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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): November 21, 1997
XCELLENET, INC.
(Exact Name of Registrant as Specified in Charter)
Georgia 0-23560 58-1749705
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
5 Concourse Parkway, Suite 850
Atlanta, Georgia 30328
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code: (770) 804-8100
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On November 21, 1997, XcelleNet, Inc. (the "Company") entered into a
Shareholder Protection Rights Agreement pursuant to which it will distribute one
right (a "Right") for each outstanding share of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"), to shareholders of record at the
close of business on December 8, 1997 and for each share of Common Stock issued
by the Company thereafter and prior to the Separation Time (as described below).
Each Right entitles the registered holder to purchase from the Company one one-
hundredth (1/100th) of a share (a "Unit") of Series G Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), at a
purchase price of $75.00 per Unit (the "Exercise Price"), subject to adjustment.
The description and terms of the Rights are set forth in the Shareholder
Protection Rights Agreement between the Company and SunTrust Bank, Atlanta, as
Rights Agent, dated November 21, 1997 (the "Rights Agreement").
Separation Time
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Initially, the Rights will be transferable only with the shares of Common
Stock with respect to which they were distributed. Until the Separation Time
the Rights will be evidenced by the certificates representing the shares of
outstanding Common Stock with which they are associated, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock and the Separation Time will occur upon the earlier of (i) ten business
days (unless otherwise accelerated or delayed by the Board of Directors with the
concurrence of a majority of the members of the Board of Directors of the
Company who are not an Acquiring Person (as defined below), or a representative
or nominee of an Acquiring Person or an Affiliate or Associate of any of the
foregoing (the "Continuing Directors")) following public announcement by the
Company that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, obtained the right to acquire, or otherwise
obtained beneficial ownership of 15% or more of the then-outstanding shares of
Common Stock, or (ii) ten business days (unless otherwise delayed by the Board
of Directors with the concurrence of a majority of the Continuing Directors)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of the then-outstanding
shares of Common Stock. An Acquiring Person does not include (a) any person who
is a beneficial owner of 15% or more of the Common Stock on November 21, 1997
(the date of adoption of the Rights Agreement), unless such person or group
shall thereafter acquire beneficial ownership of additional Common Stock and
fails to reduce its beneficial ownership of Common Stock to previous levels, (b)
a person who acquires beneficial ownership of 15% or more of the Common Stock
without any intention to affect control of the Company and who thereafter
promptly divests sufficient shares so that such person ceases to be the
beneficial owner of 15% or more of the Common Stock, or (c) a person who is or
becomes a beneficial owner of 15% or more of the Common Stock as a result of an
option granted by the Company in connection with an agreement to acquire or
merge with the Company prior to a Flip-In Date (as defined below).
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Transfer of Rights and Certificates
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Until the Separation Time, (i) the Rights will be evidenced by Common Stock
certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after December 8, 1997
will bear a legend incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates representing outstanding Common Stock
will also constitute the surrender for transfer of the Rights associated with
the Common Stock represented by such certificate.
Promptly after the Separation Time, Rights Certificates will be mailed to
holders of record of Common Stock as of the close of business on the date when
the Separation Time occurs (other than holders of Rights that are or were
beneficially owned by an Acquiring Person or an affiliate or associate thereof
or by any transferee of any of the foregoing, which Rights shall be void) and,
thereafter, the separate Rights Certificates alone will represent the Rights.
Exercise of Rights for Common Stock
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If a Flip-In Date occurs (i.e., the close of business ten business days
following a public announcement by the Company that a person has become an
Acquiring Person), and if the Company has not redeemed the Rights as described
below, then a Right entitles the holder thereof to acquire shares of Common
Stock (rather than Preferred Stock) having a value equal to twice the Right's
exercise price. Instead of issuing shares of Common Stock upon exercise of a
Right following a Flip-In Date, the Company may substitute therefor shares of
Preferred Stock at a ratio of one one-hundredth of a share of Preferred Stock
for each share of Common Stock so issuable. In the event there are not
sufficient treasury shares or authorized but unissued shares of Common Stock or
Preferred Stock to permit exercise in full of the Rights, the Company may
substitute debt or equity securities or other assets (or a combination thereof).
In addition, the Company, upon the action of the Board of Directors, provided
there are Continuing Directors then in office and that a majority of the
Continuing Directors concur, may, after a Flip-In Date and prior to the time
that an Acquiring Person becomes the beneficial owner of more than 50% of the
Common Stock, elect to exchange all outstanding Rights (other than Rights that
have become void) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, as adjusted. Notwithstanding any of the foregoing,
Rights that are, or (under certain circumstances set forth in the Rights
Agreement) were, beneficially owned by any person on or after the date such
person becomes an Acquiring Person will be null and void.
In addition, the Rights Agreement provides that if an Acquiring Person
controls the Company's Board of Directors, then Company shall not enter into an
agreement with respect to, consummate or permit to occur any: (i) consolidation,
merger or share exchange if either the Acquiring Person or an affiliate or
associate of the Acquiring Person is a party to the transaction or the terms of
the transaction are not the same for the Acquiring Person as for the other
holders of Common Stock, or (ii) sale or transfer of a majority of the Company's
assets, unless the Company enters into an agreement for the
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benefit of the holders of the Rights providing that upon consummation of such
transaction each Right shall constitute the right to purchase stock in the
acquiring entity having a value equal to twice the exercise price of the Rights
for an amount in cash equal to the exercise price of the Rights.
Exercise Period
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The Rights are not exercisable until the Separation Time and will expire at
the close of business on November 21, 2007 unless earlier exchanged or redeemed
by the Company as described below.
Redemption of Rights
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At any time until the close of business on the Flip-In Date, the Company
may, upon the action of the Board of Directors if there are Continuing Directors
then in office and a majority of the Continuing Directors concur, elect to
redeem the Rights at a price of $0.01 per right. The Board of Directors may
condition redemption of the Rights upon the occurrence of a specified future
time or event.
Adjustments
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The exercise price payable and the number of Rights outstanding are subject
to adjustment from time to time to prevent dilution in the event of a stock
dividend, stock split or reverse stock split, or other recapitalization which
would change the number of shares of Common Stock outstanding.
If prior to the Separation Time, the Company distributes securities or
assets in exchange for Common Shares (other than regular cash dividends or a
dividend paid solely in Common Shares) whether by dividend, reclassification, or
otherwise, the Corporation shall make such adjustments, if any, in the Exercise
Price, number of Rights and otherwise as the Board of Directors deems
appropriate.
Amendments
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Any provisions of the Rights Agreement may be amended at any time prior to
the close of business on the Flip-In Date without the approval of holders of the
Rights, and thereafter, the Rights Agreement may be amended without approval of
the Rights holders in any way which does not materially adversely affect the
interests of the Rights holders generally or to cure an ambiguity or to correct
or supplement any provision which may be inconsistent with any other provision
or otherwise defective.
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Rights Prior to Exercise
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable.
