SECOND AMENDED AND RESTATED LIMITED WAIVER AGREEMENT
THIS SECOND AMENDED AND RESTATED LIMITED WAIVER AGREEMENT (the
"Agreement") is made and entered into as of the 29th day of March, 1999, by
and between Software Spectrum, Inc., a Texas corporation (the "Company") and
Private Capital Management, Inc., a Florida corporation (the "Shareholder").
Terms used but not otherwise defined herein shall have the meanings assigned
them in the Rights Agreement, as defined in such agreement as referenced
below.
WITNESSETH:
WHEREAS, the Company and ChaseMellon Shareholder Services, L.L.C.,
(the "Rights Agent") (as successor to Keycorp Shareholder Services, Inc.),
are parties to that certain Rights Agreement, dated as of December 13, 1996
(the "Rights Agreement"), which provides that, upon the event of any person
or entity becoming an "Acquiring Person" as defined therein (an "Event"),
shareholders of the Company may exercise certain Rights, defined therein to
be the rights to purchase from the Company certain shares of the preferred
stock of the Company having the rights and preferences set forth in the
Statement of Designation attached as Exhibit A to the Rights Agreement;
WHEREAS, the Company and the Shareholder mutually agreed that it was
in the best interest of each of the Company and the Shareholder that the
Company effect a certain 1997 Stock Repurchase Plan (the "1997 Plan")
pursuant to the terms of which the Company from time to time during the
operation of the 1997 Plan repurchased in the open market an amount equal to
$2.5 Million, shares of its common stock, par value $.01 (the "Common Stock")
(the "1997 Plan Repurchases");
WHEREAS, in order to preclude the 1997 Plan Repurchases from
resulting in the Shareholder owning a percentage of the Company's stock that
would result in an Event (the "Shareholder Event"), which Shareholder Event,
upon agreement of the Company and the Shareholder, would have had undesirable
consequences for each of the Company and the Shareholder, the Company and the
Shareholder executed and delivered that certain Limited Waiver Agreement
dated as of July 31, 1997 (the "Waiver Agreement");
WHEREAS, following the completion of the 1997 Plan Repurchases, the
Company and the Shareholder mutually agreed that it was in the best interest
of each of the Company and the Shareholder that the Company effect a certain
1998 Stock Repurchase Plan (the "1998 Plan") pursuant to the terms of which
the Company from time to time during the operation of the 1998 Plan
repurchased, for an additional amount not to exceed in the aggregate $2.5
Million, in the open market, a certain number of shares of its Common Stock
(the "1998 Repurchases");
WHEREAS, in order to preclude the 1998 Repurchases from resulting in
the Shareholder owning a percentage of the Company's stock that would result
in a Shareholder Event, the
Company and the Shareholder executed and delivered that certain Amended and
Restated Limited Waiver Agreement dated as of July 7, 1998 (the "Amended
Waiver Agreement");
WHEREAS, the Company and the Shareholder have mutually agreed that
upon completion of the 1998 Repurchases, it is in the best interest of each
of the Company and the Shareholder that the Company effect a certain 1999
Stock Repurchase Plan (the "1999 Plan") pursuant to the terms of which the
Company will from time to time during the operation of the 1999 Plan,
repurchase for an additional amount not to exceed $5.0 million, in the open
market, a certain number of shares of its Company Stock (the "1999
Repurchases"); and
WHEREAS, the Company and the Shareholder have mutually agreed that
it is in the best interest of each of the Company and the Shareholder to
amend and restate the terms of the Amended Waiver Agreement, expressly to
effect the 1999 Plan;
NOW, THEREFORE, in order to facilitate the 0000 Xxxxxxxxxxx pursuant
to the 1999 Plan and simultaneously to preclude the occurrence of the
Shareholder Event, the Company and the Shareholder, in consideration of the
mutual covenants and agreements herein contained, do hereby agree as follows:
1. CERTAIN DEFINITIONS.
"AFFILIATE(S)" shall mean any person or entity that directly,
or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Shareholder.
Furthermore, with respect to the Shareholder, "Affiliate(s)" shall
also mean any person or entity for whom the Shareholder acts as an
investment advisor or consultant with respect to the Company.
"BENEFICIAL OWNERSHIP" shall have the meaning assigned to such
term in Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended as in effect on the date
hereof.
"CONTROL" shall mean the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of the Company, whether through ownership of the Common Stock,
by contract, or otherwise.
"CURRENT SHAREHOLDER POSITION" shall have the meaning assigned
it in Section 2 below.
"PROHIBITED ACTIVITY" shall mean: (i) any attempt by the
Shareholder or any of its Affiliates to gain Control of the Company;
(ii) any Prohibited Transaction, as hereinafter defined or (iii) any
public action on the part of the Shareholder or any of its Affiliates,
acting individually or in concert with other persons, which could
reasonably be construed: (a) as an attempt to effect a change of
Control including, but not limited to, the issuance of press releases
or the filing of documents with the Securities And Exchange Commission
or any other Federal or State governmental entity or (b) as an action
contrary to the position of the then current board of directors of the
Company.
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"PROHIBITED TRANSACTION" shall mean any transaction by the
Shareholder or any of its Affiliates which would result in the
Beneficial Ownership by the Shareholder or any of its Affiliates,
either individually or as a group, of the Common Stock in an amount
in excess of the Current Shareholder Position.
