**Exhibit 4.01**

** **

**RACOTEK, INC.**

** **

**AND**

** **

**NORWEST BANK MINNESOTA,N.A.**

** **

**RIGHTS AGENT**

** **

** **

**RIGHTS AGREEMENT**

** **

**DATED AS OF SEPTEMBER 12,1994**

 

 

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**TABLE OF CONTENTS**

 
| Section 1.   |   | Certain Definitions                                                                                                           |
|--------------|--------|-------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                          |
| Section 2.   |   | Appointment of  Rights Agent                                                                                                  |
|         |   |                                                                                                                          |
| Section 3.   |   | Issue of Right  Certificates                                                                                                  |
|         |   |                                                                                                                          |
| Section 4.   |   | Form of Right  Certificates                                                                                                   |
|         |   |                                                                                                                          |
| Section 5.   |   | Countersignature  and Registration                                                                                            |
|         |   |                                                                                                                          |
| Section 6.   |   | Transfer, Split Up, Combination and  Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right  Certificates |
|         |   |                                                                                                                          |
| Section 7.   |   | Exercise of Rights;  Purchase Price; Expiration Date of Rights                                                                |
|         |   |                                                                                                                          |
| Section 8.   |   | Cancellation and Destruction of  Right Certificates                                                                           |
|         |   |                                                                                                                          |
| Section 9.   |   | Status and  Availability of Preferred Shares                                                                                  |
|         |   |                                                                                                                          |
| Section 10.  |   | Preferred  Shares Record Date                                                                                                 |
|         |   |                                                                                                                          |
| Section 11.  |   | Adjustment of  Purchase Price, Number of Shares or Number of Rights                                                           |
|         |   |                                                                                                                          |
| Section  12. |   | Certificate  of Adjusted Purchase Price or Number of Shares                                                                   |
|         |   |                                                                                                                          |
| Section 13.  |   | Consolidation, Merger, Sale  or Transfer of Assets or Earning Power                                                           |
|         |   |                                                                                                                          |
| Section  14. |   | Fractional  Rights and Fractional Shares                                                                                      |
|         |   |                                                                                                                          |
| Section 15.  |   | Rights of Action                                                                                                              |
|         |   |                                                                                                                          |
| Section 16.  |   | Agreement of  Right Holders                                                                                                   |
|         |   |                                                                                                                          |
| Section  17. |   | Right  Certificate Holder Not Deemed a Stockholder                                                                            |
|         |   |                                                                                                                          |
| Section 18.  |   | Concerning the  Rights Agent                                                                                                  |

 

 

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| Section  19. |   | Merger  or Consolidation or Change of Name of Rights Agent                             |
|--------------|--------|----------------------------------------------------------------------------------------|
|         |   |                                                                                   |
| Section 20.  |   | Duties of Rights  Agent                                                                |
|         |   |                                                                                   |
| Section 21.  |   | Change of Rights  Agent                                                                |
|         |   |                                                                                   |
| Section  22. |   | Issuance  of New Right Certificates                                                    |
|         |   |                                                                                   |
| Section 23.  |   | Redemption                                                                             |
|         |   |                                                                                   |
| Section 24.  |   | Exchange                                                                               |
|         |   |                                                                                   |
| Section 25.  |   | Notice of Certain  Events                                                              |
|         |   |                                                                                   |
| Section 26.  |   | Notices                                                                                |
|         |   |                                                                                   |
| Section 27.  |   | Supplements and  Amendments                                                            |
|         |   |                                                                                   |
| Section 28.  |   | Successors                                                                             |
|         |   |                                                                                   |
| Section 29.  |   | Benefits of this  Agreement                                                            |
|         |   |                                                                                   |
| Section 30.  |   | Severability                                                                           |
|         |   |                                                                                   |
| Section 31.  |   | Governing Law                                                                          |
|         |   |                                                                                   |
| Section 32.  |   | Counterparts                                                                           |
|         |   |                                                                                   |
| Section 33.  |   | Descriptive Headings                                                                   |
|         |   |                                                                                   |
| Section 34.  |   | Entire Agreement                                                                       |
|         |   |                                                                                   |
| Signatures   |   |                                                                                   |
|         |   |                                                                                   |
| Exhibit  A - |   | Form  of Certificate of Designations of Series A Junior Participating Preferred  Stock |
|         |   |                                                                                   |
| Exhibit B -  |   | Form of Right  Certificate                                                             |
|         |   |                                                                                   |
| Exhibit  C - |   | Summary  of Rights to Purchase Preferred Shares                                        |

 

 

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**RIGHTS AGREEMENT**

 

                Agreement, dated as of September12, 1994, between Racotek, Inc., a Delaware corporation (the “Company”),and Norwest Bank Minnesota, N.A. (the “Rights Agent”).

 

                The Board of Directors of theCompany has authorized and declared a dividend of one preferred share purchaseright (a “Right”) for each Common Share (as hereinafter defined) of theCompany outstanding at the Close of Business (as hereinafter defined) onSeptember 28, 1994 (the “Record Date”), each Right representing theright to purchase one one-hundredth of a Preferred Share (as hereinafterdefined), upon the terms and subject to the conditions herein set forth, andhas further authorized and directed the issuance of one Right with respect toeach Common Share that shall become outstanding between the Record Date and theearliest of the Distribution Date, the Redemption Date and the Final ExpirationDate (as such terms are hereinafter defined).

 

                Accordingly, in consideration ofthe premises and the mutual agreements herein set forth, the parties heretohereby agree as follows:

 

                Section 1. Certain Definitions.For purposes of this Agreement, the following terms have the meaningsindicated:

 

                                (a)           “Acquiring Person” shall meanany Person who or which, together with all Affiliates and Associates of suchPerson, shall be the Beneficial Owner of 20% or more of the Common Shares ofthe Company then outstanding, but shall not include (i) the Company, (ii) anySubsidiary of the Company, (iii) any employee benefit plan of the Company orany Subsidiary of the Company or (iv) any entity holding Common Shares for orpursuant to the terms of any such plan. Notwithstanding the foregoing, noPerson shall become an “Acquiring Person” as the result of an acquisition ofCommon Shares by the Company which, by reducing the number of sharesoutstanding, increases the proportionate number of shares beneficially owned bysuch Person and such Person’s Affiliates and Associates to 20% or more of theCommon Shares of the Company then outstanding; provided, however,that if a Person, together with such Person’s Affiliates and Associates, shallbecome the Beneficial Owner of 20% or more of the Common Shares of the Companythen outstanding by reason of share purchases by the Company and shall, aftersuch share purchases by the Company, such Person, together with its Affiliatesand Associates, become the Beneficial Owner of any additional Common Shares ofthe Company, then such Person shall be deemed to be an “Acquiring Person.”

 

                                (b)           “Affiliate” and “Associate”shall have the following meanings:

 

                                                (i)            An “Affiliate” of, or aPerson “affiliated” with, a specified Person, is a Person that directly,or indirectly through one or more intermediaries, controls, or is controlledby, or is under common control with, the Person specified. For this purpose, “control”(including the terms “controlling,” “controlled by” and “undercommon control with”) means the possession, direct or indirect, of thepower to direct or cause the direction of the management and

 

 

 

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policiesof a Person, whether through the ownership of voting securities, by contract orotherwise;

 

                                                (ii)           The term “Associate” used toindicate a relationship with any Person shall mean (A) any corporation ororganization (other than the Company or a majority-owned subsidiary of theCompany) of which such Person is an officer or partner or is, directly orindirectly, the Beneficial Owner of 10% or more of any class of equitysecurities, (B) any trust or other estate in which such Person has asubstantial beneficial interest or as to which such Person serves as trustee orin a similar fiduciary capacity, and (C) any relative or spouse of such Person,or any relative of such spouse, who has the same home as such Person or who isa director or officer of the Company or any of its parents or Subsidiaries.

 

                                (c)           A Person shall be deemed the “BeneficialOwner” of and shall be deemed to “beneficially own” any securities:

 

                                                (i)            which such Person owns, directly orindirectly;

 

                                                (ii)            which such Person has (A) the rightto acquire (whether such right is exercisable immediately or only after thepassage of time) pursuant to any agreement, arrangement or understanding (otherthan customary agreements with and between underwriters and selling groupmembers with respect to a bona fide public offering of securities), written orotherwise, 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 to be the Beneficial Owner of, or tobeneficially own, securities tendered pursuant to a tender or exchange offermade by or on behalf of such Person until such tendered securities are acceptedfor purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangementor understanding; provided, however, that a Person shall not bedeemed the Beneficial Owner of, or to beneficially own, any security if theagreement, arrangement or understanding to vote such security (1) arises solelyfrom a revocable proxy or consent given to such Person in response to a publicproxy or consent solicitation made pursuant to, and in accordance with, theapplicable rules and regulations promulgated under the Exchange Act and (2) isnot also then reportable on Schedule 13D under the Exchange Act (or anycomparable or successor report); or

 

                                                (iii)          which are beneficially owned, directlyor indirectly, by any other Person with which such Person has any agreement,arrangement or understanding (other than customary agreements with and betweenunderwriters and selling group members with respect to a bona fide publicoffering of securities), written or otherwise, for the purpose of acquiring,holding, voting (except to the extent contemplated by the proviso to Sectionl(c)(ii)(B)) or disposing of any securities of the Company.

 

                                                Notwithstandinganything in this definition of Beneficial Ownership to the contrary, the phrase“then outstanding,” when used with reference to a Person’s BeneficialOwnership of securities of the Company, shall mean the number of suchsecurities then issued and outstanding together with the number of suchsecurities not then actually issued and outstanding which such Person would bedeemed to own beneficially hereunder.

