UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): February 18,
1998
POMEROY COMPUTER RESOURCES, INC.
_________________________________
(Exact name of registrant as specified in its charter)
Delaware 0-20022
______________________________ _____________
(State or other jurisdiction of (Commission
incorporation or organization) file number)
Identification No.)
31-1227808
____________________
(I.R.S. Employer
Identification No.)
1020 Petersburg Road, Hebron, Kentucky 41048
____________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code (606)586-0600
_____________
<PAGE>
Item 5. Other Events.
_______ _____________
On February 18, 1998, the Board of Directors of Pomeroy
Computer Resources, Inc. (the ``Company' ) declared a dividend of
one preferred share purchase right (a ``Right'') for each
outstanding share of common stock, par value $.01 per share (the
``Common Share'') on March 15, 1998 (the ``Record Date'') to the
stockholders of record on that date. Each Right entitles the
holder to purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par value $.01
per share (the ``Preferred Shares''), of the Company, at a price
of $115.00 per one one-thousandth of a Preferred Share (the
``Purchase Price''), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the
``Rights Agreement '') between the Company and The Fifth Third
Bank, as Rights Agent (the ``Rights Agent'').
Subject to certain limited exceptions, until the earlier of
(i) ten days following a public announcement that a person or
group of affiliated or associated persons (an ``Acquiring
Person'') has acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) ten business days (or such
later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring
Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group of 15% or more of such outstanding Common
Shares (the earlier of such dates being called the ``Distribution
Date''), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by
such Common Share certificate with a copy of this Summary of
Rights attached thereto.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date or upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the
Common Shares 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 Shares as of the
close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
<PAGE>
The Rights are not exercisable until the Distribution Date.
The Rights will expire on March 1, 2008 (the ``Final Expiration
Date''), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed by the Company, in each case as
described below.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred
Shares) 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 Preferred Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations
or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to
a quarterly dividend payment of 1,000 times the dividend declared
per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to an aggregate payment of
1000 times the aggregate payment made per Common Share. Each
Preferred Share will have 1,000 votes, voting together with the
Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common
Share.
In the event that any person becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person and
its Affiliates and Associates (which will thereafter be void),
will thereafter have the right to receive upon exercise, in lieu
<PAGE>
of Preferred Shares, that number of Common Shares having a market
value of two times the exercise price of the Right. In the event
that, at any time after a Person becomes an Acquiring Person, the
Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning
power is sold, 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 will have a market value of
two times the exercise price of the Right.
If the Company does not have sufficient Common Shares to
satisfy such obligation to issue Common Shares, or if the Board
of Directors so elects, the Company shall deliver upon payment of
the exercise price of a Right an amount of cash or securities
equivalent in value to the Common Shares issuable upon exercise
of a Right; provided that, if the Company fails to meet such
obligation within 30 days following the later of (x) the first
occurrence of an event triggering the right to purchase Common
Shares and (y) the date on which the Company's right to redeem
the Rights expires, the Company must deliver, upon exercise of a
Right but without requiring payment of the exercise price then in
effect, Common Shares (to the extent available) and cash equal in
value to the difference between the value of the Common Shares
otherwise issuable upon the exercise of a Right and the exercise
price then in effect. The Board of Directors may extend the 30-
day period described above for up to an additional 60 days to
permit the taking of action that may be necessary to authorize
sufficient additional Common Shares to permit the issuance of
Common Shares upon the exercise in full of the Rights.
At any time after any Person becomes an Acquiring Person and
prior to the acquisition by any person or group of a majority of
the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at
an exchange ratio of one Common Share per Right (subject to
adjustment).
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
Preferred Shares will be issued (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share,
which may, at the election of the Company, be evidenced by
depository receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on
the last trading day prior to the date of exercise.
At any time prior to the time any Person becomes an
Acquiring Person, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $0.001
per Right (the ``Redemption Price ''). The redemption of the
<PAGE>
Rights may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, except that from and after such time as any person
becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
The Rights Agreement is attached hereto as an exhibit and is
incorporated herein by reference. This summary description of
the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement.
Effective February 18, 1998, Edwin S. Weinstein resigned as
the Company's Vice President of Finance, Treasurer, and Secretary
of the Company. Mr. Weinstein continues to serve as a Director
of the Company. On February 18, 1998, Stephen E. Pomeroy was
elected as Treasurer and Secretary of the Company to fill the
vacancy resulting from Mr. Weinstein's resignation.
On February 18, 1998, the Company appointed Stephen
E. Pomeroy and Richard C. Mills to its Board of Directors. Mr.
Pomeroy currently serves as the Chief Financial Officer of the
Company, a position he has held since May 16, 1997, and as
Treasurer and Secretary. From September 1996 to May 1997, Mr.
Pomeroy served as the Vice President of Marketing and Corporate
Development of the Company. Prior to that time, Mr. Pomeroy was
the Director of New Market Development of the Company from 1994
to September 1996 and Account Executive from 1991 to 1994. Mr.
Mills currently serves as the Chief Operating Officer of the
Company, a position he has held since May 16, 1997. From July
1993 until May 1997, Mr. Mills served as the Vice President of
Operations of the Company. Prior to that time, Mr. Mills was the
founder and president of The Computer Store of Kentucky, Inc., a
Louisville-based retailer of computer products.
On February 9, 1998, the Company announced its unaudited
operating results for the fourth quarter and year ended January
5, 1998.
For the quarter, total net sales and revenues increased
approximately 39% to $142.1 million from $102.3 million in the
fourth quarter of 1996. For the 1997 fiscal year, total net sales
and revenues increased approximately 46% to $491.4 million from
<PAGE>
$336.4 million in fiscal 1996.
Net income for the fourth quarter increased approximately 56% to
$4.8 million, or $0.41 per diluted share, from $3.1 million, or
$0.31 per diluted share, in the comparable period of 1996. For
the 1997 fiscal year, net income increased approximately 162% to
$16.3 million, or $1.44 per diluted share, from $6.2, or $0.77
per diluted share, in fiscal 1996. Fiscal 1996 results include an
after tax charge of $2.6 million, or $0.32 per share, associated
with the settlement and related costs arising from the Vanstar
litigation.