Effect of the Rights
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The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors of the Company (with, where
required by the Rights Agreement, the concurrence of the Continuing Directors)
unless the offer is conditioned on a substantial number of Rights being
acquired. However, the Rights should not interfere with any merger, statutory
share exchange or other business combination approved by a majority of the
Continuing Directors since the Rights may be redeemed by the Company upon
resolution of the Board of Directors with the concurrence of a majority of the
Continuing Directors at any time on or prior to the close of business ten
business days after announcement by the Company that a person has become an
Acquiring Person. Thus, the Rights are intended to encourage persons who may
seek to acquire control of the Company to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the Rights may
be to discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial equity position in the equity securities of,
or seeking to obtain control of, the Company. To the extent any potential
acquirors are deterred by the Rights, the Rights may have the effect of
preserving incumbent management in office.
Documents and Effect of This Summary
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A copy of the Rights Agreement is included as an Exhibit to this Report.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
No financial statements are required to be filed as part of this Report.
The following exhibits are filed as part of this Report:
EXHIBIT NO. DESCRIPTION
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99.1 Shareholder Protection Rights Agreement, dated
November 21, 1997, between XcelleNet, Inc. and
SunTrust Bank, Atlanta, as Rights Agent
99.2 Press Release, dated November 24, 1997
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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 hereunto duly authorized.
XCELLENET, INC.
By: /s/ Jeanne N. Bateman
---------------------------
Jeanne N. Bateman
Vice President - Finance
Dated: November 24, 1997
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EXHIBIT 99.1
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
<PAGE>
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS SHAREHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time,
this "Agreement"), is made and entered into as of November 21, 1997 between
XcelleNet, Inc., a Georgia corporation (the "Company"), and SunTrust Bank,
Atlanta, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
W I T N E S S E T H:
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WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
December 8, 1997 (the "Record Time") and (b) as provided in Section 2.4,
authorized the issuance of one Right in respect of each share of Common Stock
issued after the Record Time and prior to the Separation Time (as hereinafter
defined) and, to the extent provided in Section 5.3, each share of Common Stock
issued after the Separation Time;
WHEREAS, subject to Sections 3.1, 5.1 and 5.10, each Right entitles the
holder thereof, after the Separation Time, to purchase securities of the Company
(or, in certain cases, of certain other entities) pursuant to the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf
of the Company, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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1.1 Certain Definitions. For purposes of this Agreement, the following
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terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of 15%
or more of the outstanding shares of Common Stock; provided, however, that the
term "Acquiring Person" shall not include any Person (i) who is the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock on the date of
this Agreement or who shall become the Beneficial Owner of 15% or more of the
outstanding shares of Common Stock solely as a result of an acquisition by the
Company of shares of Common Stock, until such time hereafter or thereafter as
any such Person shall become the Beneficial Owner (other than by means of a
stock dividend or stock split) of any additional shares of Common Stock;
provided, however, that if a Person who is the Beneficial Owner of 15% or more
of the outstanding shares of Common Stock on the date of this Agreement becomes
the Beneficial Owner of any additional shares of Common Stock, such Person will
not be deemed an Acquiring Person if such Person promptly divests itself of a
sufficient number of shares of Common Stock that such Person Beneficially Owns a
number of shares of Common Stock (after adjustment for stock dividends and stock
splits) no greater than the number of shares of Common Stock Beneficially Owned
by such Person on the date of this Agreement, (ii)
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who is the Beneficial Owner of 15% or more of the outstanding shares of Common
Stock but who acquired Beneficial Ownership of shares of Common Stock without
any plan or intention to seek or effect control of the Company, if such Person
promptly enters into an irrevocable commitment promptly to divest, and
thereafter promptly divests (without exercising or retaining any power,
including voting power, with respect to such shares), sufficient shares of
Common Stock (or securities convertible into, exchangeable into or exercisable
for Common Stock) so that such Person ceases to be the Beneficial Owner of 15%
or more of the outstanding shares of Common Stock or (iii) who Beneficially Owns
shares of Common Stock consisting solely of one or more of (A) shares of Common
Stock Beneficially Owned pursuant to the grant or exercise of an option granted
to such Person by the Company in connection with an agreement to merge with, or
acquire, the Company entered into prior to a Flip-In Date, (B) shares of Common
Stock (or securities convertible into, exchangeable into or exercisable for
Common Stock) Beneficially Owned by such Person or its Affiliates or Associates
at the time of grant of such option or (C) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) acquired by
Affiliates or Associates of such Person after the time of such grant which, in
the aggregate, amount to less than 1% of the outstanding shares of Common Stock.
In addition, the Company, any Subsidiary of the Company and any employee stock
ownership or other employee benefit plan of the Company or a Subsidiary of the
Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as such Rule
is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership" of, and to "Beneficially Own", any securities of which such Person or
any of such Person's Affiliates or Associates is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, as such Rules are in effect on the date of this Agreement as well
as any securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding, 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 the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (i) solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is accepted
for payment or exchange or (ii) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a
public proxy or consent solicitation made to more than ten holders of shares of
a class of stock of the Company registered under Section 12 of the Securities
Exchange Act of 1934 and pursuant to, and in accordance with, the applicable
rules and regulations under the Securities Exchange Act of 1934, except if such
power (or the arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the Securities Exchange Act of 1934 (or any similar provision
of a comparable or successor report). Notwithstanding the foregoing, no officer
or director of the Company shall be deemed to Beneficially Own any securities of
any other Person by virtue of any actions such officer or director takes in such
capacity. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any time, including for purposes of
determining the percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the
provisions of Rule 13d-3(d)(1)(i) under the Securities Exchange Act of 1934.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in Atlanta, Georgia are generally authorized or
obligated by law or executive order to close.
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"close of business" on any given date shall mean 5:00 p.m. Atlanta, Georgia
time on such date (or, if such date is not a Business Day, 5:00 p.m. Atlanta,
Georgia time on the next succeeding Business Day).
"Common Stock" shall mean the shares of Common Stock, par value $0.01 per
share, of the Company.
"Continuing Director" shall mean (i) any member of the Board of Directors
of the Company, while such person is a member of the Board of Directors, who is
not an Acquiring Person or an Affiliate or an Associate of an Acquiring Person
or a representative or nominee of an Acquiring Person or of an Affiliate or an
Associate of an Acquiring Person and who was a member of the Board of Directors
prior to the date of this Agreement; and (ii) any person who subsequently
becomes a member of the Board of Directors who is not an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person or a representative or nominee
of an Acquiring Person or of an Affiliate or an Associate of an Acquiring Person
and who is recommended, approved or elected by a majority of the then-Continuing
Directors.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a holder of
a Right may purchase the securities issuable upon exercise of one whole Right.
Until adjustment thereof in accordance with the terms hereof, the Exercise Price
shall equal $75.00.
"Expiration Time" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time, (iii) November 21, 2007 and (iv) the time of a merger of
the Company into another corporation pursuant to an agreement entered into prior
to a Flip-In Date.