 

 

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                                (d)           “Business Day” shall mean anyday other than a Saturday, a Sunday, or a day on which banking institutions inthe State of Minnesota are authorized or obligated by law or executive order toclose.

 

                                (e)           “Close of Business” on anygiven date shall mean 5:00 p.m., Pacific Time, on such date; provided, however,that if such date is not a Business Day it shall mean 5:00 p.m., Pacific Time.on the next succeeding Business Day.

 

                                (f)            “Common Shares” when usedwith reference to the Company shall mean the shares of common stock, par value$0.01 per share, of the Company. “Common Shares” when used with reference toany Person other than the Company shall mean the capital stock (or equityinterest) with the greatest voting power of such other Person or, if such otherPerson is a Subsidiary of another Person, the Person or Persons whichultimately control such first-mentioned Person.

 

                                (g)           “Distribution Date” shall havethe meaning set forth in Section 3 hereof.

 

                                (h)           “Exchange Act” shall mean theSecurities Exchange Act of 1934, as amended.

 

                                (i)            “Final Expiration Date” shallhave the meaning set forth in Section 7 hereof.

 

                                (j)            “Person” shall mean anyindividual, firm, corporation, partnership, limited partnership, businesstrust, unincorporated association or other entity, and shall include anysuccessor (by merger or otherwise) of such entity.

 

                                (k)           “Purchase Price” shall havethe meaning set forth in Section 7(b) hereof.

 

                                (l)            “Preferred Shares” shall meanshares of Series A Junior Participating Preferred Stock, par value $0.01 pershare, of the Company having the rights and preferences set forth in theCertificate of Designations attached to this Agreement as Exhibit A.

 

                                (m)          “Redemption Date” shall havethe meaning set forth in Section 7 hereof.

 

                                (n)           “Shares Acquisition Date”shall mean the earlier of the date of (i) the public announcement by theCompany or an Acquiring Person that an Acquiring Person has become such or (ii)the public disclosure of facts by the Company or an Acquiring Person indicatingthat an Acquiring Person has become such.

 

                                (o)           “Subsidiary” of any Personshall mean any Person of which a majority of the voting power of the votingequity securities or equity interest is owned, directly or indirectly, by suchPerson.

 

 

 

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                                (p)           A “Successor” shall mean theestate or legal representative of a deceased individual, the beneficiary of adeceased individual’s estate, a trust created by a deceased individual asgrantor, or the beneficiary of a trust created by a deceased individual asgrantor.

 

                Section 2.  Appointment of Rights Agent. The Company herebyappoints the Rights Agent to act as agent for the Company and the holders ofthe Rights (who, in accordance with Section 3 hereof, shall prior to theDistribution Date also be the holders of the Common Shares) in accordance withthe terms and conditions hereof, and the Rights Agent hereby accepts suchappointment. The Company may from time to time appoint such co-Rights Agents asit may deem necessary or desirable.

 

                Section 3.  Issue of Right Certificates.

 

                                (a)           Until the earlier of (i) the tenthday after the Shares Acquisition Date or (ii) the tenth Business Day (or suchlater date as may be determined by action of the Board of Directors prior tosuch time as any Person becomes an Acquiring Person) after the first publicannouncement of the intention of any Person (other than the Company, anySubsidiary of the Company, any employee benefit plan of the Company or of anySubsidiary of the Company, or any entity holding Common Shares for or pursuantto the terms of any such plan) to commence a tender or exchange offer theconsummation of which would result in any such Person, together with suchPerson’s Affiliates and Associates, becoming the Beneficial Owner of CommonShares aggregating 20% or more of the then outstanding Common Shares (includingany such date which is after the date of this Agreement and prior to theissuance of the Rights; the earlier of such dates being herein referred to asthe “Distribution Date”); (x) the Rights will be evidenced (subject tothe provisions of Section 3(b) hereof) by the certificates for Common Sharesregistered in the names of the holders thereof (which certificates shall alsobe deemed to be Right Certificates) and not by separate Right Certificates, and(y) the right to receive Right Certificates will be transferable only inconnection with the transfer of Common Shares. As soon as practicable after theDistribution Date, the Company will prepare and execute, the Rights Agent willcountersign, and the Company will send or cause to be sent (and the RightsAgent will, if requested. send) by first-class, insured, postage-prepaid mail,to each record holder of Common Shares as of the Close of Business on theDistribution Date, at the address of such holder shown on the records of theCompany, a Right Certificate, in substantially the form of Exhibit Bhereto (a “Right Certificate”), evidencing one Right for each CommonShare so held. As of the Distribution Date, the Rights will be evidenced solelyby such Right Certificates.

 

                                (b)           On the Record Date, or as soon aspracticable thereafter, the Company will send a copy of a Summary of Rights toPurchase Preferred Shares, in substantially the form of Exhibit C hereto(the “Summary of Rights”), by first-class, postage-prepaid-mail, to eachrecord holder of Common Shares as of the Close of Business on the Record Date,at the address of such holder shown on the records of the Company. With respectto certificates for Common Shares outstanding as of the Record Date, until theDistribution Date, the Rights will be evidenced by such certificates registeredin the names of the holders thereof together with a copy of the Summary ofRights attached thereto. Until the Distribution Date (or the earlier of theRedemption Date or the Final Expiration Date), the surrender for transfer ofany certificate for

 

 

 

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CommonShares outstanding on the Record Date, with or without a copy of the Summary ofRights attached thereto, shall also constitute the transfer of the Rightsassociated with the Common Shares represented thereby.

 

                                (c)           Certificates for Common Shares whichbecome outstanding (including, without limitation, reacquired Common Sharesreferred to in the last sentence of this paragraph (c) ) after the Record Datebut prior to the earliest of the Distribution Date, the Redemption Date or theFinal Expiration Date shall have impressed on, printed on, written on or otherwiseaffixed to them the following legend:

 

Thiscertificate also evidences and entitles the holder hereof to certain rights(the “Rights”) as set forth in a Rights Agreement between Racotek, Inc. andNorwest Bank Minnesota, N.A., dated as of September 12, 1994, as such maysubsequently be amended (the “Rights Agreement”), the terms of which are herebyincorporated herein by reference and a copy of which is on file at theprincipal executive offices of Racotek, Inc. Under certain circumstances, asset forth in the Rights Agreement, such Rights will be evidenced by separatecertificates and will no longer be evidenced by this certificate. Racotek, Inc.will mail to the holder of this certificate a copy of the Rights Agreementwithout charge after receipt of a written request therefor. As described inSection 11(a)(ii) of the Rights Agreement, Rights beneficially owned by anyPerson who becomes an Acquiring Person (as defined in the Rights Agreement) andcertain other Persons shall become null and void.

 

Withrespect to such certificates containing the foregoing legend, until theDistribution Date, the Rights associated with the Common Shares represented bysuch certificates shall be evidenced by such certificates alone, and thesurrender for transfer of any such certificate shall also constitute thetransfer of the Rights associated with the Common Shares represented thereby.In the event that the Company purchases or acquires any Common Shares after theRecord Date but prior to the Distribution Date, any Rights associated with suchCommon Shares shall be deemed cancelled and retired so that the Company shallnot be entitled to exercise any Rights associated with the Common Shares whichare no longer outstanding.

 

                Section 4. Form of RightCertificates. The Right Certificates (and the forms of election topurchase Preferred Shares and of assignment to be printed on the reversethereof) shall be substantially the same as Exhibit B hereto and may have suchmarks of identification or designation and such legends, summaries orendorsements printed thereon as the Company may deem appropriate and as are notinconsistent with the provisions of this Agreement, or as may be required tocomply with any applicable law or with any rule or regulation made pursuantthereto or with any rule or regulation of any stock exchange on which theRights may from time to time be listed, or to conform to usage. Subject to theother provisions of this Agreement, the Right Certificates shall entitle theholders thereof to purchase such number of one one-hundredth of a PreferredShare as shall be set forth therein at the Purchase Price, but the number ofsuch one one-hundredths of a Preferred Share and the Purchase Price shall besubject to adjustment as provided herein.

 

 

 

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                Section 5. Countersignature andRegistration. The Right Certificates shall be executed on behalf of theCompany by its Chairman of the Board, its Chief Executive Officer, itsPresident, any of its Vice Presidents, or its Treasurer, either manually or byfacsimile signature, shall have affixed thereto the Company’s seal or afacsimile thereof, and shall be attested by the Secretary or any AssistantSecretary of the Company, either manually or by facsimile signature. The RightCertificates shall be manually countersigned by the Rights Agent (unlessapplicable exchange rules and law permit facsimile signature, in which case theRights Agent signature may be by facsimile) and shall not be valid for anypurpose unless countersigned. In case any officer of the Company who shall havesigned any of the Right Certificates shall cease to be such officer of theCompany before countersignature by the Rights Agent and issuance and deliveryby the Company, such Right Certificates, nevertheless, may be countersigned bythe Rights Agent and issued and delivered by the Company with the same forceand effect as though the person who signed such Right Certificates had notceased to be such officer of the Company; and any Right Certificate may besigned on behalf of the Company by any person who, at the actual date of theexecution of such Right Certificate, shall be a proper officer of the Companyto sign such Right Certificate, although at the date of the execution of thisRights Agreement any such person was not such an officer.