Filed herewith as Exhibit 99.2 is the Company's Condensed
Consolidated Balance Sheets (Unaudited) as of January 5, 1997 and
1998, and the Condensed Consolidated Income Statements
(Unaudited) for the Quarters and Years Ended January 5, 1997 and
1998.
Item 7. Financial Statements and Exhibits.
_______ __________________________________
(c) Exhibits
4 Rights Agreement between the
Company and The Fifth Third Bank,
as Rights Agent dated as of
February 23, 1998
99.2 Condensed Consolidated Balance
Sheets (Unaudited) as of January 5,
1997 and 1998, and the Condensed
Consolidated Income Statements
(Unaudited) for the Quarters and
Years Ended January 5, 1997 and
1998
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 2, 1998 POMEROY COMPUTER RESOURCES, INC.
By: /s/ Stephen E. Pomeroy
_______________________
Stephen E. Pomeroy, Chief
Financial Officer, Treasurer
and Secretary
<PAGE>
EXHIBIT 4
POMEROY COMPUTER RESOURCES, INC.
and
THE FIFTH THIRD BANK
RIGHTS AGENT
RIGHTS AGREEMENT
Dated as of February 23, 1998
TABLE OF CONTENTS
Section 1. Certain Definitions...................... 1
Section 2. Appointment of Rights Agent.............. 6
Section 3. Issue of Right Certificates.............. 6
Section 4. Form of Right Certificates............... 8
Section 5. Countersignature and Registration........ 8
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates
.................................. 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights ............................. 10
Section 8. Cancellation and Destruction of Right Certificates
............................................ 11
<PAGE>
Section 9. Status and Availability of Preferred Shares
.......................................................
12
Section 10. Preferred Shares Record Date
.................................................................
......13
Section 11. Adjustment of Purchase Price; Number of Shares or
Number of Rights...... 13
Section 12. Certificate of Adjustment
............................................................
.............. 21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 22
Section 14. Fractional Rights and Fractional Shares
.................................................. 23
Section 15. Rights of Action
............................................................
.......................... 24
Section 16. Agreement of Right Holders
............................................................
........... 25
Section 17. Right Certificate Holder Not Deemed a Stockholder
................................... 25
Section 18. Concerning the Rights Agent
.....................................................
.................... 25
Section 19. Merger or Consolidation or Change of Name of
Rights Agent .................... 26
TABLE OF CONTENTS, continued
Section 20. Duties of Rights Agent
............................................................
.............. 27
Section 21. Change of Rights Agent
............................................................
............. 29
Section 22. Issuance of New Right Certificates
............................................................
. 30
<PAGE>
Section 23. Redemption
............................................................
........................................ 30
Section 24. Exchange
............................................................
....................................... 31
Section 25. Notice of Certain Events
............................................................
.......... 33
Section 26. Notices
............................................................
.................................. 34
Section 27. Supplements and Amendments
............................................................
... 35
Section 28. Successors
............................................................
....................................... 35
Section 29. Benefits of this Agreement
............................................................
........... 35
Section 30. Severability
............................................................
...................................... 35
Section 31. Governing Law
............................................................
.......................... 36
Section 32. Counterparts
............................................................
...................................... 36
Section 33. Descriptive Headings
............................................................
.......................... 36
Section 34. Administration
............................................................
........................... 36
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February_23, 1998, between Pomeroy
Computer Resources, Inc., a Delaware corporation (the "Company"),
<PAGE>
and The Fifth Third Bank, an Ohio banking corporation (the
"Rights Agent").
WITNESSETH
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each share of Common Stock, par value $.01 per
share, of the Company (a"Common Share") outstanding on the close
of business on March 15, 1998 (the "Record Date") and has
authorized the issuance of one right with respect to each
additional share of Common Stock that shall become outstanding
between the Record Date and the earlier of the Distribution Date
or the Final Expiration Date (as such terms are defined in
Section 1 hereof), each Right representing the right to purchase
one one-thousandth of a share (a "Preferred Share" as hereinafter
defined) of Series A Junior Participating Preferred Stock of the
Company having the rights and preferences set forth in the form
of Certificate of Designations attached hereto as Exhibit A, or
such different amount and/or kind of securities as shall be
hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter 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 who or which,
together with all Affiliates and Associates of such Person,
without prior approval of the Company shall be the Beneficial
Owner of a Substantial Block or who was such a Beneficial Owner
at any time after the date hereof, whether such Person continues
to be the Beneficial Owner of a Substantial Block, but shall not
include an Exempt Person. Notwithstanding the foregoing, (1) no
Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall so become the Beneficial Owner of
15% or more of the Common Shares of the Company then outstanding
by reason of an acquisition of Common Shares by the Company and
shall, after such share purchases by the Company, become the
Beneficial Owner of an additional 1% of the outstanding Common
Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person"; (2) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and
such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing
<PAGE>
provisions of this paragraph, then such Person shall not be
deemed to have become an "Acquiring Person" for any purposes of
this Agreement; and (3) an underwriter or underwriters which
become the Beneficial Owner of 15% or more of the Common Shares
of the Corporation then outstanding in connection with an
underwritten public offering with a view to the public
distribution of such Common Shares shall not become an Acquiring
Person" hereunder.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement but shall not include an Exempt Person.
(d) "Agreement" shall mean this Rights Agreement as originally
executed or as it may from time to time be amended, renewed,
supplemented or extended pursuant to the applicable provisions
hereof.
(e) "Beneficial Owner". 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 pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of
this Agreement; (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), written or otherwise, or upon the
exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided
however, that a Person shall not be deemed to be the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to
a tender or exchange offer made pursuant to, and in accordance
with the applicable rules and regulations promulgated under the
Exchange Act by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also 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
<PAGE>
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), written or otherwise, for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to section (B) of the immediately preceding paragraph
(ii)) 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.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the
Commonwealth of Kentucky are authorized or obligated by law or
executive order to close.
