Exhibit 4.1
AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
----------------
THIS AMENDMENT NO. 1, dated as of March 3, 1998 (the "Amendment") to
the Rights Agreement dated as of March 22, 1996 (the "Rights Agreement"),
between INTELLIGENT ELECTRONICS, INC., a Pennsylvania corporation (the
"Company") and XXXXX XXXXXX SHAREHOLDER SERVICES L.L.C., formerly CHEMICAL
MELLON SHAREHOLDER SERVICES L.L.C. (the "Rights Agent").
WHEREAS, the Company desires to amend the Rights Agreement to
designate Xerox Corporation, a New York corporation, including any of its
wholly-owned direct and indirect subsidiaries now existing or hereafter
formed (together, "Xerox"), as an Exempt Person, provided that Xerox shall
immediately and thereafter cease to be an Exempt Person if it shall become
the Beneficial Owner (as defined in the Rights Agreement) of 15% or more of
the shares of Company Common Stock (as defined in the Rights Agreement)
then outstanding, other than pursuant to an agreement of merger to which
Xerox and the Company are both parties;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Section 1, paragraph (i) of the Rights Agreement is
amended to read in its entirety as follows:
(i) "Exempt Person" means:
(1) Company, any Subsidiary of the Company, any employee
benefit plan or employee stock plan of the Company or of any Subsidiary of
the Company, or any person or entity organized, appointed, established or
holding Company Common Stock for or pursuant to the terms of any such plan;
(2) Xerox Corporation, a New York corporation, including
any of its wholly-owned direct and indirect subsidiaries now existing or
hereafter formed and their respective Associates and Affiliates (together,
"Xerox"); provided, however, that Xerox shall immediately and thereafter
cease to be an Exempt Person if it shall become the Beneficial Owner of 15%
or more of the shares of Company Common Stock then outstanding, other than
pursuant to an agreement of merger to which Xerox and the Company are both
parties; and
(3) any Person who would otherwise become an Acquiring
Person solely by virtue of a reduction in the number of outstanding shares
of Company Common Stock; provided, however, that such Person shall not be
an Exempt Person if, subsequent to such reduction, such Person shall become
the Beneficial Owner of any additional shares of Company Common Stock.
SECTION 2. Notwithstanding any provision of the Rights Agreement to
the contrary, the execution and delivery of the Agreement and Plan of
Merger dated as of March 4, 1998 by and among Xerox Corporation, TDC
Subsidiary Corporation, TDC Two Subsidiary Corporation, the Company and
XLConnect Solutions, Inc. (the "Merger Agreement") or the consummation of
the Sub Merger or Parent Merger (as such terms are defined in the Merger
Agreement) contemplated thereby will not (i) cause the Rights to become
exercisable, (ii) cause any Person to become an Acquiring Person or (iii)
give rise to a Distribution Date.
SECTION 3. The form of Summary of Rights set forth in Exhibit C
attached to the Rights Agreement is hereby amended to read in its entirety
as set forth in Exhibit C attached hereto.
SECTION 4. The terms "Agreement" and "Rights Agreement" as used in
the Rights Agreement shall be deemed to refer to the Rights Agreement as
amended hereby. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed thereto in the Rights
Agreement. This Amendment shall be effective as of the date hereof and,
except as set forth herein, the Rights Agreement shall remain in full force
and effect and be otherwise unaffected hereby.
SECTION 5. This Amendment may be executed (including by facsimile) in
one or more counterparts and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed, all as of the date first above written.
ATTEST: INTELLIGENT ELECTRONICS, INC.
By: /s/ Xxxxx Worn By: /s/ Xxxx Xxxxxxxxx
-------------------------- --------------------------------
Name: Xxxxx Worn Name: Xxxx Xxxxxxxxx
Title: Paralegal Title: CFO
ATTEST: XXXXX XXXXXX SHAREHOLDER
SERVICES L.L.C.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx
--------------------------- ---------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxx Xxxxx
Title: Assistant Vice President Title: Assistant Vice President
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On March 8, 1996, the Board of Directors of Intelligent Electronics,
Inc., a Pennsylvania corporation (the "Company"), declared a distribution
of one Right (as defined below) for each outstanding share of Common Stock,
par value $.01 per share (the "Company Common Stock"), to shareholders of
record at the close of business on March 25, 1996 (the "Record Date") and
for each share of Company Common Stock issued by the Company thereafter and
prior to the Distribution Date. Each Right entitles the registered holder,
subject to the terms of the Rights Agreement (as defined below), to
purchase from the Company one one-thousandth of a share (a "Unit") of
Series A Preferred Stock, par value $.01 per share (the "Preferred
Stock"), at a Purchase Price of $28.00 per Unit, subject to adjustment
(the "Right"). The Purchase Price is payable in cash or by certified or
bank check or money order payable to the order of the Company. As of March
3, 1998, the Company entered into an amendment ("Amendment No. 1") to its
Rights Agreement that designates Xerox Corporation, a New York corporation,
including any of its wholly-owned direct and indirect subsidiaries now
existing or hereafter formed (together, "Xerox"), an Exempt Person (as
defined in the Rights Agreement, as amended), provided that Xerox shall
immediately and thereafter cease to be an Exempt Person if it shall become
the Beneficial Owner of 15% or more of the shares of Company Common Stock
then outstanding, other than pursuant to an agreement of merger to which
Xerox and the Company are both parties. The description and terms of the
Rights are set forth in a Rights Agreement between the Company and Xxxxx
Xxxxxx Shareholder Services L.L.C. (formerly Chemical Mellon Shareholder
Services L.L.C.), as Rights Agent (the "Rights Agreement").