 

                Following the Distribution Date,the Rights Agent will keep or cause to be kept, at its principal office, booksfor registration and transfer of the Right Certificates issued hereunder. Suchbooks shall show the names and addresses of the respective holders of the RightCertificates, the number of Rights evidenced on its face by each of the RightCertificates and the date of each of the Right Certificates.

 

                Section 6. Transfer, Split Up,Combination and Exchange of Right Certificates: Mutilated, Destroyed, Lost orStolen Right Certificates. Subject to the provisions of Section 14 hereof,at any time after the Close of Business on the Distribution Date, and at orprior to the Close of Business on the earlier of the Redemption Date or theFinal Expiration Date, any Right Certificate or Right Certificates (other thanRight Certificates representing Rights that have become void pursuant toSection 11(a)(ii) hereof or that have been exchanged pursuant to Section 24hereof) may be transferred, split up, combined or exchanged for another RightCertificate or Right Certificates, entitling the registered holder to purchasea like number of one one-hundredths of a Preferred Share as the RightCertificate or Right Certificates surrendered then entitled such holder topurchase. Any registered holder desiring to transfer, split up, combine orexchange any Right Certificate or Right Certificates shall make such request inwriting delivered to the Rights Agent, and shall surrender the RightCertificate or Right Certificates to be transferred, split up, combined orexchanged at the principal office of the Rights Agent. Thereupon the RightsAgent shall countersign and deliver to the person entitled thereto a RightCertificate or Right Certificates, as the case may be, as so requested. TheCompany may require payment of a sum sufficient for any tax or governmentalcharge that may be imposed in connection with any transfer, split up,combination or exchange of Right Certificates.

 

                Upon receipt by the Company andthe Rights Agent of evidence reasonably satisfactory to them of the loss,theft, destruction or mutilation of a Right Certificate, and, in case of loss,theft

 

 

 

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ordestruction, of indemnity or security reasonably satisfactory to them, and, atthe Company’s request, reimbursement to the Company and the Rights Agent of allreasonable expenses incidental thereto, and upon surrender to the Rights Agentand cancellation of the Right Certificate if mutilated, the Company will makeand deliver a new Right Certificate of like tenor to the Rights Agent fordelivery to the registered holder in lieu of the Right Certificate so lost,stolen, destroyed or mutilated.

 

                Section 7. Exercise of Rights; Purchase Price; Expiration Date ofRights

 

                                (a)           The registered holder of any RightCertificate may exercise the Rights evidenced thereby (except as otherwiseprovided herein) in whole or in part at any time after the Distribution Dateupon surrender of the Right Certificate, with the form of election to purchaseon the reverse side thereof duly executed, to the Rights Agent at the principaloffice of the Rights Agent, together with payment of the Purchase Price foreach one one-hundredth of a Preferred Share as to which the Rights areexercised, at or prior to the earliest of (i) the Close of Business onSeptember 12, 2004 (the “Final Expiration Date”), (ii) the time at whichthe Rights are redeemed as provided in Section 23 hereof (the “RedemptionDate”), or (iii) the time at which such Rights are exchanged as provided inSection 24 hereof.

 

                                (b)           The Purchase Price for each oneone-hundredth of a Preferred Share pursuant to the exercise of a Right shallinitially be $25.00 (the “Purchase Price”), shall be subject toadjustment from time to time as provided in Sections 11 and 13 hereof and shallbe payable in lawful money of the United States of America in accordance withparagraph (c) below.

 

                                (c)           Upon receipt of a Right Certificaterepresenting exercisable Rights, with the form of election to purchase andcertificate duly executed, accompanied by payment of the Purchase Price for theshares to be purchased and an amount equal to any applicable transfer taxrequired to be paid by the holder of such Right Certificate in accordance withSection 9 hereof by certified check, cashier’s check or money order payable tothe order of the Company, the Rights Agent shall thereupon promptly (i) (A)requisition from any transfer agent of the Preferred Shares certificates forthe number of one-one hundredths of a Preferred Share to be purchased and theCompany hereby irrevocably authorizes its transfer agent to comply with allsuch requests, or (B) requisition from any depositary agent for the PreferredShares depositary receipts representing such number of one one-hundredths of aPreferred Share as are to be purchased (in which case certificates for thePreferred Shares represented by such receipts shall be deposited by thetransfer agent with the depositary agent) and the Company hereby directs thedepositary agent to comply with such request, (ii) when appropriate,requisition from the Company the amount of cash to be paid in lieu of issuanceof fractional Preferred Shares in accordance with Section 14 hereof, (iii) afterreceipt of such certificates or depositary receipts, cause the same to bedelivered to or upon the order of the registered holder of such RightCertificate, registered in such name or names as may be designated by suchholder and (iv) when appropriate, after receipt, deliver such cash to or uponthe order of the registered holder of such Right Certificate.

 

 

 

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                                (d)           In case the registered holder of anyRight Certificate shall exercise less than all the Rights evidenced thereby, anew Right Certificate evidencing Rights equivalent to the Rights remainingunexercised shall be issued by the Rights Agent to the registered holder ofsuch Right Certificate or to such holder’s duly authorized assigns, subject tothe provisions of Section l4 hereof.

 

                                (e)           The Company covenants and agrees thatit will cause to be reserved and kept available, out of its authorized andunissued Preferred Shares or any Preferred Shares held in its treasury, thenumber of Preferred Shares that will be sufficient to permit the exercise infull of all outstanding Rights in accordance with this Section 7.

 

                                (f)            Notwithstanding anything in thisAgreement to the contrary, neither the Rights Agent nor the Company shall beobligated to undertake any action with respect to a registered holder upon theoccurrence of any purported exercise as set forth in this Section 7 unless suchregistered holder shall have (i) completed and signed the certificate followingthe form of election to purchase set forth on the reverse side of the RightCertificate surrendered for such exercise and (ii) provided such additionalevidence of the identity of the Beneficial Owner (or former Beneficial Owner)or Affiliates or Associates thereof as the Company shall reasonably request.

 

                Section 8. Cancellation andDestruction of Right Certificates. All Right Certificates surrendered forthe purpose of exercise, transfer, split up, combination or exchange shall, ifsurrendered to the Company or to any of its agents, be delivered to the RightsAgent for cancellation or in cancelled form, or, if surrendered to the RightsAgent, shall be cancelled by it, and no Right Certificates shall be issued inlieu thereof except as expressly permitted by any of the provisions of this RightsAgreement. The Company shall deliver to the Rights Agent for cancellation andretirement, and the Rights Agent shall so cancel and retire, any other RightCertificate purchased or acquired by the Company otherwise than upon theexercise thereof. The Rights Agent shall deliver all cancelled RightCertificates to the Company.

 

                Section 9. Status and Availabilityof Preferred Shares. The Company covenants and agrees that it will take allsuch action as may be necessary to ensure that all Preferred Shares deliveredupon exercise of Rights shall, at the time of delivery of the certificates forsuch Preferred Shares (subject to payment of the Purchase Price), be duly andvalidly authorized and issued and fully paid and non-assessable shares.

 

                The Company further covenantsand agrees that it will pay when due and payable any and all federal and statetransfer taxes and charges which may be payable in respect of the issuance ordelivery of the Right Certificates or of any Preferred Shares upon the exerciseof Rights. The Company shall not, however, be required to pay any transfer taxwhich may be payable in respect of any transfer or delivery of RightCertificates to a person other than, or the issuance or delivery ofcertificates or depositary receipts for the Preferred Shares in a name otherthan that of, the registered holder of the Right Certificate evidencing Rightssurrendered for exercise or to issue or to deliver any certificates ordepositary receipts for Preferred Shares upon the exercise of any Rights untilany such tax shall have been paid (any such tax being payable by the holder ofsuch

 

 

 

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RightCertificate at the time of surrender) or until it has been established to theCompany’s reasonable satisfaction that no such tax is due.

 

                Section 10. Preferred SharesRecord Date. Each person in whose name any certificate for PreferredShares is issued upon the exercise of Rights shall for all purposes be deemedto have become the holder of record of the Preferred Shares represented therebyon, and such certificate shall be dated, the date upon which the RightCertificate evidencing such Rights was duly surrendered and payment of thePurchase Price (and any applicable transfer taxes) was made. Prior to the exerciseof the Rights evidenced thereby, the holder of a Right Certificate shall not beentitled to any rights of a holder of Preferred Shares for which the Rightsshall be exercisable, including, without limitation, the right to vote, toreceive dividends or other distributions or to exercise any preemptive rights,and shall not be entitled to receive any notice of any proceedings of theCompany, except as provided herein.

 

                Section 11. Adjustment ofPurchase Price, Number of Shares or Number of Rights. ThePurchase Price, the number of Preferred Shares covered by each Right and thenumber of Rights outstanding are subject to adjustment from time to time asprovided in this Section 11.

 

                                (a)           (i)            Inthe event the Company shall at any time after the date of this Agreement (A)declare a dividend on the Preferred Shares payable in Preferred Shares, (B)subdivide the outstanding Preferred Shares, (C) combine the outstandingPreferred Shares into a smaller number of Preferred Shares or (D) issue anyshares of its capital stock in a reclassification of the Preferred Shares(including any such reclassification in connection with a consolidation ormerger in which the Company is the continuing or surviving corporation), exceptas otherwise provided in this Section 11(a), the Purchase Price in effect atthe time of the record date for such dividend or of the effective date of suchsubdivision, combination or reclassification, and the number and kind of sharesof capital stock issuable on such date, shall be proportionately adjusted sothat the holder of any Right exercised after such time shall be entitled toreceive the aggregate number and kind of shares of capital stock which, if suchRight had been exercised immediately prior to such date, such holder would haveowned upon such exercise and been entitled to receive by virtue of suchdividend, subdivision, combination or reclassification; provided, however,that in no event shall the consideration to be paid upon the exercise of oneRight be less than the aggregate par value of the shares of capital stock ofthe Company issuable upon exercise of one Right.