(h) "Close of Business" on any given date shall mean 5:00 P.M.,
Erlanger, Kentucky time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M.,
Erlanger, Kentucky time, on the next succeeding Business Day.
(i) "Common Stock" when used in reference to the Company shall
mean the Common Stock, par value $.01 per share, of the Company
or any other shares of capital stock of the Company into which
such stock shall be classified or changed. "Common Stock" when
used with reference to any Person other than the Company
organized in corporate form shall mean (i) the capital stock or
other equity securities or interest of such Person with the
greatest voting power, (ii) the equity securities or other equity
interest having power to control or direct the management of such
Person or (iii) if such Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-
mentioned Person and which have issued any such outstanding
capital stock, equity securities or equity interest. "Common
Stock" when used with reference to any Person not organized in
corporate form shall mean units of beneficial interest which (x)
shall represent the right to participate generally in the profits
and losses of such Person (including, without limitation, any
flow-through tax benefits resulting from an ownership interest in
such Person) and (y) shall be entitled to exercise the greatest
voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner
or partners.
(j) "Common stock equivalents" shall have the meaning set forth
in Section 11(a)(iii)(B)(3).
<PAGE>
(k) "Continuing Director" shall mean (i) an individual who is a
member of the Board on the date hereof or (ii) an individual
designated (before such individual's initial election as a
director) as a Continuing Director by a majority of the
Continuing Directors then in office.
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii)(A)(1) hereof.
(m) "Distribution Date" shall mean the earlier of (i) the tenth
day after the Shares Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the
Continuing Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any
Person other than an Exempt Person of, or of the first public
announcement of the intention of any Person other than an Exempt
Person to commence, a tender or exchange offer the consummation
of which would result in any Person becoming the beneficial owner
of a Substantial Block.
(n) "Equivalent preferred shares" shall have the meaning set
forth in Section 11(b).
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(p) "Exchange Ratio" shall have the meaning set forth in Section
24(a).
(q) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the
Company or any Subsidiary of the Company, (iv) any entity holding
Common Shares for or pursuant to the terms of any such employee
benefit plan, (v) David B. Pomeroy, II, any members of his
immediate family or any of his or their Affiliates or Associates.
(r) "Final Expiration Date" shall mean March 1, 2008.
(s) "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership,
business trust, limited liability company, unincorporated
association or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(t) "Purchase Price" shall have the meaning set forth in Section
7(b).
(u) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the
Company.
(v) "Redemption Date" shall mean the date on which the Rights
are redeemed as provided in Section 23 hereof.
<PAGE>
(w) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(x) "Shares Acquisition Date" shall mean the earlier of the date
of (i) the first date of public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such, or
(ii) the public disclosure of facts by the Company or an
Acquiring Person indicating that an Acquiring Person has become
such (including, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act), provided that, if such
Person is determined not to have become an Acquiring Person
pursuant to Section 1(a) hereof, then no Shares Acquisition Date
shall be deemed to have occurred.
(y) "Spread" shall have the meaning set forth in Section
11(a)(iii)(A)(2) hereof.
(z) "Subsidiary" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(aa) "Substantial Block" shall mean a number of shares of Common
Stock of the Company which equals or exceeds 15% of the number of
shares of Common Stock of the Company then outstanding.
(bb) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(cc) "Trading Day" shall mean a day on which the principal
national securities exchange on which a referenced security is
listed or admitted to trading is open for the transaction of
business or, if a referenced security is not listed or admitted
to trading on any national securities exchange, a Business Day.
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 Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall have
no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of Sections 3(b) and 3(c)
hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, and (ii) the right to receive Right Certificates
<PAGE>
will be transferable only in connection with the transfer of
Common Shares until the earlier of the Distribution Date, the
Redemption Date or the Final Expiration Date. 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 pre-paid mail,
to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate
evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates. For
purposes hereof, a tender or exchange offer shall not be deemed
to have commenced, nor shall any Person be deemed to have
publicly announced an intent to commence a tender or exchange
offer, until such time as (i) one or more of the events
specified by Rule 14d-2(a)(1),(2),(3) or (4) under the Exchange
Act shall have occurred or any Person shall have filed a Schedule
14D-1 with the Securities and Exchange Commission under the
Exchange Act with respect to the commencement of a tender or
exchange offer (the first to occur of any such events or filing
being deemed an "Event") or (ii) an Event shall have occurred
following a public announcement by any Person other than an
Exempt Person of the intention to commence a tender or exchange
offer.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of the Summary of Rights by first-
class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With
respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof 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 certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares evidenced thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, 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 Pomeroy
Computer Resources, Inc. and The Fifth Third Bank, as Rights
<PAGE>
Agent, dated as of February 23, 1998 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices
of Pomeroy Computer Resources, Inc. and available for inspection
by the holder hereof. 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. Pomeroy Computer Resources, 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, Rights that are or were acquired or
beneficially owned by Acquiring Persons (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 Shares represented by certificates shall be evidenced
by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(d) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be
deemed canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be 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 on
which the Rights may from time to time be listed, or to conform
to usage. Subject to the other provisions of this Agreement, the
Right Certificates whenever distributed, shall be dated as of the
Record Date (or in the case of Rights issued with respect to
Common Shares issued by the Company after the Record Date, as of
the date of issuance of such Common Shares) and on their face
shall entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as shall be set forth
therein at the Purchase Price, but the number of one one-
thousandths of a Preferred Share 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 by its
Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Chief Financial
Officer, either manually or by facsimile signature, shall have
<PAGE>
affixed thereto the Company's seal or a facsimile thereof, and
shall be attested by the Secretary or any Assistant Secretary of
the Company, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned,
either manually or by facsimile. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the 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.