Copies of the Rights Agreement and the Certificate of Designation for
the Preferred Stock have been filed with the Securities and Exchange
Commission as exhibits to a Registration Statement on Form 8-A dated March
20, 1996 (the "Form 8-A"). Copies of Amendment No. 1 to the Rights
Agreement have been filed with the Securities and Exchange Commission as an
exhibit to a Current Report on Form 8-K dated __________, 1998 (the "Form
8-K"). Copies of the Rights Agreement, Amendment No. 1 to the Rights
Agreement and the Certificate of Designation are available free of charge
from the Company. This summary description of the Rights and the Preferred
Stock does not purport to be complete and is qualified in its entirety by
reference to all the provisions of the Rights Agreement, as amended, and
the Certificate of Designation, including the definitions therein of
certain terms, which Rights Agreement and Certificate of Designation are
incorporated herein by reference.
The Rights Agreement
--------------------
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights
Certificates will be distributed. The Rights will separate from the
Company Common Stock and the "Distribution Date" will occur upon the
earlier of (i) 10 business days following a public announcement (the date
of such announcement being the "Stock Acquisition Date") that a person or
group of affiliated or associated persons (other than an Exempt Person) (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 Company Common Stock, and (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors
prior to such time as any person becomes an Acquiring Person) following the
commencement of a tender offer or exchange offer that would result in a
person or group beneficially other than an Exempt Person owning 15% or more
of the then outstanding shares of Company Common Stock. Until the
Distribution Date, (i) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (ii) new Company Common Stock certificates issued after
the Record Date (also including shares distributed from Treasury) will
contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates representing
outstanding Company Common Stock will also constitute the transfer of the
Rights associated with the Company Common Stock represented by such
certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights
Agreement unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as
of the close of business on the Distribution Date and, thereafter, the
separate Rights certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall
remain outstanding, (ii) a Person other than an Exempt Person becomes the
beneficial owner of 15% or more of the then outstanding shares of Company
Common Stock, (iii) an Acquiring Person engages in one or more "self-
dealing" transactions as set forth in the Rights Agreement, or (iv) during
such time as there is an Acquiring Person, an event occurs which results in
such Acquiring Person's ownership interest being increased by more than 1%
(e.g., by means of a reverse stock split or recapitalization), then, in
each such case, each holder of a Right will thereafter have the right to
receive, upon exercise, Units of Preferred Stock (or, in certain
circumstances, Company Common Stock, cash, property or other securities of
the Company) having a current market value equal to two times the exercise
price of the Right. The exercise price is the Purchase Price multiplied by
the number of Units of Preferred Stock issuable upon exercise of a Right
prior to the events described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in
this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates
or merges with the Company and all or part of the Company Common Stock is
converted or exchanged for securities, cash or property of any other Person
or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have
been voided as described above) shall thereafter have the right to receive,
upon exercise, common stock of the Acquiring Person having a current market
value equal to two times the exercise price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii)
if holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the distribution
to the holders of the Preferred Stock of evidences of indebtedness, cash or
assets (excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu
thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock prior to the date of exercise.
At any time until ten business days following the Stock Acquisition
Date, a majority of the Independent Directors may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (subject to
adjustment in certain events) (the "Redemption Price"), payable, at the
election of such majority of the Independent Directors, in cash or shares
of Company Common Stock. Immediately upon the action of a majority of the
Independent Directors ordering the redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time prior to the Distribution Date, the Company (by action of
a majority of the Independent Directors) may exchange all or part of the
outstanding Rights for that number of Units of Preferred Stock at an
exchange ratio determined pursuant to the Rights Agreement and reflective
of the then current market price.
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 for Units of Preferred Stock (or
other consideration).
Notwithstanding any provision of the Rights Agreement to the contrary,
the execution and delivery of the Agreement and Plan of Merger dated as of
March ___, 1998 by and among Xerox Corporation, TDC subsidiary Corporation,
TDC Two Subsidiary Corporation, the Company and XLConnect Solutions, Inc.
(the "Merger Agreement") or the consummation of the Sub Merger or Parent
Merger (as such terms are defined in the Merger Agreement) contemplated
thereby will not (i) cause the Rights to become exercisable, (ii) cause any
Person to become an Acquiring Person or (iii) give rise to a Distribution
Date.
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to
the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person), or
to shorten or lengthen any time period under the Rights Agreement;
provided, however, that, except under certain circumstances, no amendment
to adjust the time period governing redemption shall be made at such time
as the Rights are not redeemable.
Description of Preferred Stock
------------------------------
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of
preferred stock that may be issued by the Company.
Each Unit of Preferred Stock will be entitled to dividends at the same
rate per share as dividends declared on the Company Common Stock and shall
be entitled to payment of dividends to the extent dividends are declared on
the Company Common Stock. In the event of liquidation, the holder of a
Unit of Preferred Stock will receive the per share amount paid in respect
of a share of Company Common Stock.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of
each share of Company Common Stock. Each Unit of Preferred Stock will have
one vote, voting together with the Company Common Stock. The rights of
holders of the Preferred Stock to dividends, liquidation and voting, and in
the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock, that
may be acquired upon the exercise of each Right should approximate the
economic value of one share of the Company's Common Stock.
