EXHIBIT 4.2
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment"), dated as of
July 3, 2003, is between DATATEC SYSTEMS, INC., a Delaware corporation (the
"Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as rights agent (the
"Rights Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement dated as of February 24, 1998 (the "Rights Agreement"); and
WHEREAS, the Rights Agreement was subsequently amended by an
Amendment To Rights Agreement dated as of April 3, 2002 between the Company and
the Rights Agent to amend the definition of "Acquiring Person;" and
WHEREAS, concurrently with the execution hereof, the Company has
entered into that certain Note Purchase Agreement by and among the Company,
Palladin Partners I, L.P., Palladin Multi-Strategy Partners, L.P., XxXX
Convertible Arbitrage Fund, Ltd., Palladin Overseas Fund, Ltd., Palladin
Opportunity Fund, LLC, and Palladin Overseas Multi-Strategy Fund, Ltd.
(collectively, the "Investors") dated as of July 3, 2003 (the "Purchase
Agreement"); and
WHEREAS, the Board of Directors of the Company has approved,
authorized and adopted the Purchase Agreement and the transactions contemplated
thereby; and
WHEREAS, Section 27 of the Rights Agreement permits the amendment of
the Rights Agreement by the Board of Directors of the Company; and
WHEREAS, pursuant to a resolution duly adopted on June 23, 2003, the
Board of Directors of the Company has adopted and authorized the amendment of
the Rights Agreement to amend the definition of "Acquiring Person;" and
WHEREAS, the Board of Directors of the Company has resolved and
determined that such amendment is desirable and consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in connection
with the original adoption of the Rights Agreement.
NOW, THEREFORE,
1. Section 1(a) of the Rights Agreement is hereby amended in its
entirety to read as follows:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with
all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, after the date
hereof, shall become the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding, but shall not include the
Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, neither Xxxxx
Xxxxxxx nor Xxxxxxxxxxx X. Xxxxx, shall be deemed an
Acquiring Person for any purpose of this Agreement,
provided, that each such Person together with his
Affiliates does not become the Beneficial Owner of 20% or
more of the outstanding shares of Common Stock of the
Company; and neither Halifax Fund, L.P., Palladin
Opportunity Fund, L.L.C., Palladin Partners I, L.P.,
Palladin Multi-Strategy Partners, L.P., XxXX Convertible
Arbitrage Fund, Ltd., Palladin Overseas Fund, Ltd., nor
Palladin Overseas Multi-Strategy Fund, Ltd. shall be
deemed an Acquiring Person for any purpose of this
Agreement.
Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number
of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases
by the Company and shall, after such share purchases by
the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise
be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be
an "Acquiring Person" for any purposes of this Agreement.
2. This Amendment to the Rights Agreement shall be effective as of
the date of this Amendment, and all references to the Rights Agreement shall,
from and after such time, be deemed to be references to the Rights Agreement as
amended hereby.
3. The undersigned officer of the Company certifies by execution
hereof that this Amendment is in compliance with the terms of Section 27 of the
Rights Agreement.
4. This Amendment may be executed in any number of counterparts,
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. If any term, provision, covenant or restriction of this Amendment is
held by a court of competent jurisdiction or other authority to be invalid,
illegal, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
DATATEC SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: CFO
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------
Name: X. Xxxxxxxxxx
Title: Vice Pres.
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