"Flip-In Date" shall mean the tenth business day after any Stock
Acquisition Date or such earlier or later date the Board of Directors, provided
there are Continuing Directors then in office and that a majority of the
Continuing Directors concur, may from time to time fix by resolution adopted
prior to the Flip-In Date that would otherwise have occurred.
"Flip-Over Entity" for purposes of Section 3.2, shall mean (i) in the case
of a Flip-Over Transaction or Event described in clause (i) of the definition
thereof, the Person issuing any securities into which shares of Common Stock are
being converted or exchanged and, if no such securities are being issued, the
other party to such Flip-Over Transaction or Event and (ii) in the case of a
Flip-Over Transaction or Event referred to in clause (ii) of the definition
thereof, the Person receiving the greatest portion of the assets or earning
power being transferred in such Flip-Over Transaction or Event, provided in all
cases if such Person is a Subsidiary of a corporation, the parent corporation
shall be the Flip-Over Entity.
"Flip-Over Stock" shall mean the capital stock (or similar equity interest)
with the greatest voting power in respect of the election of directors (or other
persons similarly responsible for direction of the business and affairs) of the
Flip-Over Entity.
"Flip-Over Transaction or Event" shall mean a transaction or series of
transactions after a Flip-In Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share
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exchange with any other Person if, at the time of the consolidation, merger or
share exchange or at the time the Company enters into any agreement with respect
to any such consolidation, merger or share exchange, the Acquiring Person
Controls the Board of Directors of the Company and either (A) any term of or
arrangement concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of the Common
Stock or (B) the Person with whom the transaction or series of transactions
occurs is the Acquiring Person or an Affiliate or Associate of the Acquiring
Person or (ii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer) assets (A) aggregating more
than 50% of the assets (measured by either book value or fair market value) or
(B) generating more than 50% of the operating income or cash flow, of the
Company and its Subsidiaries (taken as a whole) to any Person (other than the
Company or one or more of its wholly owned Subsidiaries) or to two or more such
Persons which are Affiliates or Associates or otherwise acting in concert, if,
at the time of the entry by the Company (or any such Subsidiary) into an
agreement with respect to such sale or transfer of assets, the Acquiring Person
Controls the Board of Directors of the Company. An Acquiring Person shall be
deemed to "Control" the Company's Board of Directors when, following a Flip-In
Date, the persons who were directors of the Company before the Flip-In Date
shall cease to constitute a majority of the Company's Board of Directors.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on
any date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, 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, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by The Nasdaq Stock Market, Inc.'s Nasdaq
National Market or such other system then in use, or, if on any such date the
securities are not listed or admitted to trading on any national securities
exchange or 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
securities selected by the Board of Directors of the Company; provided, however,
that if on any such date the securities are not listed or admitted to trading on
a national securities exchange or traded in the over-the-counter market, the
closing price per share of such securities on such date shall mean the fair
value per share of securities on such date as determined in good faith by the
Board of Directors of the Company, after consultation with a nationally
recognized investment banking firm, and set forth in a certificate delivered to
the Rights Agent.
"Person" shall mean any individual, firm, partnership, association, group
(as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934,
as such Rule is in effect on the date of this Agreement), corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
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"Redemption Price" shall mean an amount equal to one cent ($0.01).
"Redemption Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 5.1 hereof.
"Preferred Stock" shall mean the Series G Junior Participating Preferred
Stock, par value $0.01 per share, of the Company created by the Articles of
Amendment in substantially the form set forth in Exhibit A hereto appropriately
completed.
"Separation Time" shall mean the close of business on the earlier of (i)
the tenth business day (or such later date as the Board of Directors, provided
there are Continuing Directors then in office and that a majority of the
Continuing Directors concur, may from time to time fix by resolution adopted
prior to the Separation Time that would otherwise have occurred) after the date
on which any Person commences a tender or exchange offer which, if consummated,
would result in such Person's becoming an Acquiring Person and (ii) the Flip-In
Date; provided, that if the foregoing results in the Separation Time being prior
to the Record Time, the Separation Time shall be the Record Time and provided
further, that if any tender or exchange offer referred to in clause (i) of this
paragraph is canceled, terminated or otherwise withdrawn prior to the Separation
Time without the purchase of any shares of Common Stock pursuant thereto, such
offer shall be deemed, for purposes of this paragraph, never to have been made.
"Stock Acquisition Date" shall mean the first date of public announcement
by the Company (by any means) that an Acquiring Person has become such.
"Subsidiary" of any specified Person shall mean any corporation or other
entity of which a majority of the voting power of the equity securities or a
majority of the equity interests is Beneficially Owned, directly or indirectly,
by such Person.
"Trading Day," when used with respect to any securities, shall mean a day
on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the New
York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a day on which The Nasdaq Stock
Market, Inc.'s National Market or such other system then in use, or, if such
securities are not listed or admitted to trading on any national securities
exchange or quoted on any such system, a Business Day.
ARTICLE II
THE RIGHTS
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2.1 Summary of Rights. As soon as practicable after the Record Time, the
-----------------
Company will mail a letter summarizing the terms of the Rights to each holder of
record of Common Stock as of the Record Time, at such holder's address as shown
by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common
-----------------------------------
Stock issued after the Record Time but prior to the Separation Time shall
evidence, in addition to the Common Stock represented by such certificate, one
Right for each share of Common Stock represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
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"Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles
the holder hereof to certain Rights as set forth in a Rights
Agreement, dated as of November 21, 1997 (as such may be amended
from time to time, the "Rights Agreement"), between XcelleNet, Inc.
(the "Company") and SunTrust Bank, Atlanta, as Rights Agent, the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may become exercisable for
securities or assets of the Company or of another entity, may be
exchanged for shares of Common Stock or other securities or assets
of the Company, may expire, may become void (if they are
"Beneficially Owned" by an "Acquiring Person" or an Affiliate or
Associate thereof, as such terms are defined in the Rights Agreement,
or by any transferee of any of the foregoing) or may be evidenced
by separate certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing of
a copy of the Rights Agreement to the holder of this certificate
without charge promptly after the receipt of a written request
therefor."
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence, in addition to the Common Stock represented
by such certificate, one Right for each share of Common Stock evidenced thereby
notwithstanding the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections
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3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Time and prior to the
Expiration Time, to purchase, for the Exercise Price, one one-hundredth
(1/100th) of a share of Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii) each
Right will be evidenced by the certificate that evidences the share of Common
Stock with which it is associated and will be transferable only together with,
and will be transferred only by a transfer of, such associated share of Common
Stock, and the surrender for transfer of any certificates representing
outstanding Common Stock will also constitute the surrender for transfer of the
Rights associated with the Common Stock represented by such certificate.
(c) Subject to this Section 2.3 and to Sections 3.1, 5.1 and 5.10, after
the Separation Time and prior to the Expiration Time, the Rights (i) may be
exercised and (ii) may be transferred independently of shares of Common Stock.
Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than any
Person whose Rights have become void pursuant to Section 3.1(b)), at such
holder's address as shown by the records of the Company (the Company hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a Rights Certificate (as defined below) and (y) a disclosure
statement describing the Rights.