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 at or prior to the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section
11(a)(ii) 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 one one-
thousandths of a Preferred Share 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 for 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 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
<PAGE>
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 holder 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 (other than a
holder whose Rights have become void pursuant to Section
11(a)(ii) hereof or have been exchanged pursuant to Section 24
hereof) may exercise the Rights evidenced thereby 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
its principal office, together with payment of the Purchase Price
for each one one-thousandth of a Preferred Share as to which the
Rights are exercised, at or prior to the earliest of (i) the
Close of Business on the Final Expiration Date, or (ii) the
Redemption Date, or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a
Preferred Share to be purchased upon the exercise of the Right
shall initially be One Hundred Fifteen Dollars and No Cents
($115.00) (the "Purchase Price"), 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.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and certificate
duly executed, accompanied by payment of the Purchase Price for
the number of one one-thousandths of a Preferred Share 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 by cash, certified check,
cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Shares
certificates for the number of one one-thousandths of a Preferred
Share to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests,
or (B) requisition from any depositary agent for the Preferred
Shares depositary receipts representing such number of one one-
thousandths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional Preferred Shares in accordance
with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such
<PAGE>
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. The payment of the
Purchase Price (as such amount may be reduced, including to zero,
pursuant to Section 11(a)(iii) hereof) may be made (x) in cash or
by certified bank check or bank draft payable to the order of the
Company, or (y) by delivery of a certificate or certificates
(with appropriate stock powers executed in blank attached
thereto) evidencing a number of shares of Common Stock equal to
the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) hereof) per share of Common
Stock on the Trading Day immediately preceding the date of such
exercise. In the event that the Company is obligated to issue
securities of the Company other than Preferred Shares, pay cash
and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available
for distribution by the Rights Agent.
(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.
(e) Notwithstanding anything in this Agreement to the contrary,
the Rights shall not be effectively exercised and neither the
Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in Section 7 unless such
registered holder shall have (i) completed and signed the
certificate following the form of election to purchase set forth
on the reverse side of the Right Certificate surrendered for such
exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for 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 canceled Right Certificates
to the Company, or shall, at the written request of the Company,
<PAGE>
destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Status and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued
and fully paid and non-assessable shares.
(b) 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 Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or
depository receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depository receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such
tax is due.
(c) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available, out of its
authorized and unissued Preferred Shares or any Preferred Shares
held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7 hereof.
(d) The Company shall use its best efforts to (i) file, as soon
as practicable following the Distribution Date, a registration
statement under the Securities Act of 1933 (the "Act"), with
respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act and
the rules and regulations thereunder) until the earlier of (A)
the date as of which the Rights are no longer exercisable for
such securities, or (B) the Expiration Date. The Company may
temporarily suspend, for a period not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this Section 9(d), the exerciseability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating, and notify the Rights Agent,
that the exerciseability of the Rights has been temporarily
<PAGE>
suspended, as well as a public announcement and notification to
the Rights Agent at such time as the suspension is no longer in
effect. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the
exerciseability of the Rights. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction, unless the requisite
qualification in such jurisdiction shall have been obtained, or
an exemption therefrom shall be available, and until a
registration statement has been declared effective.
(e) If the Company shall hereafter list any of its Preferred
Shares on a national securities exchange, then so long as the
Preferred Shares (and, following the date when any Person, alone
or together with its Affiliates and Associates, shall have become
an Acquiring Person, Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be
listed on such exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for a number of one one-thousandths of a
Preferred Share is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made.
Prior to the exercise of the Rights evidenced thereby, the holder
of a Right Certificate shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred
Shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this
Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares
of its capital stock in a reclassification or recapitalization of
<PAGE>
the Preferred Shares (including any such reclassification or
recapitalization 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,
reclassification or recapitalization, 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, other
securities and/or property which, if such Right had been
exercised immediately prior to such date, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination, reclassification or
recapitalization; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. 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 the following paragraph of this subparagraph (ii)
and to Section 24 of this Agreement, in the event that any
Person, alone or together with its Affiliates and Associates,
shall become 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 Preferred Share for which a
Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share 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 Shares
(determined pursuant to Section 11(d) hereof on the date of the
occurrence of the event set forth above in this subparagraph
(ii)) on the date such Person became an Acquiring Person;
provided, however, that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provision of
Section 13 shall apply and no adjustment shall be made pursuant
to this Section 11(a)(ii). In the event that any Person, alone
or together with its Affiliates and Associates, shall become an
Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action that would eliminate or
diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such an event, any Rights that
are or were acquired or beneficially owned by such Acquiring
Person (or any Associate or Affiliate of such Acquiring Person)
<PAGE>
on or after the earlier of (x) the Shares Acquisition Date and
(y) the Distribution Date 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 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 whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof shall be
canceled.