 

                                                (ii)           Subject to the following paragraph ofthis subparagraph (ii) and to Sections 23 and 24 of this Agreement, in theevent that any Person shall become an Acquiring Person, each holder of a Rightshall thereafter have a right to receive, upon exercise thereof at a priceequal to the then current Purchase Price multiplied by the number of oneone-hundredths of a Preferred Share for which a Right is then exercisable, inaccordance with the terms of this Agreement and in lieu of Preferred Shares,such number of Common Shares of the Company as shall equal the result obtainedby (x) multiplying the then current Purchase Price by the number of oneone-hundredths of a Preferred Share for which a Right is then exercisable anddividing that product by (y) 50% of the then current per share market price ofthe Company’s Common

 

 

 

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Shares(determined pursuant to Section 11(d) hereof) on the date such Person became anAcquiring Person.

 

                                                                Fromand after the occurrence of any Person becoming an Acquiring Person, any Rightsthat are or were acquired or beneficially owned by such Acquiring Person (orany Associate or Affiliate of such Acquiring Person) shall be void and anyholder of such Rights shall thereafter have no right to exercise such Rightsunder any provision of this Agreement. No Right Certificate shall be issuedpursuant to Section 3 that represents Rights beneficially owned by an AcquiringPerson whose Rights would be void pursuant to the preceding sentence or anyAssociate or Affiliate thereof; no Right Certificate shall be issued at anytime upon the transfer of any Rights to an Acquiring Person whose Rights would bevoid pursuant to the preceding sentence or any Associate or Affiliate thereofor to any nominee of such Acquiring Person, Associate or Affiliate; and anyRight Certificate delivered to the Rights Agent for transfer to an AcquiringPerson whose Rights would be void pursuant to the preceding sentence or anyAssociate or Affiliate thereof shall be cancelled. This paragraph shall applynot only to an initial Acquiring Person, and its Affiliates and Associates, butalso to subsequent Acquiring Persons, and their Affiliates and Associates.

 

                                                (iii)          In the event that the number of CommonShares which are authorized by the Company’s certificate of incorporation andnot outstanding or subscribed for, or reserved or otherwise committed forissuance for purposes other than upon exercise of the Rights, is not sufficientto permit the holder of each Right to purchase the number of Common Shares towhich such holder would be entitled upon the exercise in full of the Rights inaccordance with the foregoing subparagraph (ii) of paragraph (a) of thisSection 11, the Company shall: (A) determine the excess of (1) the value of theCommon Shares issuable upon the exercise of a Right (calculated as provided inthe last sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii)hereof (the “Current Value”) over (2) the Purchase Price (such excess,the “Spread”), and (B) with respect to each Right, make adequateprovision to substitute for such Common Shares, upon payment of the applicablePurchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) CommonShares or other equity securities of the Company (including, withoutlimitation, shares, or units of shares, of preferred stock which the Board ofDirectors of the Company has determined to have the same value as shares ofcommon stock (such equity securities, “common stock equivalents”)), (4)debt securities of the Company, (5) other assets, or (6) any combination of theforegoing, having an aggregate value equal to the Current Value, where suchaggregate value has been determined by the Board of Directors of the Company ingood faith; provided, however, if the Company shall not have madeadequate provision to deliver value pursuant to clause (B) above within thirty(30) days following the later of (x) the first occurrence of an eventtriggering the rights to purchase Common Shares described in Section 11(a)(ii)and (y) the date on which the Company’s right of redemption pursuant to Section23(a) expires (the later of (x) and (y) being referred to herein as the “Section11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver,upon the surrender for exercise of a Right without requiring payment of thePurchase Price, shares of common stock (to the extent available) and then, ifnecessary, cash, which shares and cash have an aggregate value equal to theSpread. If the Board of Directors of the Company shall determine in good faiththat it is likely that sufficient additional shares of common stock could beauthorized for issuance upon

 

 

 

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exercisein full of the Rights, the thirty (30) day period set forth above may beextended to the extent necessary, but not more than ninety (90) days after theSection 11(a)(ii) Trigger Date, in order that the Company may seek stockholderapproval for the authorization of such additional shares (such period, as itmay be extended, the “Substitution Period”). To the extent that theCompany determines that some action need be taken pursuant to the first and/orsecond sentences of this Section 11(a)(iii), the Company (x) shall provide,subject to Section 7(f) hereof, that such action shall apply uniformly to alloutstanding Rights, and (y) may suspend the exercisability of the Rights untilthe expiration of the Substitution Period in order to seek any authorization ofadditional shares and/or to decide the appropriate form of distribution to bemade pursuant to such first sentence and to determine the value thereof. In theevent of any such suspension, the Company shall make a public announcement, andshall deliver to the Rights Agent a statement, stating that the exercisabilityof the Rights has been temporarily suspended. At such time as the suspension isno longer in effect, the Company shall make another public announcement, anddeliver to the Rights Agent a statement, so stating. For purposes of thisSection 11(a)(iii), the value of the Common Shares shall be the current pershare market price (as determined pursuant to Section 11(d)(i) hereof) of theCommon Shares on the Section 11(a)(ii) Trigger Date and the value of any“common stock equivalent” shall be deemed to have the same value as the CommonShares on such date.

 

                                (b)           In case the Company shall fix arecord date for the issuance of rights, options or warrants to all holders ofPreferred Shares entitling them to subscribe for or purchase Preferred Shares(or shares having the same rights, privileges and preferences as the PreferredShares (“equivalent preferred shares”)) or securities convertible intoPreferred Shares or equivalent preferred shares at a price per Preferred Shareor equivalent preferred share (or having a conversion price per share, if asecurity convertible into Preferred Shares or equivalent preferred shares) lessthan the then current per share market price of the Preferred Shares (asdefined in Section 11(d)) on such record date, the Purchase Price to be ineffect after such record date shall be determined by multiplying the PurchasePrice in effect immediately prior to such record date by a fraction, thenumerator of which shall be the number of Preferred Shares outstanding on suchrecord date plus the number of Preferred Shares which the aggregate offeringprice of the total number of Preferred Shares and/or equivalent preferredshares so to be offered (and/or the aggregate initial conversion price of theconvertible securities so to be offered) would purchase at such current marketprice and the denominator of which shall be the number of Preferred Sharesoutstanding on such record date plus the number of additional Preferred Sharesand/or equivalent preferred shares to be offered for subscription or purchase(or into which the convertible securities so to be offered are initiallyconvertible); provided, however, that in no event shall theconsideration to be paid upon the exercise of one Right be less than theaggregate par value of the shares of capital stock of the Company issuable uponexercise of one Right. In case such subscription price may be paid in aconsideration part or all of which shall be in a form other than cash, thevalue of such consideration shall be as determined in good faith by the Boardof Directors of the Company, whose determination shall be described in astatement filed with the Rights Agent. Preferred Shares owned by or held forthe account of the Company shall not be deemed outstanding for the purpose ofany such computation. Such adjustment shall be made successively whenever sucha record date is fixed; and in the event that

 

 

 

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suchrights, options or warrants are not so issued, the Purchase Price shall beadjusted to be the Purchase Price which would then be in effect if such recorddate had not been fixed.

 

                                (c)           In case the Company shall fix arecord date for the making of a distribution to all holders of the PreferredShares (including any such distribution made in connection with a consolidationor merger in which the Company is the continuing or surviving corporation) ofevidences of indebtedness or assets (other than a regular quarterly cashdividend or a dividend payable in Preferred Shares) or subscription rights orwarrants (excluding those referred to in Section 11(b) hereof), the PurchasePrice to be in effect after such record date shall be determined by multiplyingthe Purchase Price in effect immediately prior to such record date by afraction, the numerator of which shall be the then current per share marketprice of the Preferred Shares on such record date, less the fair market value(as determined in good faith by the Board of Directors of the Company, whosedetermination shall be described in a statement filed with the Rights Agent) ofthe portion of the assets or evidences of indebtedness so to be distributed orof such subscription rights or warrants applicable to one Preferred Share andthe denominator of which shall be such current per share market price of thePreferred Shares; provided, however, that in no event shall theconsideration to be paid upon the exercise of one Right be less than the aggregatepar value of the shares of capital stock of the Company to be issued uponexercise of one Right. Such adjustments shall be made successively wheneversuch a record date is fixed; and in the event that such distribution is not somade, the Purchase Price shall again be adjusted to be the Purchase Price whichwould then be in effect if such record date had not been fixed.

