EXHIBIT 1
AMENDMENT NO. 3 TO THE
RIGHTS AGREEMENT
OF PICTURETEL CORPORATION
This Amendment No. 3, dated as of May 24, 2001, amends the Rights
Agreement dated as of March 25, 1992 (as amended to date, the "RIGHTS
AGREEMENT"), between PictureTel Corporation, a Delaware corporation (the
"COMPANY") and Fleet National Bank (f/k/a BankBoston, N.A., f/k/a First National
Bank of Boston), as Rights Agent. Capitalized terms which are used herein
without definition and which are defined in the Rights Agreement shall have the
respective meanings assigned to such terms in the Rights Agreement.
W I T N E S S E T H:
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WHEREAS, on March 25, 1992, the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, shares of the Company's Junior Preference
Stock;
WHEREAS, on March 25, 1992, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding on the Dividend Record Date and
authorized the issuance of one Right (subject to certain adjustments) for each
share of Common Stock of the Company issued between the Dividend Record Date and
the Distribution Date;
WHEREAS, the Distribution Date has not occurred; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Continuing
Directors have approved an amendment of certain provisions of the Rights
Agreement as set forth below.
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(v) is hereby deleted in its entirety and replaced
with the following:
"(v') "Exempt Person" shall mean:
(i) Intel Corporation ("Intel"), so long as such
Person and its Affiliates and Associates does
not become the Beneficial Owner of greater than
that number of shares of Common Stock equal to
the sum of: (A) the number of shares of Common
Stock issuable upon conversion of the Series A
Preferred Stock of the Company purchased by
Intel in connection with that certain Stock
Purchase
and Investors Rights Agreement, dated as of
January 18, 1999 ("1999 Stock Agreement"), by
and among this Company and Intel; PLUS (B) the
number of shares of Common Stock issuable upon
conversion of the Series B Preference Stock of
the Company ("Series B Stock") purchased by
Intel in connection with that certain Stock
Purchase and Investors Rights Agreement, dated
as of July 13, 2000 ("2000 Stock Agreement"), by
and among this Company, Intel, the State of
Wisconsin Investment Board ("SWIB"), Xxxxxxx,
Xxxxx & Co., and certain other investors listed
on Schedule 1 thereto; PLUS (C) the number of
additional shares of Common Stock which may be
purchased by Intel pursuant to the 1999 Stock
Agreement and the 2000 Stock Agreement, each
such number of shares as adjusted for stock
splits;
(ii) SWIB, so long as such Person and its Affiliates
and Associates does not become the Beneficial
Owner of greater than that number of shares of
Common Stock equal to the sum of: (A) 3,616,900
shares of Common Stock, PLUS (B) the number of
shares of Common Stock issuable upon conversion
of the Series B Stock purchased by SWIB in
connection with the 2000 Stock Agreement; PLUS
(C) such number of additional shares of Common
Stock which may be purchased by SWIB and which,
when added to the number of shares of Common
Stock in Clauses (A) and (B) hereunder, shall
result in the Beneficial Ownership at the time
of less than 20% of the Common Stock; PLUS (D)
the number of additional shares of Common Stock
which may be purchased by SWIB pursuant to the
2000 Stock Agreement, each such number of shares
as adjusted for stock splits; PROVIDED, HOWEVER,
that at no time shall such Person, its
Affiliates and Associates become the Beneficial
Owner of 20% or more of Common Stock of the
Company; and
(iii) Polycom, Inc., Pharaoh Acquisition Corp. and any
of their Affiliates solely to the extent that
any such Person becomes the Beneficial Owner of
15% of more of the shares of Common Stock then
outstanding by reason of the execution of, or
the consummation of the transactions
contemplated by, the Agreement and Plan of
Merger dated as of May 24, 2001, by and among
the Company, Polycom, Inc. and Pharaoh
Acquisition Corp.
(the "Merger Agreement") or Company Tender and
Voting Agreements (as defined in the Merger
Agreement), including, without limitation, the
commencement or consummation of the Offer (as
defined in the Merger Agreement), the
consummation of the Merger (as defined in the
Merger Agreement), or any announcement relating
thereo, PROVIDED that this Section 1(v)(iii)
shall be of no further force and effect at and
after such time as the Merger Agreement is
terminated."
2. AMENDMENT TO SECTION 7(a). Section 7(a) of the Rights Agreement is
hereby amended and restated in its entirety as follows:
(a) Except as otherwise provided herein, the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby in
whole or in part at any time from and after the Distribution Date and
at or prior to the earliest to occur of: (i) the earlier of (A) Close
of Business on March 25, 2002, or (B) the Appointment Date (as such
term is defined in the Merger Agreement) in accordance with the terms
of the Merger Agreement (the earlier being the "Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which the Rights
are exchanged as provided in Section 24 hereof (the "Exchange Date").
At the earliest to occur of the Expiration Date, the Redemption Date or
the Exchange Date, all Rights will be extinguished and all Rights
Certificates shall become null and void. To exercise Rights, the
registered holder of the Rights Certificates evidencing such Rights
shall surrender such Rights Certificate, with the form of election to
purchase on the reverse side thereof and the certificate contained
therein duly executed, after the Distribution Date, to the Rights Agent
at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as
the Rights Agent may reasonably request, together with payment in cash,
only if by electronic wire transfer, or by certified check or bank
check, of the Purchase Price with respect to the total number of
one-one hundredths of a share of Preference Stock (or, after a Common
Stock Event, Common Stock and/or Other Consideration) as to which the
Rights are exercised (which payment shall include any additional amount
payable by such Person in accordance with Section 9(d) hereof). The
Rights Agent shall promptly deliver to the Company all payments of the
Purchase Price received in respect of Rights Certificates accepted for
exercise.
3. A new Section 35 is hereby added to add the following:
"Notwithstanding any provision to the contrary in this
Agreement, no holder of any Right shall be entitled to exercise such
Right under or be entitled to any Right pursuant to, any sections of
this Agreement, in any case by reason of the execution of the Merger
Agreement or Company Tender and Voting Agreements or consummation of
any of the transactions contemplated thereby, including, without
limitation, the commencement or
consummation of the Offer , the consummation of the Merger, or any
announcement relating thereto; PROVIDED that this Section 35 shall be
of no further force and effect at and after such time as the Merger
Agreement is terminated."
4. EFFECT OF AMENDMENT. Except as expressly amended hereby, the Rights
Agreement, as amended to the date hereof, shall remain in full force and effect.
5. GOVERNING LAW. This Agreement shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of said state applicable to
contracts made and to be performed entirely within said state.
6. 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.
[THE REMAINDER OF THE PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
to the Rights Agreement to be duly executed as of the day and year first above
written.
PICTURETEL CORPORATION
By: /s/ Xxxxxx Xxxx
Title: Chief Executive Officer and Chairman of
the Board of Directors
Attest:
By: /s/ Xxxxxxxx Xxxxx
FLEET NATIONAL BANK
By: /s/ Xxxxx Xxxxxx-Xxxx
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Title: Managing Director
Attest:
By: /s/ Xxxxxxxx X. XxXxxx