(iii) In the event that the number of Common Shares which are
authorized by the Company's Certificate of Incorporation and not
outstanding or subscribed for, or reserved or otherwise committed
for issuance for purposes other than upon exercise of the Rights,
are not sufficient to permit the holder of each Right to purchase
the number of Common Shares to which such holder would be
entitled upon the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of paragraph (a) of this
Section 11, or, if any regulatory approvals for the issuance of
the Common Shares has not been obtained by the Company and the
Rights become so exercisable, notwithstanding any other provision
of this Agreement, to the extent necessary and permitted by
applicable law and any agreements in effect on the date hereof to
which it is a party, the Company shall: (A) determine the excess
of (1) the value of the Common Shares issuable upon the exercise
of a Right (calculated as provided in the last sentence of this
subparagraph (iii)) pursuant to Section 11 (a)(ii) hereof (the
"Current Value") over (2) the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Common Shares, upon payment of
the applicable Purchase Price, any one or more of the following
having an aggregate value determined by the Board to be equal to
the Current Value: (1) cash, (2) a reduction in the Purchase
Price, (3) Common Shares or other equity securities of the
Company (including without limitation, shares, or units of
shares, of preferred stock which the Board has determined to have
the same value as Common Shares (such shares of preferred stock,
"common stock equivalents"), (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within
thirty days following the first occurrence of an event triggering
the rights to purchase Common Shares described in Section
11(a)(ii) (the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring prior payment of the
Purchase Price, Common Shares (to the extent available) and then,
<PAGE>
if necessary, cash which shares and cash have an aggregate value
equal to the Spread. If the Board shall determine in good faith
that it is likely that sufficient additional Common Shares could
be authorized for issuance upon exercise in full of the Rights,
the thirty day period set forth above may be extended to the
extent necessary, but not more than ninety days after the Section
11 (a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second
sentences of this Section 11 (a) (iii), the Company (x) shall
provide, subject to Section 7(e) hereof and the last paragraph of
Section 11 (a)(ii) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the
exerciseability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Company shall make a public announcement, and
shall deliver to the Rights Agent a statement, stating that the
exerciseability of the Rights has been temporarily suspended. At
such time as the suspension is no longer in effect, the Company
shall make another public announcement, and deliver to the Rights
Agent a statement, so stating. For purposes of this Section
11(a)(iii), the value of the Common Share shall be the current
per share market price (as determined pursuant to Section
11(d)(i) hereof) of the Common Shares on the Section 11(a)(ii)
Trigger Date and the value of any common stock equivalent shall
be deemed to have the same value as the Common Shares on such
date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred
Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred
shares)) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per
share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share
market price of the Preferred Shares (as defined in Section
11(d)) on such record date, the Purchase Price to be in effect
after such record date shall be adjusted by multiplying the
Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
<PAGE>
purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent. Preferred Shares
owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board, 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 Preferred Share and the denominator
of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall be again 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 per share market price" of any security (a "Security")
on any date shall be deemed to be the average of the daily
<PAGE>
closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; provided, however,
that in the event that the current per share market price of the
Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination
reclassification or recapitalization of such Security and prior
to the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination, reclassification or recapitalization,
then, and in each such case, the current per share market price
shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transactional reporting
system
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof)
multiplied by 1000. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per
share as determined in good faith by the Board, 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 one ten-
millionth of a Preferred Share or one ten-thousandth of any other
share or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than three years from the date
of the transaction which requires such adjustment.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, the number of such other
<PAGE>
shares so receivable upon exercise of any Right shall thereafter
be subject to adjustment from time to time in a manner and on
terms nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a)
through (c) inclusive, and the provisions of Section 7, 9, 10 and
13 with respect to the Preferred Shares shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, 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, the number of one one-thousandths
of a Preferred Share (calculated to the nearest one ten-millionth
of a Preferred Share (obtained by (i) multiplying (x) the number
of one one-thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and
(ii)dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights in
substitution for any adjustment in the number of one one-
thousandths of a Preferred Share purchasable upon the exercise of
a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by
the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been distributed,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been distributed, upon
each adjustment of the number of Rights pursuant to this Section
11 (i), the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
<PAGE>
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 to
be so 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 Preferred Share
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-thousandths of a
Preferred Share which were expressed in the initial Right
Certificate 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 of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-
assessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuing to the holder of any
Right exercised after such record date of the Preferred Shares
and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares
and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.
(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
(i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) dividends on Preferred
<PAGE>
Shares payable in Preferred Shares or (v) issuance of any rights,
options or warrants referred to hereinabove in Section 11 (b),
hereafter made by the Company to holders of its Preferred Shares,
shall not be taxable to such stockholders.
(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 Shares or (ii)
effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise other than by payment of
dividends in Common Shares) into a greater or lesser number of
Common Shares, then in any such case (i) the number of one one-
thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a Preferred
Share so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately
after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it
that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11 (n) shall be made
successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjustment. Whenever an adjustment
is made as provided in Sections 11 and 13 hereof, the Company
shall promptly:
(a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment;
(b) file with the Rights Agent and with each transfer agent of
the Common Shares or the Preferred Shares a copy of such
certificate; and
(c) mail a brief summary thereof to each holder of Right
Certificate in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event that at any time after a
Person, alone or together with an Affiliate or Associates,
becomes an Acquiring Person, directly or indirectly, (i) the
Company shall consolidate with, or merge with and into, any other
Person, (ii) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such consolidation or merger, all or part of the
Common Shares shall be changed into or exchanged for stock or
<PAGE>
other securities of any other Person (or the Company) or cash or
any other property, or (iii) 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 50% or more 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 (A) each holder of a Right
(except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and
in lieu of Preferred Shares, such number of Common Shares of such
other Person (including the Company as successor thereto or as
the surviving corporation) as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of
one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (y) 50% of the then
current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer;
(B) the issuer of such Common Shares 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; (C) the term "Company" shall
thereafter be deemed to refer to such issuer; and (D) such issuer
shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company covenants and
agrees that it shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent
a supplemental agreement so providing. 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. For the
purposes hereof, the "earning power" of the Company and its
Subsidiaries shall be determined in good faith by the Company's
Board of Directors on the basis of the operating earnings of each
business operated by the Company and its Subsidiaries during the
three fiscal years preceding the date of such determination (or,
in the case of any business not operated by the Company or any
Subsidiary during three full fiscal years preceding such date,
<PAGE>
during the period such business was operated by the Company or
any Subsidiary.)
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 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 nation securities exchange in
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any nation
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, the fair value of the Rights on such date
as determined in good faith by the Board shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-thousandth of a Preferred Share may, at the election of
the Company, be evidenced by depository receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to each registered holder of Right
Certificates at the time such Rights are exercised as herein
<PAGE>
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share as the fraction of
one Preferred Share that such holder would otherwise receive upon
the exercise of the aggregate number of rights exercised by such
holder. For the purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) 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 any right to receive fractional Rights or
fractional shares upon exercise of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the
respective holders of the Right Certificates and, prior to the
Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares) may, 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
Shares), on his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his right
to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any
Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books maintained by the Rights
Agent if surrendered at the principal office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer
with a completed form of certification; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
<PAGE>
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at anytime be issuable on the
exercise of the Rights represented thereby nor shall anything
contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such
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 gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim or
liability in connection therewith.