 

                                (d)           (i)            Forthe purpose of any computation hereunder, the “current per share marketprice” of any security (a “Security” for the purpose of this Section11(d)(i)) on any date shall be deemed to be the average of the daily closingprices per share of such Security for the 30 consecutive Trading Days (as suchterm is hereinafter defined) immediately prior to such date; provided, however,that in the event that the current per share market price of the Security isdetermined during a period following the announcement by the issuer of suchSecurity of (A) a dividend or distribution on such Security payable in sharesof such Security or securities convertible into such shares, or (B) anysubdivision, combination or reclassification of such Security and prior to theexpiration of 30 Trading Days after the ex-dividend date for such dividend ordistribution, or the record date for such subdivision, combination orreclassification, then, and in each such case, the current per share marketprice shall be appropriately adjusted to reflect the current market price pershare equivalent of such Security. The closing price for each day shall be thelast sale price, regular way, or, in case no such sale takes place on such day,the average of the closing bid and asked prices, regular way, in either case asreported in the principal consolidated transaction reporting system withrespect to securities listed or admitted to trading on the New York StockExchange or, if the Security is not listed or admitted to trading on the NewYork Stock Exchange, as reported in the principal consolidated transactionreporting system with respect to securities listed on the principal nationalsecurities exchange on which the Security is listed or admitted to trading or,if the Security is not listed or admitted to trading on any national securitiesexchange, the last quoted price, or, if not so quoted, the average of the highbid and low asked prices in the over-the-counter market, as reported by theNational Association of Securities Dealers, Inc. Automated Quotations System (“Nasdaq”)or such other

 

 

 

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systemthen in use, or, if on any such date the Security is not quoted by any suchorganization, the average of the closing bid and asked prices as furnished by aprofessional market maker making a market in the Security selected by the Boardof Directors of the Company. The term “Trading Day” shall mean a day onwhich the principal national securities exchange on which the Security islisted or admitted to trading is open for the transaction of business or, ifthe Security is not listed or admitted to trading on any national securitiesexchange, a Business Day.

 

                                                (ii)           For the purpose of any computationhereunder, the “current per share market price” of the Preferred Shares shallbe determined in accordance with the method set forth in Section 1l(d)(i). Ifthe Preferred Shares are not publicly traded, the “current per share marketprice” of the Preferred Shares shall be conclusively deemed to be the currentper share market price of the Common Shares as determined pursuant to Section1l(d)(i) (appropriately adjusted to reflect any stock split, stock dividend orsimilar transaction occurring after the date hereof), multiplied by onehundred. If neither the Common Shares nor the Preferred Shares are publiclyheld or so listed or traded, “current per share market price” shall mean thefair value per share as determined in good faith by the Board of Directors ofthe Company, whose determination shall be described in a statement filed withthe Rights Agent.

 

                                (e)           No adjustment in the Purchase Priceshall be required unless such adjustment would require an increase or decreaseof at least 1% in the Purchase Price; provided, however, that anyadjustments which by reason of this Section 11(e) are not required to be madeshall be carried forward and taken into account in any subsequent adjustment.All calculations under this Section 11 shall be made to the nearest cent or tothe nearest one one-millionth of a Preferred Share or one one-thousandth of anyother share or security as the case may be. Notwithstanding the first sentenceof this Section 11(e), any adjustment required by this Section 11 shall be madeno later than three years from the date of the transaction which requires suchadjustment.

 

                                (f)            If as a result of an adjustment madepursuant to Section 11(a) hereof, the holder of any Right thereafter exercisedshall become entitled to receive any shares of capital stock of the Companyother than Preferred Shares, the number of such other shares so receivable uponexercise of any Right shall thereafter be subject to adjustment from time totime in a manner and on terms as nearly equivalent as practicable to theprovisions with respect to the Preferred Shares contained in Section 11(a)through (c), inclusive, and the provisions of Sections 7, 9, 10 and 13 withrespect to the Preferred Shares shall apply on like terms to any such othershares.

 

                                (g)           All Rights originally issued by theCompany subsequent to any adjustment made to the Purchase Price hereunder shallevidence the right to purchase, at the adjusted Purchase Price. the number ofone one-hundredths of a Preferred Share purchasable from time to time hereunderupon exercise of the Rights, all subject to further adjustment as providedherein.

 

                                (h)           Unless the Company shall haveexercised its election as provided in Section 11(i), upon each adjustment ofthe Purchase Price as a result of the calculations made in Sections 11(b) and(c), each Right outstanding immediately prior to the making of such

 

 

 

 

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adjustmentshall thereafter evidence the right to purchase, at the adjusted PurchasePrice, that number of one one-hundredths of a Preferred Share (calculated tothe nearest one one-millionth of a Preferred Share) obtained by (i) multiplying(x) the number of one one-hundredths of a share covered by a Right immediatelyprior to this adjustment by (y) the Purchase Price in effect immediately priorto such adjustment of the Purchase Price and (ii) dividing the product soobtained by the Purchase Price in effect immediately after such adjustment ofthe Purchase Price.

 

                                (i)            The Company may elect on or afterthe date of any adjustment of the Purchase Price to adjust the number of Rightsin substitution for any adjustment in the number of one one-hundredths of aPreferred Share purchasable upon the exercise of a Right. Each of the Rightsoutstanding after such adjustment of the number of Rights shall be exercisablefor the number of one one-hundredths of a Preferred Share for which a Right wasexercisable immediately prior to such adjustment. Each Right held of recordprior to such adjustment of the number of Rights shall become that number ofRights (calculated to the nearest one one-thousandth) obtained by dividing thePurchase Price in effect immediately prior to adjustment of the Purchase Priceby the Purchase Price in effect immediately after adjustment of the PurchasePrice. The Company shall make a public announcement of its election to adjustthe number of Rights, indicating the record date for the adjustment, and, ifknown at the time, the amount of the adjustment to be made. This record datemay be the date on which the Purchase Price is adjusted or any day thereafter,but, if the Right Certificates have been distributed, shall be at least 10 dayslater than the date of the public announcement. If Right Certificates have beendistributed, upon each adjustment of the number of Rights pursuant to thisSection 11(i), the Company shall, as promptly as practicable, cause to bedistributed to holders of record of Right Certificates on such record dateRight Certificates evidencing, subject to Section 14 hereof, the additionalRights to which such holders shall be entitled as a result of such adjustment,or, at the option of the Company, shall cause to be distributed to such holdersof record in substitution and replacement for the Right Certificates held bysuch holders prior to the date of adjustment, and upon surrender thereof, ifrequired by the Company, new Right Certificates evidencing all the Rights towhich such holders shall be entitled after such adjustment. Right Certificatesto be so distributed shall be issued, executed and countersigned in the mannerprovided for herein and shall be registered in the names of the holders ofrecord of Right Certificates on the record date specified in the publicannouncement.

 

                                (j)            Irrespective of any adjustment orchange in the Purchase Price or the number of one one-hundredths of a PreferredShare issuable upon the exercise of the Rights, the Right Certificatestheretofore and thereafter issued may continue to express the Purchase Priceand the number of one one-hundredths of a Preferred Share which were expressedin the initial Right Certificates issued hereunder.

 

                                (k)           Before taking any action that wouldcause an adjustment reducing the Purchase Price below one one-hundredth of thethen par value of the Preferred Shares issuable upon exercise of the Rights,the Company shall take any corporate action which may, in the opinion of itscounsel, be necessary in order that the Company may validly and legally issuefully paid and non-assessable Preferred Shares at such adjusted Purchase Price.

 

 

 

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                                (l)            In any case in which this Section 11shall require that an adjustment in the Purchase Price be made effective as ofa record date for a specified event, the Company may elect to defer until theoccurrence of such event the issuing to the holder of any Right exercised aftersuch record date of the Preferred Shares and other capital stock or securitiesof the Company, if any, issuable upon such exercise over and above thePreferred Shares and other capital stock or securities of the Company, if any,issuable upon such exercise on the basis of the Purchase Price in effect priorto such adjustment; provided, however, that the Company shalldeliver to such holder a due bill or other appropriate instrument evidencingsuch holder’s right to receive such additional shares upon the occurrence ofthe event requiring such adjustment.

 

                                (m)          Anything in this Section 11 to thecontrary notwithstanding, the Company shall be entitled to make such reductionsin the Purchase Price, in addition to those adjustments expressly required bythis Section 11, as and to the extent that it in its sole discretion shalldetermine to be advisable in order that any (i) consolidation or subdivision ofthe Preferred Shares, (ii) issuance wholly for cash of Preferred Shares orsecurities which by their terms are convertible into or exchangeable forPreferred Shares, (iii) dividends on Preferred Shares payable in PreferredShares or (iv) issuance of any rights, options or warrants referred tohereinabove in Section 11 (b), hereafter made by the Company to holders of itsPreferred Shares shall not be taxable to such stockholders.

 

                                (n)           In the event that at any time afterthe date of this Agreement and prior to the Distribution Date, the Companyshall (i) declare or pay any dividend on the Common Shares payable in CommonShares or (ii) effect a subdivision, combination or consolidation of the CommonShares (by reclassification or otherwise other than by payment of dividends inCommon Shares) into a greater or lesser number of Common Shares, then in anysuch case (i) the number of one one-hundredths of a Preferred Share purchasableafter such event upon proper exercise of each Right shall be determined bymultiplying the number of one one-hundredths of a Preferred Share sopurchasable immediately prior to such event by a fraction, the numerator ofwhich is the number of Common Shares outstanding immediately before such eventand the denominator of which is the number of Common Shares outstandingimmediately after such event, and (ii) each Common Share outstandingimmediately after such event shall have issued with respect to it that numberof Rights which each Common Share outstanding immediately prior to such eventhad issued with respect to it. The adjustments provided for in this Section11(n) shall be made successively whenever such a dividend is declared or paidor such a subdivision, combination or consolidation is effected.

 

                                (o)           The Company covenants and agreesthat, after the Distribution Date, it will not, except as permitted by Sections23, 24 and 27, take (or permit any Subsidiary to take) any action if thepurpose of such action is to, or if at the time such action is taken it isreasonably foreseeable that such action will, diminish substantially oreliminate the benefits intended to be afforded by the Rights.