"STANDSTILL PERIOD" shall mean that time period commencing on
the date of this Agreement and ending with the date which is the fifth
annual anniversary of the date of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDER.
A. The Company hereby represents and warrants to the
Shareholder that it (i) has duly authorized the 1999 Plan and, subject to
relevant market and other factors and conditions affecting the Company in the
good faith judgment of its Board of Directors, the Company will make bona fide
efforts, during the operation of the 1999 Plan, to effect the 0000 Xxxxxxxxxxx
pursuant to the 1999 Plan and (ii) is currently authorized to spend up to $5.0
Million on the 0000 Xxxxxxxxxxx pursuant to the 1999 Plan.
B. The Shareholder hereby represents and warrants to the
Company that, as of the date hereof, the total number of shares of Common Stock
of which the Shareholder or any of its Affiliates or Associates has Beneficial
Ownership is 861,854 shares (as such share ownership may be affected from time
to time by stock splits, stock dividends, reverse splits or any other such
matter affecting all shareholders equally, the "Current Shareholder Position").
3. CERTAIN COVENANTS AND AGREEMENTS.
A. COVENANTS AND AGREEMENTS OF THE COMPANY.
a. The Company hereby agrees that,
notwithstanding the fact that the 0000 Xxxxxxxxxxx pursuant to the 1999 Plan
may result in the Shareholder Event, if the Shareholder Event should occur
solely by virtue of the 1997 Plan Repurchases, the 1998 Repurchases and/or
the 0000 Xxxxxxxxxxx pursuant to the 1999 Plan, such Shareholder Event shall
be deemed not to have occurred, and the Company hereby grants a limited
waiver of any provision of the Rights Agreement pursuant to the terms of
which the Shareholder Event would be considered to have occurred solely by
virtue of the 1997 Plan Repurchases, the 1998 Repurchases and/or the 1999
Repurchases.
b. The Company hereby acknowledges and
agrees that, by virtue of the operation of this Agreement, the Shareholder,
alone or together with its Affiliates and Associates, may have Beneficial
Ownership of twenty percent (20%) or more of the shares of Common Stock of
the Company then outstanding, provided that such circumstance occurs solely
as a result of the 1997 Plan Repurchases, the 1998 Repurchases Repurchases
and/or the 1999 Repurchases, and yet not be deemed to be an "Acquiring
Person" for purposes of the Rights Agreement.
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c. The Company acknowledges and agrees that
nothing in this Agreement shall preclude the Shareholder from (i) effecting
sales and purchases of the Common Stock so long as the Current Shareholder
Position is not exceeded or (ii) subject to the provisions of paragraph
3(B)(a) below, exercising the voting privileges commensurate with its
ownership of the Common Stock.
B. COVENANTS AND AGREEMENTS OF THE SHAREHOLDER.
a. The Shareholder agrees that neither the
Shareholder nor any of its Affiliates shall engage in any Prohibited Activity
(i) at any time that the Shareholder, alone or together with its Affiliates
has Beneficial Ownership of 20% or more of the outstanding Common Stock of
the Company as a result of Repurchases pursuant to the Plan, or (ii) during
the Standstill Period.
b. The Shareholder acknowledges and agrees
that this Agreement constitutes only a limited waiver of the Rights Agreement
and that the waiver herein contained applies only to the occurrence of the
Shareholder Event as the result solely of the 1997 Plan Repurchases, the 1998
Repurchases and/or the 0000 Xxxxxxxxxxx and not to any other circumstances or
conditions which may result in the occurrence of the Shareholder Event.
c. The Shareholder hereby further
acknowledges that, should the Shareholder Event occur as a result of or in
connection with the purchase or acquisition by the Shareholder of Common
Stock of the Company which results in an increase in the Current Shareholder
Position, then this limited waiver shall not apply and the Shareholder shall,
in accordance with the terms of the Rights Agreement, be deemed to be an
"Acquiring Person."
C. COVENANTS AND AGREEMENTS OF THE COMPANY AND THE
SHAREHOLDER.
The Company and the Shareholder acknowledge and
agree that this Agreement constitutes a limited waiver of the Rights
Agreement; by agreeing to this waiver, the Company has not agreed to waive
any other provisions of the Rights Agreement and the Company hereby expressly
reserves its right fully to enforce the Rights Agreement except as such
enforcement may be limited by the express terms of this Agreement.
4. GENERAL PROVISIONS.
A. VOIDABILITY. This Agreement shall become null and
void if the Company shall not have publicly announced its authorization of
the 1999 Plan on or before May 31, 1999.
B. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement by and among the parties with respect to the subject matter
hereof.
C. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
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D. ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, that neither this Agreement nor any right hereunder shall
be assignable by the Shareholder without the prior written consent of the
Company and the Rights Agent, but this Agreement shall be assignable by the
Company to any successor by merger or otherwise to the Company and by the
Rights Agent to any successor without the consent of the Shareholder.
E. GOVERNING LAW. The validity, interpretation and
effect of this Agreement shall be governed exclusively by the laws of the
State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SOFTWARE SPECTRUM, INC.
By: /s/ Xxxx Xxxx Xxxx
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Name: Xxxx Xxxx Xxxx
Title: Chief Executive Officer
PRIVATE CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Senior V.P.
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ACKNOWLEDGED AND ACCEPTED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ R. Xxxx Xxxxx, V.P.
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Name: R. Xxxx Xxxxx
Title: Vice President
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