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 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.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
<PAGE>
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 of
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
hereof. 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 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 expressly set forth in the
Agreement and no implied duties or obligations shall be read
into this Agreement against the Rights Agent. The Rights Agent
shall perform those duties and obligations 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 legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
<PAGE>
prior to taking or suffering any action 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, the Chief Financial
Officer, a 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
gross 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 as to 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
exerciseability of the rights (including the rights becoming void
pursuant to Section 11(a)(ii) hereof) or adjustment required
under the provisions of Sections 11 or 13 hereof or any other
provision or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as
to whether any Preferred Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged end 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.
<PAGE>
(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, the Chief Financial Officer, a 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. Any application by the Rights
Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission
of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such
application (which date shall not be less than five Business Days
after the date any such officer of the Company actually received
such application), unless prior to taking any such action (or the
effective date in case of an omission), the Rights Agent shall
have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
rights 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 Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates that the holder may be an Acquiring Person, the Rights
Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Company.
<PAGE>
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing the repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination under
the Rights Agreement unless and until the Rights Agent shall be
notified in writing by the Company of such fact, event or
determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares and the Preferred Shares 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 Shares and the Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Right Agent.
If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit 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 organized and doing
business under the laws of the United States or of any state of
the United States, in good standing, having an office in the
State of Ohio or the Commonwealth of Kentucky which is authorized
under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100 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
<PAGE>
Agent and each transfer agent of the Common Shares and the
Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right 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 may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board to reflect any adjustment or change in the
Purchase Price and/or 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 may, at its option, at any time prior to such time
as any Person becomes an Acquiring Person, redeem all but not
less than all of the then outstanding Rights at a redemption
price of $0.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the
Rights by the Board may be made effective at such time, on such
basis and subject to such conditions as the Board in its sole
discretion may establish.
(b) Immediately upon the action of the Board 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 ordering the redemption of the Rights
pursuant to paragraph (a), 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 Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. If
the payment of the Redemption Price is not included with such
notice, each such notice shall state the method by which the
payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23
<PAGE>
or in Section 24 hereof, other than in connection with the
repurchase of Common Shares prior to the Distribution Date.
(c) Notwithstanding the provisions of this Section 23, if, as
the result of any action (whether action taken by stockholders of
the Company at a meeting of stockholders or action taken by
stockholders by written consent without a meeting or action taken
by the Board), Continuing Directors cease to constitute a
majority of the Board, the Rights shall not be redeemable by the
Board if such redemption is reasonably likely to have the purpose
or effect of facilitating a consolidation, merger, sale or
transfer transaction of the type described in Section 13 hereof
between the Company and any other Person.
Section 24. Exchange.
(a) The Board 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 Common Shares at an exchange ratio
of one Common Share 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, (i) the Board shall not be empowered to effect such
exchange at any time after any Person other than an Exempt
Person, together with all Affiliates and Associates of such
Person, becomes the Beneficial owner of a majority of the Common
Shares then outstanding and (ii) if, as the result of any action
(whether action taken by stockholders of the Company at a meeting
of stockholders or action taken by stockholders by written
consent without a meeting or action taken by the Board),
Continuing Directors cease to constitute a majority of the Board,
the Rights shall not be exchangeable by the Board if such
exchange is reasonably likely to have the purpose or effect of
facilitating a consolidation, merger, sale or transfer
transaction of the type described in Section 13 hereof between
the Company and any other Person.
(b) Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given,
<PAGE>
whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares or common stock
equivalents for Common Shares exchangeable for Rights, at the
initial rate of one one-thousandth of a Preferred Share (or an
appropriate number of common stock equivalents) for each Common
Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as
one Common Share.
(d) In the event that there shall not be sufficient Common
Shares, Preferred Shares or common stock equivalents authorized
by the Company's certificate of incorporation and not outstanding
or subscribed for, or reserved or otherwise committed for
insurance for purposes other than upon exercise of Rights, to
permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be
necessary to authorize additional Common Shares, Preferred Shares
or common stock equivalents for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the
same fraction of the current per share market value of a whole
Common Share. For the purposes of this paragraph (e), the
current per share market value of a whole Common Share shall be
the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall after the Distribution Date
propose (i) to pay any dividend payable in stock of any class to
the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), or (ii) to offer to the holders
of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional preferred Shares or shares of stock of
any class or any other securities, rights or options, or (iii) to
<PAGE>
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), or (iv) to effect any consolidation or merger
into or with, 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 50% or more of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then,
in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice
of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Pomeroy Computer Resources, Inc.
1020 Petersburg Road
Hebron, Kentucky 41048
Attention: Stephen E. Pomeroy
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
<PAGE>
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows;
The Fifth Third Bank
Corporate Trust Administration
Mail Location Number 1090D2-3212
38 Fountain Square Plaza
Cincinnati, Ohio 45202
Attention: Randolph Stierer
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. Subject to the
approval of the Continuing Directors, the Company may from time
to time, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to
make any change to or delete any provision hereof or to adopt any
other provisions with respect to the Rights which the Company may
deem necessary or desirable. Any such supplement or amendment
will be evidence 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 amended or supplemented in any manner which would adversely
affect the interests of the holders of Rights (other than an
Acquiring Person and its Affiliates and Associates).
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 or corporation
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) 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 Common Shares).
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
<PAGE>
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement
would adversely affect the purpose of this Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated
and shall not expire until the close of business on the tenth day
following the date of such determination by the Board.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of
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.
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.
Section 34. Administration. The Board shall have the
exclusive power and authority to administer and interpret the
provisions of this Agreement and to exercise all rights and
powers specifically granted to the Board or the Company or as may
be necessary or advisable in the administration of this
Agreement. All such action, calculations, determination and
interpretations which are done or made by the Board in good faith
shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the rights and all other parties and shall
not subject the Board or the Continuing Directors to any
liability to the holders of the Rights.
IN WITNESS WHEREOF, the parties have caused this Rights Agreement
to be duly executed and their respective corporate seals to be
hereunder affixed and attested, all as of the day and year first
above written.
ATTEST: POMEROY COMPUTER RESOURCES, INC.