 

                Section 12. Certificate ofAdjusted Purchase Price or Number of Shares. Whenever anadjustment is made as provided in Sections 11 and 13 hereof, the Company shallpromptly (a) prepare a certificate setting forth such adjustment, and a briefstatement of the facts accounting

 

 

 

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for suchadjustment, (b) file with the Rights Agent and with each transfer agent for theCommon Shares or the Preferred Shares a copy of such certificate and (c) mail abrief summary thereof to each holder of a Right Certificate in accordance withSection 25 hereof.

 

                Section 13. Consolidation, Mergeror Sale or Transfer of Assets or Earning Power. In the event that, afterthe Distribution Date, directly or indirectly, (a) the Company shallconsolidate with, or merge with and into, an Acquiring Person, or an affiliateor associate of an Acquiring Person, (b) an Acquiring Person, or an affiliateor associate of an Acquiring Person, shall consolidate with the Company, ormerge with and into the Company and the Company shall be the continuing orsurviving corporation of such merger and, in connection with such merger, allor part of the Common Shares shall be changed into or exchanged for stock orother securities of any other Person (or the Company) or cash or any otherproperty, or (c) the Company shall sell or otherwise transfer (or one or moreof its Subsidiaries shall sell or otherwise transfer), in one or moretransactions, assets or earning power aggregating 50% or more of the assets orearning power of the Company and its Subsidiaries (taken as a whole) to anAcquiring Person, or an affiliate or associate of an Acquiring Person, then,and in each such case, proper provision shall be made so that (i) each holderof a Right (except as otherwise provided herein) shall thereafter have theright to receive, upon the exercise thereof at a price equal to the thencurrent Purchase Price multiplied by the number of one one-hundredths of aPreferred Share for which a Right is then exercisable, in accordance with theterms of this Agreement and in lieu of Preferred Shares, such number of CommonShares of the Person in the transaction (including the Company as successorthereto or as the surviving corporation) who is issuing the consideration withthe greatest fair market value to the Company and its stockholders in connectionwith such transaction (the “Principal Issuer”) as shall equal the resultobtained by (A) multiplying the then current Purchase Price by the number ofone one-hundredths of a Preferred Share for which a Right is then exercisableand dividing that product by (B) 50% of the then current per share market priceof the Common Shares of the Principal Issuer (determined pursuant to Section11(d) hereof) on the date of consummation of such consolidation, merger, saleor transfer; (ii) the Principal Issuer shall thereafter be liable for, andshall assume, by virtue of such consolidation, merger, sale or transfer, allthe obligations and duties of the Company pursuant to this Agreement; (iii) theterm “Company” shall thereafter be deemed to refer to the Principal Issuer; and(iv) the Principal Issuer shall take such steps (including, but not limited to,the reservation of a sufficient number of its Common Shares in accordance withSection 9 hereof) in connection with such consummation as may be necessary to assurethat the provisions hereof shall thereafter be applicable, as nearly asreasonably may be, in relation to the Common Shares thereafter deliverable uponthe exercise of the Rights. The Company covenants and agrees that it shall notconsummate any such consolidation, merger, sale or transfer unless priorthereto the Company and the Principal Issuer shall have executed and deliveredto the Rights Agent a supplemental agreement so providing. The Company shallnot enter into any transaction of the kind referred to in this Section 13 if atthe time of such transaction there are any rights, warrants, instruments orsecurities outstanding or any agreements or arrangements which, as a result ofthe consummation of such transaction, would eliminate or substantially diminishthe benefits intended to be afforded by the Rights. The provisions of thisSection 13 shall similarly apply to successive mergers or consolidations orsales or other transfers.

 

 

 

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                Section 14. Fractional Rights andFractional Shares.

 

                                (a)           The Company shall not be required toissue fractions of Rights or to distribute Right Certificates which evidencefractional Rights. In lieu of such fractional Rights, there shall be paid tothe registered holders of the Right Certificates with regard to which suchfractional Rights would otherwise be issuable, an amount in cash equal to thesame fraction of the current market value of a whole Right. For the purposes ofthis Section l4(a), the current market value of a whole Right shall be theclosing price of the Rights for the Trading Day immediately prior to the dateon which such fractional Rights would have been otherwise issuable. The closingprice for any day shall be the last sale price, regular way, or, in case nosuch sale takes place on such day, the average of the closing bid and askedprices, regular way, in either case as reported in the principal consolidatedtransaction reporting system with respect to securities listed or admitted totrading on the New York Stock Exchange or, if the Rights are not listed oradmitted to trading on the New York Stock Exchange, as reported in theprincipal consolidated transaction reporting system with respect to securitieslisted on the principal national securities exchange on which the Rights arelisted or admitted to trading or, if the Rights are not listed or admitted totrading on any national securities exchange, the last quoted price or, if notso quoted, the average of the high bid and low asked prices in theover-the-counter market, as reported by Nasdaq or such other system then in useor, if on any such date the Rights are not quoted by any such organization, theaverage of the closing bid and asked prices as furnished by a professionalmarket maker making a market in the Rights selected by the Board of Directorsof the Company. If on any such date no such market maker is making a market inthe Rights, the fair value of the Rights on such date as determined in goodfaith by the Board of Directors of the Company shall be used.

 

                                (b)           The Company shall not be required toissue fractions of Preferred Shares (other than fractions which are integralmultiples of one one-hundredth of a Preferred Share) upon exercise of theRights or to distribute certificates which evidence fractional Preferred Shares(other than fractions which are integral multiples of one one-hundredth of aPreferred Share). Fractions of Preferred Shares in integral multiples of oneone-hundredth of a Preferred Share may, at the election of the Company, beevidenced by depositary receipts, pursuant to an appropriate agreement betweenthe Company and a depositary selected by it; provided, that suchagreement shall provide that the holders of such depositary receipts shall haveall the rights, privileges and preferences to which they are entitled asbeneficial owners of the Preferred Shares represented by such depositaryreceipts. In lieu of fractional Preferred Shares that are not integralmultiples of one one-hundredth of a Preferred Share, the Company shall pay tothe registered holders of Right Certificates at the time such Rights areexercised as herein provided an amount in cash equal to the same fractions ofthe current market value of one Preferred Share. For the purposes of thisSection l4(b), the current market value of a Preferred Share shall be theclosing price of a Preferred Share (as determined pursuant to the secondsentence of Section 1l(d)(i) hereof) for the Trading Day immediately prior tothe date of such exercise.

 

                                (c)           The holder of a Right by theacceptance of the Right expressly waives any right to receive fractional Rightsor fractional shares upon exercise of a Right (except as provided above).

 

 

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                Section 15. Rights of Action. Allrights of action in respect of this Agreement, excepting the rights of actiongiven to the Rights Agent under Section 18 hereof, are vested in the respectiveregistered holders of the Right Certificates (and, prior to the DistributionDate, the registered holders of the Common Shares); and any registered holderof any Right Certificate (or, prior to the Distribution Date, of the CommonShares) may, without the consent of the Rights Agent or of the holder of anyother Right Certificate ( or, prior to the Distribution Date, of the CommonShares), in such holder’s own behalf and for such holder’s own benefit,enforce, and may institute and maintain any suit, action or proceeding againstthe Company to enforce, or otherwise act in respect of, such holder’s right toexercise the Rights evidenced by such Right Certificate in the manner providedin such Right Certificate and in this Agreement. Without limiting the foregoingor any remedies available to the holders of Rights, it is specificallyacknowledged that the holders of Rights would not have an adequate remedy atlaw for any breach of this Agreement and will be entitled to specificperformance of the obligations under, and injunctive relief against actual orthreatened violations of the obligations of any Person subject to, thisAgreement.

 

                Section 16.  Agreement of Right Holders. Every holder of a Right,by accepting the same, consents and agrees with the Company and the RightsAgent and with every other holder of a Right that:

 

                                (a)           prior to the Distribution Date, theRights will be transferable only in connection with the transfer of the CommonShares;

 

                                (b)           after the Distribution Date, theRight Certificates are transferable only on the registry books maintained bythe Rights Agent if surrendered at the principal office of the Rights Agent,duly endorsed or accompanied by a proper instrument of transfer; and

 

                                (c)           the Company and the Rights Agent maydeem and treat the person in whose name the Right Certificate (or, prior to theDistribution Date, the associated Common Shares certificate) is registered asthe absolute owner thereof and of the Rights evidenced thereby (notwithstandingany notations of ownership or writing on the Right Certificates or theassociated Common Shares certificate made by anyone other than the Company orthe Rights Agent) for all purposes whatsoever, and neither the Company nor theRights Agent shall be affected by any notice to the contrary.

 

                Section 17. Right CertificateHolder Not Deemed a Stockholder. No holder, as such, of any RightCertificate shall be entitled to vote, receive dividends or be deemed for anypurpose the holder of the Preferred Shares or any other securities of theCompany which may at any time be issuable on the exercise of the Rightsrepresented thereby nor shall anything contained herein or in any RightCertificate be construed to confer upon the holder of any Right Certificate, assuch, any of the rights of a stockholder of the Company or any right to votefor the election of directors or upon any matter submitted to stockholders atany meeting thereof, or to give or withhold consent to any corporate action, orto receive notice of meetings or other actions affecting stockholders (exceptas provided in Section 25 hereof), or to receive dividends or subscription

 

 

 

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rights,or otherwise, until the Right or Rights evidenced by such Right Certificateshall have been exercised in accordance with the provisions hereof.

 

                Section 18. Concerning the RightsAgent.