(d) Subject to Sections 3.1, 5.1 and 5.10, Rights may be exercised on any
Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent and the address set forth in Section 5.9 hereof
the Rights Certificate evidencing such Rights with an Election to Exercise (an
"Election to Exercise") substantially in the form attached to the Rights
Certificate duly completed, accompanied by payment in cash, or by certified or
official bank check or money order payable to the order of the Company, of a sum
equal to the Exercise Price multiplied by the number of Rights being exercised
and a sum sufficient to cover any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates
-6-
<PAGE>
for shares or depositary receipts (or both) in a name other than that of the
holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d), and subject to Sections
3.1, 5.1 and 5.10, the Rights Agent will thereupon promptly (i)(A) requisition
from a transfer agent stock certificates evidencing such number of shares or
other securities to be purchased (the Company hereby irrevocably authorizing its
transfer agents to comply with all such requisitions) and (B) if the Company
elects pursuant to Section 5.5 not to issue certificates representing fractional
shares, requisition from the depositary selected by the Company depositary
receipts representing the fractional shares to be purchased or requisition from
the Company the amount of cash to be paid in lieu of fractional shares in
accordance with Section 5.5 and (ii) after receipt of such certificates,
depositary receipts and/or cash, deliver the same to or upon the order of the
registered holder of such Rights Certificate, registered (in the case of
certificates or depositary receipts) in such name or names as may be designated
by such holder. In the event that the Company elects pursuant to Section 3.1(e)
to issue other securities and/or assets of the Company upon exercise of the
Rights, the Company will make all arrangements necessary so that such other
securities and/or assets of the Company are available for distribution by the
Rights Agent, if and when appropriate.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such action
as may be necessary to ensure that all shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized, executed, issued
and delivered and fully paid and nonassessable; (ii) take all such action as may
be necessary to comply with any applicable requirements of the Securities Act of
1933 or the Securities Exchange Act of 1934, and the rules and regulations
thereunder, and any other applicable law, rule or regulation, in connection with
the issuance of any shares upon exercise of Rights; and (iii) pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Rights
Certificates or of any shares issued upon the exercise of Rights, provided that
the Company shall not be required to pay any transfer tax or charge which may be
payable in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for shares in a
name other than that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the
-----------------------------------------------
Company shall at any time after the Record Time and prior to the Separation Time
(i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, then (x) the Exercise
Price in effect after such adjustment will be equal to the Exercise Price in
effect immediately prior to such adjustment divided by the number of shares of
Common Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will become that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be distributed among the shares of
Common Stock with respect to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will have
exactly one Right associated with it. Each adjustment made pursuant to this
paragraph shall be made as of the payment or effective date for the applicable
dividend, subdivision or combination.
-7-
<PAGE>
In the event the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share. To the
extent provided in Section 5.3, Rights shall be issued by the Company in respect
of shares of Common Stock that are issued or sold by the Company after the
Separation Time.
(b) In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors, in their sole discretion, may deem
to be appropriate under the circumstances in order to adequately protect the
interests of the holders of Rights generally, and the Company and the Rights
Agent shall amend this Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this Section
2.4 shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein and shall not be deemed to have
knowledge of any such adjustment unless and until it shall have received such a
certificate.
Rights Certificates shall represent the right to purchase the securities
purchasable under the terms of this Agreement, including any adjustment or
change in the securities purchasable upon exercise of the Rights, even though
such certificates may continue to express the right to purchase the securities
purchasable at the time of issuance of the initial Rights Certificates.
2.5 Date on Which Exercise is Effective. Each person in whose name any
-----------------------------------
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Exercise Price for such Rights (and any
applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; provided, however, that if the date of such surrender and
payment is a date upon which the applicable stock transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the applicable stock transfer books of the Company are open.
2.6 Form, Execution, Authentication, Delivery and Dating of Rights
--------------------------------------------------------------
Certificates. (a) Rights Certificates shall be in substantially the form of
- ------------
Exhibit B hereto appropriately completed, representing the number of Rights held
by such holder at the Separation Time and having 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 law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any national
securities exchange or quotation system on which the Rights may from time to
time be listed or traded, or to conform to usage ("Rights Certificate").
------------------
-8-
<PAGE>
(b) The Rights Certificates shall be executed on behalf of the Company by
its President or its Chairman of the Board and Chief Executive Officer, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
(c) Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
(d) Promptly after the Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company to the Rights Agent for countersignature, and, subject to Section
3.1(b), an authorized signatory of the Rights Agent shall manually countersign
and deliver such Rights Certificates to the holders of the Rights pursuant to
Section 2.3(c) hereof. No Rights Certificate shall be valid for any purpose
unless manually countersigned by the Rights Agent.
(e) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
---------------------------------------------------
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Company and registering Rights and
transfers of Rights after the Separation Time as herein provided. In the event
that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent
will have the right to examine the Rights Register at all reasonable times after
the Separation Time.
(b) After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of this Section 2.7(b) and Section 2.7(c), the
Company will execute and the Rights Agent will countersign and deliver, in the
name of the holder or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights Certificate so
surrendered; provided, however, that the Company shall not be required to
register the transfer or exchange of any Rights after such Rights have become
void under Section 3.1(b), been exchanged under Section 3.1(c) or been redeemed
under Section 5.1.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. Neither the Rights Agent not the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificates until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request. As a
condition to the issuance of any new Rights Certificate under this Section 2.7,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
-9-
<PAGE>
(d) Except as otherwise provided in Section 3.1(b), all Rights issued upon
any registration of transfer or exchange of Rights Certificates shall be the
valid obligations of the Company, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any
---------------------------------------------------------
mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the Company
shall execute and the Rights Agent shall countersign and deliver in exchange
therefor a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior
to the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity as
may be required by them to save each of them and any of their agents harmless,
then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the absence of notice to
the Company or the Rights Agent that such Rights Certificate has been acquired
by a bona fide purchaser, the Company shall execute and upon its request the
Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost
or stolen Rights Certificate, a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.8, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and, subject to Section 3.1(b), shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly
issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
---------------------
Certificate (or, prior to the Separation Time, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the person in whose
name such Rights Certificate (or, prior to the Separation Time, such Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
-----------------------------------------
surrendered upon exercise or for registration of transfer or exchange shall, if
surrendered to any person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly canceled by the Rights Agent.
The Company may at any time deliver to the Rights Agent for cancellation any
Rights Certificates previously countersigned and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Rights Certificates
so delivered shall be promptly canceled by the Rights Agent. No Rights
Certificates shall be countersigned in lieu of or in exchange for any Rights
Certificates canceled as
-10-
<PAGE>
provided in this Section 2.10, except as expressly permitted by this Agreement.
The Rights Agent shall return all canceled Rights Certificates to the Company.