/S/Bernard F. Metzroth By: /S/ David B. Pomeroy II
------------------------------ --------------------------------
<PAGE>
ATTEST: THE FIFTH THIRD BANK
/S/ R. Grzymajlo By: /S/ Laura Wikoff, Trust Officer
-------------------- --------------------------------------
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
POMEROY COMPUTER RESOURCES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Pomeroy Computer Resources, Inc. a corporation organized and
existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on
February 18, 1998:
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 Certificate of Incorporation of the
Corporation, the Board of Directors hereby designates 50,000
shares of the Corporation's Preferred Stock, par value $0.01 per
share, as "Series A Junior Participating Preferred Stock" of the
Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of this series
shall be designated as "Series A Junior Participating Preferred
Stock" (the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be 50,000. 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 the number of 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
<PAGE>
outstanding securities issued by the Corporation convertible into
Series A Preferred Stock.
Section 2. Dividends and Distribution.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and
superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifth day of
April, July, October and January 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
Preferred Stock, in an amount (if any) per share (rounded to the
nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 1000 times the aggregate per
share amount of all cash dividends, and 1000 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, par value $0.01 per share (the "Common Stock"), of
the Company 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 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 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)
(C) Dividends due pursuant to paragraph (A) of this Section
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, unless the date
<PAGE>
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 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 to the date fixed for the payment thereof.
Section 3. 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 1000 votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the
Corporation shall at any time 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 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 in the Certificate of
Incorporation of the Company, including any other Certificate of
Designations creating a series of Preferred Stock or any similar
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, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
<PAGE>
extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred 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; or
(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 (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock.
(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 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of Preferred stock 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 Certificate of
Incorporation of the Company, including any Certificate of
Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation the
<PAGE>
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 1000
times the aggregate amount to be distributed per share to holders
of shares of Common Stock plus an amount equal to any accrued and
unpaid dividends. In the event the Corporation shall at any time
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 aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under 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.
Section 7. 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
each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
1000 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 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 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.
Section 8. Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. Unless otherwise provided in the
Certificate of Incorporation or a Certificate of Designations
relating to a subsequently designated series of preferred stock
of the Corporation, the Series A Preferred Stock shall rank
junior to any other series of the Corporation's preferred stock
<PAGE>
subsequently issued, as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up
and shall rank senior to the Common Stock.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner, including in
a merger or consolidation, which would alter, change, or repeal
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 a least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together
as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may
be issued in whole shares or in any fraction of a share that is
one one-thousandth of a share or any integral multiple of such
fraction, which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock. In
lieu of fractional shares, the Corporation may elect to make a
cash payment as provided in the Rights Agreement for fractions of
a share other than one one-thousandth of a share or any integral
multiple thereof.
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Corporation by its Chief Financial Officer, an
Authorized Officer, this ___ day of February, 1998.
POMEROY COMPUTER RESOURCES, INC.
By: _______________________________________
Stephen E. Pomeroy, Chief Financial Officer
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER MARCH 1, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR WERE
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY ASSOCIATION OR
AFFILIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID.
Rights Certificate
POMEROY COMPUTER RESOURCES, INC.
<PAGE>
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 February 23, 1998 (the "Rights Agreement"), between
Pomeroy Computer Resources, Inc., a Delaware corporation (the
"Company"), and The Fifth Third Bank, an Ohio banking
corporation (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., Erlanger, Kentucky
time, on March 1, 2008, at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Shares"), of the Company, at a purchase price of
$115.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the certification and 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
Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of March 15, 1998, based on the
Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of one one-
thousandths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of
certain events.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by
this Right Certificate are or were at any time on or after the
earlier of (x) the Shares Acquisition Date (as such term is
defined in the Rights Agreement) and (y) the Distribution Date
(as such term is defined int eh Rights Agreement) acquired or
beneficially owned by an Acquiring Person or an Associate or
Affiliate of an Acquiring Person (as such terms are defined in
the Rights Agreement), such Rights shall become null and void,
and any holder of such Rights shall thereafter have no right to
exercise such Rights.
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 referenced 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 execute offices of the Company and the offices of the
Rights Agent.
<PAGE>
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 Preferred Shares 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 (i) may be redeemed by the Company
at a redemption price of $0.001 per Right or (ii) may be
exchanged in whole or in party for Preferred Shares or shares of
the Company's Common Stock , par value $0.01 per share.
No fractional Preferred Shares 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 a Preferred
Share, 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 purchase the holder of the
Preferred Shares or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of , _____.
Attest: Pomeroy Computer Resources,
Inc.
<PAGE>
By:
Authorized Signature
Countersigned:
The Fifth Third Bank
By:
Authorized Signature
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 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.
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
FORM OF ELECTION TO PURCHASE
To: POMEROY COMPUTER RESOURCES, INC.
<PAGE>
The undersigned hereby irrevocably elects to exercise _________
Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred 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 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.
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
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may
be, is not completed, the Company and the Rights Agent will deem
the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
EXHIBIT C
<PAGE>
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 18, 1998, the Board of Directors of Pomeroy Computer
Resources, Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $.01 per share (the "Common
Share") on March 15, 1998 (the "Record Date") to the stockholders
of record on that date. Each Right entitles the holder to
purchase from the Company one one-thousandth of a share of Series
A Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Shares"), of the Company, at a price of $115.00
per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and The Fifth Third Bank, as
Rights Agent (the "Rights Agent").
Subject to certain limited exceptions, until the earlier of (i)
ten days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has
acquired beneficial ownership of 15% or more of the outstanding
Common Shares or (ii) ten business days (or such later date as
may be determined by action of the Board of Directors prior to
such time as any person becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 15% or
more of such outstanding Common Shares (the earlier of such dates
being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share
certificate with a copy of this Summary of Rights attached
thereto.
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the Common
Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued
after the Record Date or upon transfer or new issuance of Common
Shares will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares 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
<PAGE>
Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on March 1, 2008 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed by the Company, in each case as
described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred
Shares) 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 Preferred Share issuable upon exercise of each
Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations
or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a
quarterly dividend payment of 1000 times the dividend declared
per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to an aggregate payment of
1000 times the aggregate payment made per Common Share. Each
Preferred Share will have 1000 votes, voting together with the
Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1000 times the amount
received per Common Share. These rights are protected by
customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common
Share.