 

                                (a)           The Company agrees to pay to theRights Agent reasonable compensation for all services rendered by it hereunderand, from time to time, on demand of the Rights Agent, its reasonable expensesand counsel fees and other disbursements incurred in the administration andexecution of this Agreement and the exercise and performance of its dutieshereunder. The Company also agrees to indemnify the Rights Agent for, and tohold it harmless against, any loss, liability or expense, incurred without negligence,bad faith or willful misconduct on the part of the Rights Agent, for anythingdone or omitted by the Rights Agent in connection with the acceptance andadministration of this Agreement.

 

                                (b)           The Rights Agent shall be protectedand shall incur no liability for, or in respect of any action taken, sufferedor omitted by it in connection with, its administration of this Agreement inreliance upon any Rights Certificate or certificate for the Common Shares orfor 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 genuineand to be signed, executed and, where necessary, verified or acknowledged, bythe proper Person or Persons, or otherwise upon the advice of counsel as setforth in Section 20 hereof.

 

                Section 19. Merger orConsolidation or Change of Name of Rights Agent. Any corporation intowhich the Rights Agent or any successor Rights Agent may be merged or withwhich it may be consolidated. or any corporation resulting from any merger orconsolidation to which the Rights Agent or any successor Rights Agent shall bea party, or any corporation succeeding to the stock transfer or corporate trustbusiness of the Rights Agent or any successor Rights Agent, shall be thesuccessor to the Rights Agent under this Agreement without the execution orfiling of any paper or any further act on the part of any of the partieshereto, provided that such corporation would be eligible for appointment as asuccessor Rights Agent under the provisions of Section 21 hereof. In case atthe time such successor Rights Agent shall succeed to the agency created bythis Agreement any of the Right Certificates shall have been countersigned butnot delivered, any such successor Rights Agent may adopt the countersignatureof the predecessor Rights Agent and deliver such Right Certificates socountersigned; and in case at that time any of the Right Certificates shall nothave been countersigned, any successor Rights Agent may countersign such RightCertificates either in the name of the predecessor Rights Agent or in the nameof the successor Rights Agent; and in all such cases such Right Certificatesshall have the full force provided in the Right Certificates and in thisAgreement.

 

                In case at any time the name ofthe Rights Agent shall be changed and at such time any of the RightCertificates shall have been countersigned but not delivered, the Rights Agentmay adopt the countersignature under its prior name and deliver RightCertificates so countersigned; and in case at that time any of the RightCertificates shall not have been countersigned. the Rights Agent maycountersign such Right Certificates either in its prior name or in its changed

 

 

 

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name; andin all such cases such Right Certificates shall have the full force provided inthe Right Certificates and in this Agreement.

 

                Section 20. Duties of Rights Agent.The Rights Agent undertakes the duties and obligations imposed by thisAgreement upon the following terms and conditions, by all of which the Companyand the holders of Right Certificates, by their acceptance thereof, shall bebound:

 

                                (a)           The Rights Agent may consult withlegal counsel (who may be legal counsel for the Company), and the opinion ofsuch counsel shall be full and complete authorization and protection to theRights Agent as to any action taken or omitted by it in good faith and inaccordance with such opinion.

 

                                (b)           Whenever in the performance of itsduties under this Agreement the Rights Agent shall deem it necessary ordesirable that any fact or matter be proved or established by the Company priorto taking or suffering any action hereunder, such fact or matter (unless otherevidence in respect thereof be herein specifically prescribed) may be deemed tobe conclusively proved and established by a certificate signed by any one ofthe Chairman of the Board, the Chief Executive Officer, the President, any VicePresident, the General Counsel, the Treasurer or the Secretary of the Companyand delivered to the Rights Agent; and such certificate shall be fullauthorization to the Rights Agent for any action taken or suffered in goodfaith by it under the provisions of this Agreement in reliance upon suchcertificate.

 

                                (c)           The Rights Agent shall be liablehereunder to the Company and any other Person only for its own negligence, badfaith or willful misconduct.

 

                                (d)           The Company agrees that it willperform, execute, acknowledge and deliver or cause to be performed, executed,acknowledged and delivered all such further and other acts, instruments andassurances as may reasonably be required by the Rights Agent for the carryingout or performing by the Rights Agent of the provisions of this Agreement.

 

                                (e)           The Rights Agent is hereby authorizedand directed to accept instructions with respect to the performance of itsduties hereunder from anyone of the Chairman of the Board, the Chief ExecutiveOfficer, the President, any Vice President, the General Counsel, the Secretaryor the Treasurer of the Company, and to apply to such officers for advice orinstructions in connection with its duties, and it shall not be liable for anyaction taken or suffered by it in good faith in accordance with instructions ofany such officer or for any delay in acting while waiting for thoseinstructions. Any application by the Rights Agent for written instructions fromthe Company may, at the option of the Rights Agent, set forth in writing anyaction proposed to be taken or omitted by the Rights Agent with respect to itsduties or obligations under this Rights Agreement and the date on and/or afterwhich such action shall be taken or omitted and the Rights Agent shall not beliable for any action taken or omitted in accordance with a proposal includedin any such application on or after the date specified therein (which dateshall not be less than three Business Days after the date any such officeractually receives such application, unless any such officer shall haveconsented in writing to an earlier

 

 

 

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date)unless, prior to taking or omitting any such action, the Rights Agent hasreceived written instructions in response to such application specifying theaction to be taken or omitted.

 

                                (f)            The Rights Agent and anystockholder, director, officer or employee of the Rights Agent may buy, sell ordeal in any of the Rights or other securities of the Company or become pecuniarilyinterested in any transaction in which the Company may be interested, orcontract with or lend money to the Company or otherwise act as fully and freelyas though it were not Rights Agent under this Agreement. Nothing herein shallpreclude the Rights Agent from acting in any other capacity for the Company orfor any other legal entity.

 

                                (g)           The Rights Agent may execute andexercise any of the rights or powers hereby vested in it or perform any dutyhereunder either itself or by or through its attorneys or agents, and theRights Agent shall not be answerable or accountable for any act, default,neglect or misconduct of any such attorneys or agents or for any loss to theCompany resulting from any such act, default, neglect or misconduct, providedreasonable care was exercised in the selection and continued employmentthereof.

 

                Section 21. Change of Rights Agent.The Rights Agent or any successor Rights Agent may resign and be dischargedfrom its duties under this Agreement upon 30 days’ notice in writing mailed tothe Company and to each transfer agent of the Common Shares or Preferred Sharesby registered or certified mail, and to the holders of the Right Certificatesby first-class mail. The Company may remove the Rights Agent or any successor RightsAgent upon 30 days’ notice in writing, mailed to the Rights Agent or successorRights Agent, as the case may be, and to each transfer agent of the CommonShares or Preferred Shares by registered or certified mail, and to the holdersof the Right Certificates by first-class mail. If the Rights Agent shall resignor be removed or shall otherwise become incapable of acting, the Company shallappoint a successor to the Rights Agent. If the Company shall fail to make suchappointment within a period of 30 days after giving notice of such removal orafter it has been notified in writing of such resignation or incapacity by theresigning or incapacitated Rights Agent or by the holder of a Right Certificate(who shall, with such notice, submit such holder’s Right Certificate forinspection by the Company), then the registered holder of any Right Certificatemay apply to any court of competent jurisdiction for the appointment of a newRights Agent. Any successor Rights Agent, whether appointed by the Company or bysuch a court, shall be (i) a corporation organized and doing business under thelaws of the United States or any state of the United States and in goodstanding, which is authorized under such laws to exercise corporate trust orstock transfer powers and is subject to supervision or examination by federalor state authority and which has at the time of its appointment as Rights Agenta combined capital and surplus of at least $50 million dollars or (ii) asubsidiary of a corporation described in clause (i) of this sentence. Afterappointment, the successor Rights Agent shall be vested with the same powers,rights, duties and responsibilities as if it had been originally named asRights Agent without further act or deed; but the predecessor Rights Agent shalldeliver and transfer to the successor Rights Agent any property at the timeheld by it hereunder, and execute and deliver any further assurance,conveyance, act or deed necessary for the purpose. Not later than the effectivedate of any such appointment the Company shall file notice thereof in writingwith the predecessor Rights Agent and each transfer agent of the Common Sharesor Preferred Shares, and mail a

 

 

 

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noticethereof in writing to the registered holders of the Right Certificates. Failureto give any notice provided for in this Section 21, however, or any defecttherein, shall not affect the legality or validity of the resignation orremoval of the Rights Agent or the appointment of the successor Rights Agent,as the case may be.

 

                Section 22. Issuance of New RightCertificates. Notwithstanding any of the provisions of this Agreementor of the Rights to the contrary the Company may, at its option, issue newRight Certificates evidencing Rights in such form as may be approved by itsBoard of Directors to reflect any adjustment or change in the Purchase Priceand the number or kind or class of shares or other securities or propertypurchasable under the Right Certificates made in accordance with the provisionsof this Agreement.

 

                Section 23. Redemption.

 

                                (a)           The Board of Directors of the Companymay, at its option, at any time prior to the earlier of (i) the Close ofBusiness on the tenth day following the Shares Acquisition Date and (ii) the FinalExpiration Date, redeem all but not less than all the then outstanding Rightsat a redemption price of $0.005 per Right, appropriately adjusted to reflectany stock split, stock dividend or similar transaction occurring after the datehereof (such redemption price being hereinafter referred to as the “RedemptionPrice”). Notwithstanding the foregoing, if, and so long as, following theShares Acquisition Date a majority of the members of the Board of Directors arepersons who were members of the Board immediately prior to the SharesAcquisition Date, then the Board may extend the period to redeem the Rights; provided,however, that after the period for redemption of the Rights has expired,the Board of Directors may not extend the period for redemption of the Rightsor otherwise provide for their redemption. The redemption of the Rights by theBoard of Directors may be made effective at such time, on such basis andsubject to such conditions as the Board of Directors in its sole discretion mayestablish.