2.11 Agreement of Rights Holders. Every holder of a Right, by accepting
---------------------------
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in Section 3.1(b), become void;
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof; and
(f) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of the Rights Agent's inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
---------------------------------
3.1 Flip-In. (a) In the event that prior to the Expiration Time a Flip-In
-------
Date shall occur, except as provided in this Section 3.1, each Right shall
constitute the right to purchase from the Company, upon exercise thereof in
accordance with the terms hereof (but subject to Section 5.10), that number of
shares of Common Stock having an aggregate Market Price on the Stock Acquisition
Date equal to twice the Exercise Price for an amount in cash equal to the
Exercise Price (such right to be appropriately adjusted in order to protect the
interests of the holders of Rights generally in the event that on or after such
Stock Acquisition Date an event of a type analogous to any of the events
described in Section 2.4(a) or (b) shall have occurred with respect to the
Common Stock).
-11-
<PAGE>
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete the certification set forth at the end of the form of assignment or
notice of election to exercise and provide such additional evidence of the
identity of the Beneficial Owner and its Affiliates and Associates (or former
Beneficial Owners and their Affiliates and Associates) as the Company shall
reasonably request, then the Company shall be entitled conclusively to deem the
Beneficial Owner thereof to be an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced thereby to be void and not transferable or exercisable.
(c) The Company, upon the action of the Board of Directors, provided there
are Continuing Directors then in office and that a majority of the Continuing
Directors concur, may, at its option, at any time after a Flip-In Date and prior
to the time that an Acquiring Person becomes the Beneficial owner of more than
50% of the outstanding shares of Common Stock, elect to exchange all (but not
less than all) the then-outstanding Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 3.1(b)) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted in order to protect the interests of holders of Rights
generally in the event that after the Separation Time an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Common Stock (such exchange ratio, as adjusted from
time to time, being hereinafter referred to as the "Exchange Ratio").
Immediately upon the action of the Board of Directors electing to exchange
the Rights, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right (other than Rights that have
become void pursuant to Section 3.1(b)) will thereafter represent only the right
to receive a number of shares of Common Stock equal to the Exchange Ratio.
Promptly after the action of the Board of Directors electing to exchange the
Rights, the Company shall give notice thereof (specifying the steps to be taken
to receive shares of Common Stock in exchange for Rights) to the Rights Agent
and the holders of the Rights (other than Rights that have become void pursuant
to Section 3.1(b)) outstanding immediately prior thereto by mailing such notice
in accordance with Section 5.9.
Each Person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this Section 3.1(c) or Section 3.1(d) shall for
all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of any applicable taxes and other governmental charges payable by the holder was
made; provided, however, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
Certificate shall be dated, the next succeeding Business Day on which the stock
transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section 3.1(a) or
(c) to issue shares of Common Stock upon exercise of or in exchange for Rights,
the Company, at its option, may substitute therefor shares of Preferred Stock,
at a ratio of one one-hundredth (1/100th) of a share of Preferred Stock for each
share of Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock or Preferred Stock of the Company
to permit the exercise or exchange in full of
-12-
<PAGE>
the Rights in accordance with Section 3.1(a) or (c), the Company shall either
(i) call a meeting of shareholders seeking approval to cause sufficient
additional shares to be authorized (provided that if such approval is not
obtained the Company will take the action specified in clause (ii) of this
sentence) or (ii) take such action as shall be necessary to ensure and provide,
to the extent permitted by applicable law and any agreements or instruments in
effect on the Stock Acquisition Date to which it is a party, that each Right
shall thereafter constitute the right to receive, (x) at the Company's option,
either (A) in return for the Exercise Price, cash, debt or equity securities or
other assets (or a combination thereof) having a fair value equal to twice the
Exercise Price, or (B) without payment of consideration (except as otherwise
required by applicable law), cash, debt or equity securities or other assets (or
a combination thereof) having a fair value equal to the Exercise Price, or (y)
if the Board of Directors elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-In Date times the Exchange Ratio in effect on the
Flip-In Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the Company, after consultation with a
nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
---------
enter into any agreement with respect to, consummate or permit to occur any
Flip-Over Transaction or Event unless and until it shall have entered into a
supplemental agreement with the Flip-Over Entity, for the benefit of the
holders of the Rights (other than holders of Rights that have become void
pursuant to Section 3.1(b)), providing that, upon consummation or occurrence of
the Flip-Over Transaction or Event (i) each Right (other than Rights that have
become void pursuant to Section 3.1(b)) shall thereafter constitute the right to
purchase from the Flip-Over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-Over Stock of the Flip-Over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-Over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such Right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally
(other than holders of Rights that have become void pursuant to Section 3.1(b))
in the event that after such date of consummation or occurrence an event of a
type analogous to any of the events described in Section 2.4(a) or (b) shall
have occurred with respect to the Flip-Over Stock) and (ii) the Flip-Over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-Over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this
Section 3.2 shall apply to successive Flip-Over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to Section 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-Over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect
the benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
----------------
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
-------
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company 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
-13-
<PAGE>
Rights Agent, its directors, officers, employees and agents for, and to hold
each of them harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent or such indemnified party, for anything done or omitted to be done by the
Rights Agent in connection with the acceptance and administration of this
Agreement or the exercise or performance of its duties hereunder, including the
costs and expenses of defending against any claim of liability. The indemnity
provided in this Section 4.1(a) shall survive the expiration of the Rights and
the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement or the exercise or performance of its
duties hereunder in reliance upon any certificate for securities purchasable
upon exercise of Rights, Rights Certificate, certificate 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.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
---------------------------------------------------------
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights 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 Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel will 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 advice or
opinion.
-14-
<PAGE>
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the
President or the Chairman of the Board and Chief Executive Officer and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate will 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 will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of
the validity of any provision of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any certificate for
securities purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b) hereof) or any adjustment required under any provision of this
Agreement 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 after receipt of the
certificate contemplated by Section 2.4 describing any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise
of Rights or any Rights or as to whether any securities purchasable upon
exercise of Rights will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the President or the Chairman of the
Board and Chief Executive Officer or any Vice President or the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer of the Company,
and to apply to such persons for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such person, or for any delay
in acting while awaiting 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 Agreement and the date on 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
-15-
<PAGE>
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the 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 shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in Common Stock, 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 will 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 the Rights Agent was not grossly negligent in
the selection and continued employment thereof.
(j) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
(k) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
(l) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
4.4 Change of Rights Agent. The Rights Agent may resign and be discharged
----------------------
from its duties under this Agreement upon 90 days notice (or such lesser notice
as is acceptable to the Company) in writing mailed to the Company and to each
transfer agent of Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. The Company may remove the
Rights Agent upon 30 days notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Stock by registered or certified mail, and to
the holders of the Rights in accordance with Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after 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 any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Company), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of the State of Georgia or any other State of the United States, in good
standing, which is authorized under such laws to exercise the powers of the
Rights Agent contemplated by this Agreement 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
-16-
<PAGE>
capital and surplus of at least $50,000,000 or (b) an Affiliate of a corporation
described in the immediately preceding clause (a). After appointment, the
successor Rights Agent will 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 will file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for
in this Section 4.4, 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.