In the event that any person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person and its
<PAGE>
Affiliates and Associates (which will thereafter be void), will
thereafter have the right to receive upon exercise, in lieu of
Preferred Shares, that number of Common Shares having a market
value of two times the exercise price of the Right. In the event
that, at any time after a Person becomes an Acquiring Person, the
Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning
power are sold, 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 will have a market value of
two times the exercise price of the Right.
If the Company does not have sufficient Common Shares to satisfy
such obligation to issue Common Shares, or if the Board of
Directors so elects, the Company shall deliver upon payment of
the exercise price of a Right an amount of cash or securities
equivalent in value to the Common Shares issuable upon exercise
of a Right; provided that, if the Company fails to meet such
obligation within 30 days following the later of (x) the first
occurrence of an event triggering the right to purchase Common
Shares and (y) the date on which the Company's right to redeem
the Rights expires, the Company must deliver, upon exercise of a
Right but without requiring payment of the exercise price then in
effect, Common Shares (to the extent available) and cash equal in
value to the difference between the value of the Common Shares
otherwise issuable upon the exercise of a Right and the exercise
price then in effect. The Board of Directors may extend the 30-
day period described above for up to an additional 60 days to
permit the taking of action that may be necessary to authorize
sufficient additional Common Shares to permit the issuance of
Common Shares upon the exercise in full of the Rights.
At any time after any Person becomes an Acquiring Person and
prior to the acquisition by any person or group of a majority of
the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at
an exchange ratio of one Common Share per Right (subject to
adjustment).
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 Preferred
Shares will be issued (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, 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 Shares on the last
trading day prior to the date of exercise.
At any time prior to the time any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the
<PAGE>
Rights in whole, but not in part, at a price of $0.001 per Right
(the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
of the Company without the consent of the holders of the Rights,
except that from and after such time as any person becomes an
Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring
Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated
herein by reference.
<PAGE>
Exhibit 99.2
<PAGE>
POMEROY COMPUTER RESOURCES, INC.
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
( In thousands)
<CAPTION>
January 5, January 5,
1997 1998
__________ __________
<S> <C> <C>
ASSETS
Current assets:
Cash $ 6,809 $ 380
Accounts receivable, net 68,094 99,707
Inventories 23,426 39,160
Other 739 816
__________ __________
Total current assets 99,068 140,063
__________ __________
Equipment and leasehold improvements, net 9,212 10,546
Other assets 13,100 16,655
__________ __________
Total assets $ 121,380 $ 167,264
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Notes payable $ 907 $ 2,077
Accounts payable 40,343 40,038
Bank notes payable 24,146 22,611
Other current liabilities 6,469 12,232
__________ __________
Total current liabilities 71,865 76,958
__________ __________
Notes payable 2,189 1,434
Deferred income taxes 733 95
Equity:
Preferred stock ( no shares
issued or outstanding)
Common stock ( 9,692 and 11,402
shares issued and outstanding at
January 5, 1997 and 1998,
respectively) 65 114
Paid-in capital 34,402 60,226
Retained earnings 12,330 28,641
__________ __________
46,797 88,981
Less treasury stock, at cost 204 204
__________ __________
Total equity 46,593 88,777
__________ __________
Total liabilities and equity $ 121,380 $ 167,264
========== ==========
</TABLE>
<PAGE>
POMEROY COMPUTER RESOURCES, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
( In thousands, except per share amounts )
<CAPTION>
Year Ended
________________________
January 5, January 5,
1997 1998
__________ __________
<S> <C> <C>
Net sales and revenues:
Sales - equipment and supplies $ 306,745 $ 440,982
Service 29,613 50,466
__________ __________
Total net sales and revenues 336,358 491,448
__________ __________
Cost of sales and service:
Equipment and supplies 275,273 400,059
Service 6,480 10,004
__________ __________
281,753 410,063
__________ __________
Gross profit 54,605 81,385
Operating expenses:
Selling, general and administrative 33,629 48,641
Rent expense 1,546 1,956
Depreciation 1,925 2,958
Amortization 636 982
__________ _________
Total operating expenses 37,736 54,537
__________ _________
Income from operations 16,869 26,848
Interest expense 2,170 974
Litigation Settlement and Related Costs 4,392 -
Other expense (income) (221) 54
__________ _________
Income before income tax 10,528 25,820
Income tax expense 4,296 9,507
__________ _________
Net income $ 6,232 $ 16,313
========== =========
Weighted average shares outstanding:
Basic 7,834 11,052
Diluted 8,106 11,367
Net income per common share:
Basic $ 0.80 $ 1.48
Diluted $ $0.77 $ 1.44
</TABLE>
<PAGE>
POMEROY COMPUTER RESOURCES, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
( In thousands, except per share amounts )
<CAPTION>
Three Months Ended
______________________
January 5, January 5,
1997 1998
__________ __________
<S> <C> <C>
Net sales and revenues:
Sales - equipment and supplies $ 92,654 $ 127,363
Service 9,669 14,77
__________ __________
102,323 142,136
__________ __________
Cost of sales and service:
Equipment and supplies 82,732 114,895
Service 2,099 3,428
__________ _________
84,831 118,323
Gross profit 17,492 23,813
Operating expenses:
Selling, general and administrative 10,437 14,029
Rent expense 530 551
Depreciation 647 753
Amortization 210 276
__________ _________
Total operating expenses 11,824 15,609
__________ _________
Income from operations 5,668 8,204
Interest expense 577 326
Other expense (income) (87) (26)
__________ _________
Income before income tax 5,178 7,904
Income tax expense 2,068 3,058
__________ _________
Net income $ 3,110 $ 4,846
========== =========
Weighted average shares outstanding:
Basic 9,639 11,359
Diluted 9,980 11,704
Net income per common share:
Basic $ 0.32 $ 0.43
Diluted $ 0.31 $ 0.41
</TABLE>