ARTICLE V
MISCELLANEOUS
-------------
5.1 Redemption. (a) At any time prior to the close of business on the
----------
Flip-In Date, the Company may, upon the action of the Board of Directors,
provided that there are Continuing Directors then in office and that a majority
of the Continuing Directors concur, elect to redeem all (but not less than all)
of the then outstanding Rights at the Redemption Price and the Company, at its
option, may pay the Redemption Price, either in cash or shares of Common Stock
or other securities of the Company deemed by the Board of Directors, in the
exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price.
(b) Immediately upon the action of the Board of Directors electing to
redeem the Rights (or, if the resolution of the Board of Directors electing to
redeem the Rights states that the redemption will not be effective until the
occurrence of a specified future time or event, upon the occurrence of such
future time or event), without any further action and without any notice, the
right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash or securities,
as determined by the Board of Directors. Promptly after the Rights are
redeemed, the Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice in
accordance with Section 5.9.
5.2 Expiration. The Rights and this Agreement shall expire at the
----------
Expiration Time and no Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1 or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement. In addition,
in connection with the issuance or sale of shares of Common Stock by the Company
following the Separation Time and prior to the Redemption Time or Expiration
Time pursuant to the terms of securities convertible or redeemable into shares
of Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of
such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance or sale of such shares of
Common Stock; provided, however, in each case, (i) no such Rights Certificate
shall be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be issued
if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall
-17-
<PAGE>
have no obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 Supplements and Amendments. The Company and the Rights Agent may from
--------------------------
time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) prior to the close of business on the Flip-In Date, in any
respect and (ii) after the close of business on the Flip-In Date, to make any
changes that the Company may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of Rights generally
(other than an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person) or in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be inconsistent with any other provisions
herein or otherwise defective; provided, however, that no such proposed
supplement or amendment to this Agreement pursuant to the foregoing clause (i)
or (ii) shall be effective unless (x) there shall be Continuing Directors and
(y) a majority of such Continuing Directors, at a meeting of Directors duly
called and held, votes in favor of the adoption of such proposed supplement or
amendment. The Rights Agent will duly execute and deliver any supplement or
amendment hereto requested by the Company upon receipt of a certificate from the
Company that such supplement or amendment satisfies the terms of the preceding
sentence. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment that changes the rights and duties of the Rights
Agent under this Agreement shall be effective without the consent of the Rights
Agent.
5.5 Fractional Shares. If the Company elects not to issue certificates
-----------------
representing fractional shares upon exercise or redemption of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depositary receipts
issued pursuant to an appropriate agreement between the Company and a depositary
selected by it, providing that each holder of a depositary receipt shall have
all of the rights, privileges and preferences to which such holder would be
entitled as a beneficial owner of such fractional share, or (b) sell such shares
on behalf of the holders of such Rights and pay to the registered holder of such
Rights the appropriate fraction of price per share received upon such sale.
5.6 Rights of Action. Subject to the terms of this Agreement (including
----------------
Section 3.1(b)), rights of action in respect of this Agreement, other than
rights of action vested solely in the Rights Agent, are vested in the respective
holders of the Rights; and any holder of any Rights, without the consent of the
Rights Agent or of the holder of any other Rights, may, on such holder's own
behalf and for such holder's own benefit and the benefit of other holders of
Rights, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise such holder Rights in the manner provided in such holder's
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and 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.
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as such, of any
-----------------------------------------
Rights shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised or exchanged in
accordance with the provisions hereof.
-18-
<PAGE>
5.8 Notice of Proposed Actions. In case the Company shall propose after
--------------------------
the Separation Time and prior to the Expiration Time (i) to effect or permit
occurrence of any Flip-Over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right, in accordance with Section 5.9
hereof, a notice of such proposed action, which shall specify the date on which
such Flip-Over Transaction or Event, liquidation, dissolution, or winding up is
to take place, and such notice shall be so given at least 20 Business Days prior
to the date of the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Rights to or on
the Company shall be sufficiently given or made if delivered or sent by first-
class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
XcelleNet, Inc.
5 Concourse Parkway
Suite 850
Atlanta, Georgia 30328
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be given
or made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
SunTrust Bank, Atlanta
P.O. Box 4625
Mail Code 258
Atlanta, Georgia 30302
Attention: Department Manager
Notices or demands authorized or required by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.
Failure to give a notice pursuant to the provisions of this Agreement shall
not affect the validity of any action taken hereunder.
5.10 Suspension of Exercisability. To the extent that the Company
----------------------------
determines in good faith that some action will or need be taken pursuant to
Section 2.3(g) or Section 3.1, the Company may suspend the exercisability of the
Rights for ninety (90) days and any additional period that may be reasonable in
order to take such action or comply with such laws. In the event of any such
suspension, the Company shall issue as promptly as practicable a public
announcement stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall
not be required.
-19-
<PAGE>
5.11 Costs of Enforcement. The Company agrees that if the Company or any
--------------------
other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
5.12 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.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any Person other than the Company, the Rights Agent and the
holders of the Rights any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc. The Board
--------------------------------------------------------
of Directors of the Company (with, where specifically provided for herein, the
concurrence of the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein,
the concurrence of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(or, as expressly provided, by the Continuing Directors), in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board of
Directors of the Company or the Continuing Directors to any liability to the
holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
--------------------
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL
-------------
BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF GEORGIA 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.
5.17 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.
5.18 Severability. If any term or provision hereof or the application
------------
thereof to any circumstance shall in any jurisdiction, and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
XCELLENET, INC.
By: /s/ Jeanne N. Bateman
--------------------------
Jeanne N. Bateman
Vice President - Finance
SUNTRUST BANK, ATLANTA
By: /s/ T.J. Donaldson
--------------------------
Name: T.J. Donaldson
Title: Group Vice President
-21-
<PAGE>
EXHIBIT A
---------
ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
XCELLENET, INC.
1.
The name of the corporation is "XcelleNet, Inc."
2.
The articles of incorporation of XcelleNet, Inc. are amended by:
(I) Adding the following sentence to the end of Section 3.3:
The designation of the preferences and other rights of the Series G Junior
Participating Preferred Stock, for which sufficient authorized shares are
available pursuant to Section 10 of each of Exhibits A, B, C and D to the
Company's Amended and Restated Articles of Incorporation as a result of the
conversion of all of the Convertible Preferred Stock, Series A, B, C, D, E
and F, are attached as Exhibit E to these Amended and Restated Articles of
Incorporation.
(II) Adding the attached Exhibit E as Exhibit E to the Company's Amended
and Restated Articles of Incorporation.
3.
The amendment was adopted on November 21, 1997.
4.
The amendment was duly adopted by the board of directors of XcelleNet, Inc.
IN WITNESS WHEREOF, XcelleNet, Inc. has caused these Articles of Amendment
to be executed as of November __, 1997.
XCELLENET, INC.
By:
-----------------------------------
Jeanne N. Bateman
Vice President - Finance
<PAGE>
EXHIBIT A
---------
EXHIBIT E
TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF XCELLENET, INC.
DESIGNATING THE PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF SERIES G JUNIOR
PARTICIPATING PREFERRED STOCK
There is hereby designated, of the authorized but unissued shares of
Preferred Stock of the corporation, a series thereof, and the number of shares,
voting powers, designation, preferences, and relative, participating, optional,
and other special rights, and the qualifications, limitations, and restrictions
thereof, of the shares of such series (in addition to those set forth in the
Amended and Restated Articles of Incorporation, which are applicable to the
Preferred Stock of all series), shall be as follows:
(1) Designation and Number of Shares. The designation of this series
--------------------------------
of Preferred Stock shall be "Series G Junior Participating Preferred Stock"
(hereinafter called "this Series"), to initially consist of 250,000 shares,
which number may from time to time be increased or decreased (but not below the
number then outstanding) by the Board of Directors by filing additional articles
of amendment to the corporation's amended and restated articles of
incorporation. The shares of this Series are sometimes hereinafter referred to
as the "Shares." Shares of this Series may be issued in fractional shares, which
fractional shares shall entitle the holder, in proportion to such holder's
fractional share, to all rights of a holder of a whole share of this Series.
(2) Distributions.
-------------
(a) Distribution Rights. The holders of whole or fractional
-------------------
Shares shall be entitled to receive, when, as, and if declared by the
Board of Directors, subject to restrictions imposed by the Georgia
Business Corporation Code or the Amended and Restated Articles of
Incorporation on distributions to shareholders, and subject to the
rights of the holders of any shares of any series of Preferred Stock
ranking prior and superior to this series with respect to dividends,
(i) on each date that dividends or other distributions (other than
dividends or distributions payable in Common Stock of the corporation)
are payable on or in respect of Common Stock comprising part of the
Reference Package (as defined below), in an amount per whole share of
this Series equal to the aggregate amount of dividends or other
distributions (other than dividends or distributions payable in Common
Stock of the corporation) that would be payable on such date to a
holder of the Reference Package and (ii) on the last day of March,
June, September and December in each year, in an amount per whole
share of this Series equal to the excess (if any) of $1.00 over the
aggregate dividends paid per whole share of this Series during the
three-month period ending on such last day. Each such dividend shall
be paid to the holders of record of shares of this Series on the date,
not exceeding sixty days preceding such dividend or distribution
payment date, fixed
<PAGE>
for that purpose by the Board of Directors in advance of payment of
each particular dividend or distribution. Dividends on each full and
each fractional share of this Series shall be cumulative from the date
such full or fractional share is originally issued; provided that any
such full or fractional share originally issued after a dividend
record date and on or prior to the dividend payment date to which such
record date relates shall not be entitled to receive the dividend
payable on such dividend payment date or any amount in respect of the
period from such original issuance to such dividend payment date. The
term "Reference Package" shall initially mean 100 shares of Common
Stock, par value $0.01 per share ("Common Stock"), of the corporation.
In the event the corporation shall at any time (i) declare or pay a
dividend on any Common Stock payable in Common Stock, (ii) subdivide
any Common Stock or (iii) combine any Common Stock into a smaller
number of shares, then and in each such case the Reference Package
after such event shall be the Common Stock that a holder of the
Reference Package immediately prior to such event would hold
thereafter as a result thereof. Holders of shares of this Series shall
not be entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided on
this Series.
So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking
junior to this Series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other stock ranking
junior to this Series as to dividends or upon liquidation, nor shall
any Common Stock nor any other stock of the corporation ranking junior
to or on a parity with this Series as to dividends or upon liquidation
be redeemed, purchased or otherwise acquired for any consideration (or
any moneys to be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the corporation (except
by conversion into or exchange for stock of the corporation ranking
junior to this Series as to dividends and upon liquidation), unless,
in each case, the full cumulative dividends (including the dividend to
be due upon payment of such dividend, distribution, redemption,
purchase or other acquisition) on all outstanding shares of this
Series shall have been, or shall contemporaneously be, paid.
(b) Shares Purchased by Corporation. Shares of this Series
-------------------------------
purchased by the corporation shall be canceled and shall revert to
authorized but unissued shares of Preferred Stock undesignated as to
series, which shares may thereafter be provided for and designated by
the Board of Directors pursuant to Article III of the Amended and
Restated Articles of Incorporation as part of a series of Preferred
Stock to the same extent as if such shares had not previously been
provided for and designated as part of a series of Preferred Stock;
but such shares shall not be reissued as shares of this Series.
(3) Rights of Redemption. The shares of this Series shall not be
--------------------
redeemable.
-2-
<PAGE>
(4) Rights on Liquidation, Dissolution, or Winding Up.
--------------------------------------------------
(a) In the event of any liquidation, dissolution or winding up of
the affairs of the corporation, whether voluntary or involuntary, the
holders of full and fractional shares of this Series shall be
entitled, before any distribution or payment is made on any date to
the holders of the Common Stock or any other stock of the corporation
ranking junior to this Series upon liquidation, to be paid in full an
amount per whole share of this Series equal to the greater of (A)
$1.00 or (B) the aggregate amount distributed or to be distributed
prior to such date in connection with such liquidation, dissolution or
winding up to a holder of the Reference Package (such greater amount
being hereinafter referred to as the "Liquidation Preference"),
together with accrued dividends to such distribution or payment date,
whether or not earned or declared. If such payment shall have been
made in full to all holders of shares of this Series, the holders of
shares of this Series as such shall have no right or claim to any of
the remaining assets of the corporation.
(b) In the event the assets of the corporation available for
distribution to the holders of shares of this Series upon any
liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to paragraph (a)
above, no such distribution shall be made on account of any shares of
any other class or series of Preferred Stock ranking on a parity with
the shares of this Series upon such liquidation, dissolution or
winding up unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably in proportion to the
full distributable amounts for which holders of all such parity shares
are respectively entitled upon such liquidation, dissolution or
winding up.
(c) Upon the liquidation, dissolution or winding up of the
corporation, the holders of shares of this Series then outstanding
shall be entitled to be paid out of assets of the corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to paragraph (a) above before any
payment shall be made to the holders of Common Stock or any other
stock of the corporation ranking junior upon liquidation to this
Series.
(d) For purposes of this Section (4), the consolidation or merger
of, or binding share exchange by, the corporation with any other
corporation shall not be deemed to constitute a liquidation,
dissolution or winding up of the corporation.
(5) Merger, Consolidation, Share Exchange. In the event of any
-------------------------------------
merger, consolidation, reclassification or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of this Series
shall at the same time be similarly exchanged or changed in an amount per whole
share equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, that
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<PAGE>
a holder of the Reference Package would be entitled to receive as a
result of such transaction.
(6) Voting Rights. In addition to any other vote or consent of
-------------
shareholders required by law or by the Amended and Restated Articles
of Incorporation, as amended, of the corporation, each whole share of
this Series shall, on any matter, vote as a class with any other
capital stock comprising part of the Reference Package and voting on
such matter and shall have the number of votes thereon that a holder
of the Reference Package would have.
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<PAGE>
EXHIBIT B
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- [NUMBER] Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING WILL
BE VOID.
RIGHTS CERTIFICATE
XCELLENET, INC.
This certifies that _______________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement, dated as of November
21, 1997 (as amended from time to time, the "Rights Agreement"), between
XcelleNet, Inc., a Georgia corporation (the "Company"), and SunTrust Bank,
Atlanta, as Rights Agent (the "Rights Agent," which term shall include any
successor Rights Agent under the Rights Agreement), to purchase from the Company
at any time after the Separation Time (as such term is defined in the Rights
Agreement) and prior to the close of business on November 21, 2007, one one-
hundredth (1/100th) of a fully paid share of Series G Junior Participating
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of the
Company (subject to adjustment as provided in the Rights Agreement) at the
Exercise Price referred to below, upon presentation and surrender of this Rights
Certificate with the Form of Election to Exercise duly executed at the principal
office of the Rights Agent. The Exercise Price shall initially be $75.00 per
Right and shall be subject to adjustment in certain events as provided in the
Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Preferred Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced by
this Certificate may be (a) redeemed by the Company under certain circumstances,
at its option, at a redemption price of $0.01 per Right, or (b) exchanged by the
Company under certain circumstances, at its option, for one share of Common
Stock or one one-hundredth (1/100th) of a share of Preferred Stock per Right
(or, in certain cases,
<PAGE>
other securities or assets of the Company), subject in each case to adjustment
in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Date:______________
ATTEST: XCELLENET, INC.
________________________________ By:_____________________________
Secretary Title:__________________________
Countersigned:
SUNTRUST BANK, ATLANTA
By:_____________________________
Authorized Signature
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<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated:________________, 19___.
Signature Guaranteed: _____________________________________________
Signature
(Signature must correspond to name as written
upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934.
________________________________________________________________________________
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights
and shares of Common Stock, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
_____________________________________________
Signature
________________________________________________________________________________
NOTICE
------
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
<PAGE>
[TO BE ATTACHED TO EACH RIGHTS CERTIFICATE]
FORM OF ELECTION TO EXERCISE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: XCELLENET, INC.
The undersigned hereby irrevocably elects to exercise _________________
whole Rights represented by the attached Rights Certificate to purchase the
shares of Series G Junior Participating Preferred Stock issuable upon the
exercise of such Rights and requests that certificates for such shares be issued
in the name of:
_________________________________
Address:
---------------------------------
Social Security or other Taxpayer
Identification Number:
---------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
_________________________________
Address:
---------------------------------
Social Security or other Taxpayer
Identification Number:
---------------------------------
Dated:_______________, 19___
Signature Guaranteed: _____________________________________________
Signature
(Signature must correspond to name as written
upon the face of this Rights Certificate in
every particular, without alteration or
enlargement or any change whatsoever)
Signatures must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature medallion program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934.
<PAGE>
________________________________________________________________________________
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights
and shares of Common Stock, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
_____________________________________________
Signature
________________________________________________________________________________
NOTICE
------
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
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<PAGE>
EXHIBIT 99.2
FORM OF PRESS RELEASE
<PAGE>
Contact: Deborah Cox Jeanne N. Bateman
XcelleNet, Inc. XcelleNet, Inc.
770-804-2295 770-353-2860
[email protected] [email protected]
XCELLENET ADOPTS SHAREHOLDER RIGHTS PLAN
ATLANTA (November 24, 1997) - XcelleNet/(R)/, Inc. (Nasdaq/NM:XNET) today
announced that its Board of Directors has adopted a shareholder protection
rights plan designed to enhance the ability of all of the company's shareholders
to realize the long-term value of their investment.
The rights plan provides that one preferred stock purchase right will be
distributed as a dividend on each outstanding share of common stock of the
company held of record as of the close of business on December 8, 1997.
Dennis M. Crumpler, Chairman of the Board and Chief Executive Officer of
XcelleNet, said, "The rights plan does not prevent an acquisition of the
company, but it is designed to protect shareholders' interests by encouraging
anyone seeking control of the company to negotiate with its Board of Directors."
A spokesperson also noted that such plans have been adopted by a significant
number of public corporations in recent years. The Board's action came after
consulting with legal and other advisors.
Highlights of the Plan
Each right will entitle holders of a share of common stock to purchase one
one-hundredth of a share of a new series of junior participating preferred stock
of the company at an exercise price initially equal to $75.00. Each such
fractional share of preferred stock is equivalent in voting power to one share
of the company's common stock and would be paid dividends at least equal to the
dividends paid on each share of common stock, if any. The rights will be
exercisable only if a person or group acquires beneficial ownership of 15% or
more of the company's common stock, or announces a tender or exchange offer upon
consummation of which such person or group would beneficially own 15% or more of
the company's common stock. The rights are not triggered by present beneficial
holders of 15% or more of the common stock unless they subsequently increase
their beneficial holdings.
If a person or group becomes a beneficial owner of 15% or more of the
company's common stock, then each right not owned by the person or group
entitles its holder to purchase, for an amount of cash equal to the right's
then-current exercise price, shares of the company's common stock (or in certain
circumstances as determined by the company, a combination of cash, property,
shares of common stock or other securities) having a value equal to twice the
right's exercise price. (For example, at a market price of $13 per
<PAGE>
share and a then-current exercise price of $75.00, each right would entitle its
holder to purchase approximately eleven and one-half shares of common stock.)
In addition, under certain circumstances if the company is involved in a
merger or business combination transaction with another person in which the
company is not the surviving corporation, each right that has not previously
been exercised will entitle its holder to purchase, at the right's then-current
exercise price, securities of such other person having a value of twice the
right's exercise price.
The company may redeem the rights at a price of $.01 per right at any time
until the close of business on the tenth business day following an announcement
by the company that a person or group has become the beneficial owner of 15% or
more of the company's common stock.
Details of the shareholder protection rights agreement are outlined in a
letter that will be mailed to all shareholders of record at the close of
business on December 8, 1997.
About XcelleNet
XcelleNet, Inc., Atlanta, Georgia, is the leading provider of systems management
solutions for remote users. Its RemoteWare/(R)/ brand of products enables
systems administrators to more effectively manage remote PCs, thereby reducing
total cost of ownership (TCO) and maximizing end user productivity. XcelleNet's
systems management tools, optimized for users who intermittently dial into
enterprise systems, address five key areas: software distribution; asset and
configuration management; diagnostics and recovery; event and alarm management,
and content and applications management. XcelleNet's products have been
licensed to approximately 1,650 organizations supporting more than 600,000 users
in a variety of industries. Further information on XcelleNet is available on
the World Wide Web at http://www.xcellenet.com.
###
Editor's Note: For further information on XcelleNet, visit the online press
room at
http://www.xcellenet.com/press
XcelleNet and RemoteWare are registered trademarks of XcelleNet, Inc.
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