 

                                (b)           Immediately upon the action of theBoard of Directors of the Company ordering the redemption of the Rightspursuant to paragraph (a) of this Section 23, and without any further actionand without any notice, the right to exercise the Rights will terminate and theonly right thereafter of the holders of Rights shall be to receive theRedemption Price. The Company shall promptly give public notice of any suchredemption; provided, however, that the failure to give, or anydefect in, any such notice shall not affect the validity of such redemption.Within 10 days after such action of the Board of Directors ordering theredemption of the Rights pursuant to paragraph (a), the Company shall mail anotice of redemption to all the holders of the then outstanding Rights at theirlast addresses as they appear upon the registry books of the Rights Agent or,prior to the Distribution Date, on the registry books of the transfer agent forthe Common Shares. Any notice which is mailed in the manner herein provided shallbe deemed given, whether or not the holder receives the notice. If the paymentof the Redemption Price is not included in such notice, each such notice shallstate the method by which the payment of the Redemption Price will be made.Neither the Company nor any of its Affiliates or Associates may redeem, acquireor purchase for value any Rights at any time in any manner other than that

 

 

 

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specificallyset forth in this Section 23 or in Section 24 hereof, and other than inconnection wth the purchase of Commn shares prior to the Distribution Date.

 

                                (c)           Notwithstanding anything contained inthis Agreement to the contrary, the Rights shall not be exercisable for theCommon Shares pursuant to Section 11(a)(ii) until such time as the Company’sright of redemption hereunder has terminated.

 

                Section 24. Exchange.

 

                                (a)           The Board of Directors of the Companymay, at its option, at any time after any Person becomes an Acquiring Person,exchange all or part of the then outstanding and exercisable Rights (whichshall not include Rights that have become void pursuant to the provisions ofSection 11(a)(ii) hereof) for Common Shares at an exchange ratio of one CommonShare per Right, appropriately adjusted to reflect any stock split, stockdividend or similar transaction occuring after the date hereof (such exchangeratio being hereinafter referred to as the “Exchange Ratio”).Notwithstanding the foregoing, the Board of Directors shall not be empowered toeffect such exchange at any time after any Person (other than the Company, anySubsidiary of the Company, any employee benefit plan of the Company or any suchSubsidiary, or any entity holding Common Shares for or pursuant to the terms ofany such plan), together with all Affiliates and Associates of such Person,becomes the Beneficial Owner of a majority of the Common Shares thenoutstanding.

 

                                (b)           Immediately upon the action of theBoard of Directors of the Company ordering the exchange of any Rights pursuantSection 24(a) hereof and without any further action and without any notice, theright to exercise such Rights shall terminate and the only rigtht thereafter ofa holder of such Rights shall be to receive that number of Common Shares equalto the number of such Rights held by such holder  multiplied by the Exchange Ratio. The Company shall promptly givepublic notice of any such exchange; provided, however, that thefailure to give, or any defect in, such notice shall not affect the validity ofsuch exchange. The Company promptly shall mail a notice of any such exchange toall of the holders of such Rights at their last addresses as they appear uponthe registry books of the Rights Agent. Any notice which is mailed in themanner herein provided shall be deemed given, whether or not the holderreceives the notice. Each such notice of exchange will state the method bywhich the exchange of the Common Shares for Rights will be effected and, in theevent of any partial exchange, the number of Rights which will be exchanged.Any partial exchange shall be effected pro rata based on the number of Rights(other than Rights which have become void pursuant to the provisions of Section11(a)(ii) hereof) held by each holder of Rights.

 

                                (c)           In any exchange pursuant to this Section24, the Company, at its option, may substitute Preferred Shares (or commonstock equivalents, as such term is defined in Section 11(a)(ii) hereof) forCommon Shares exchangeable for Rights, at the initial rate of one one-hundredthof a Preferred Share (or common stock equivalents) for each Common Share, asappropriately adjusted to reflect adjustments in the voting rights of thePreferred Shares pursuant to the terms thereof, so that the fraction of aPreferred Share delivered in lieu of each Common Share shall have the samevoting rights as one Common Share.

 

 

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                                (d)           In the event that there shall not besufficient Common Shares, Preferred Shares or common stock equivalentsauthorized by the Company’s certificate of incorporation and not outstanding orsubscribed for, or reserved or otherwise committed for issuance for purposesother than upon exercise of Rights, to permit any exchange of Rights ascontemplated in accordance with this Section 24, the Company shall take allsuch action as may be necessary to authorize additional Common Shares,Preferred Shares or common stock equivalents for issuance upon exchange of theRights.

 

                                (e)           The Company shall not be required toissue fractions of Common Shares or to distribute certificates which evidencefractional Common Shares. In lieu of such fractional Common Shares, the Companyshall pay to the registered holders of the Right Certificates with regard towhich such fractional Common Shares would otherwise be issuable an amount incash equal to the same fraction of the current per share market value of awhole Common Share. For the purposes of this paragraph (e), the current pershare market value of a whole Common Share shall be the closing price of aCommon Share (as determined pursuant to the second sentence of Section 11(d)(i)hereof) for the Trading Day immediately prior to the date of exchange pursuantto this Section 24.

 

                Section 25. Notice of Certain Events.

 

                                (a)           In case the Company shall propose (i)to pay any dividend payable in stock of any class to the holders of itsPreferred Shares or to make  any otherdistribution to the holders of its Preferred Shares (other than a regularquarterly cash dividend), (ii) to offer to the holders of its Preferred Sharesrights or warrants to subscribe for or to purchase any additional PreferredShares or shares of stock of any class or any other securities, rights oroptions, (iii) to effect any reclassification of its Preferred Shares (otherthan a reclassification involving only the subdivision of outstanding PreferredShares), (iv) to effect any consolidation or merger into or with, or to effectany sale or other transfer (or permit one or more of its Subsidiaries to effectany sale or other transfer), in one or more transactions, of 50% or more of theassets or earning power of the Company and its Subsidiaries (taken as a whole)to, any other Person, (v) to effect the liquidation, dissolution or winding upof the Company, or (vi) to declare or pay any dividend on the Common Sharespayable in Common Shares or to effect a subdivision, combination orconsolidation of the Common Shares (by reclassification or otherwise than bypayment of dividends in Common Shares), then, in each such case, the Companyshall give to each holder of a Right Certificate, in accordance with Section 26hereof, a notice of such proposed action, which shall specify the record datefor the purposes of such stock dividend, or distribution of rights or warrants,or the date on which such reclassification, consolidation, merger, sale,transfer, liquidation, dissolution, or winding up is to take place and the dateof participation therein by the holders of the Common Shares and/or PreferredShares, if any such date is to be fixed, and such notice shall be so given inthe case of any action covered by clause (i) or (ii) above at least 10 daysprior to the record date of determining holders of the Preferred Shares forpurposes of such action, and in the case of any such other action, at least 10days prior to the date of the taking of such proposed action or the date ofparticipation therein by the holders of the Common Shares and/or PreferredShares, whichever shall be earlier.

 

 

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                                (b)           In case any event set forth inSection 11(a)(ii) hereof shall occur, then the Company shall as soon aspracticable thereafter give to each holder of a Right Certificate, inaccordance with Section 26 hereof, a notice of the occurence of such event,which notice shall describe such event and the consequences of such event toholders of Rights under Section 11(a)(ii) hereof.

 

                Section 26. Notices. Notices or demandsauthorized by this Agreement to be given or made by the Rights Agent or by theholder of any Right Certificate to or on the Company shall be sufficientlygiven or made if sent by first-class mail, postage prepaid, addressed (untilanother address is filed in writing with the Rights Agent) as follows:

 

Racotek,Inc.

7401Metro Blvd., Suite 500

Minneapolis,MN 55439

Attention:Corporate Secretary

 

Subjectto the provisions of Section 21 hereof, any notice or demand authorized by thisAgreement to be given or made by the Company or by the holder of any RightCertificate to or on the Rights Agent shall be sufficiently given or made ifsent by first-class mail, postage prepaid, addressed (until another address isfiled in writing with the Company) as follows:

 

NorwestBank Minnesota, N.A.

161North Concord Exchange

SouthSt. Paul, MN 55075-0738

Attention:Stock Transfer Department

 

Noticesor demands authorized by this Agreement to be given or made by the Company orthe Rights Agent to the holder of any Right Certificate shall be sufficientlygiven or made if sent by first-class mail, postage prepaid, addressed to suchholder at the address of such holder as shown on the registry books of theCompany.

 

                Section 27. Supplements andAmendments. The Company may from time to time, and the Rights Agentshall, if the Company directs, supplement or amend this Agreement without theapproval of any holders of Right Certificates in order to cure any ambiguity,to correct or supplement any provision contained herein which may be defectiveor inconsistent with any other provisions herein, or to make any otherprovisions or changes with respect to the Rights which the Company may deemnecessary or desirable, including, without limitation, to modify or amend thedefinition of Acquiring Person set forth in Section 1(a) hereof, to change thePurchase Price set forth in Section 7(b), or to extend (to the extent permittedby the second sentence of Section 23 hereof) or shorten the period forredemption of the Rights: provided, however, that after theperiod for redemption of the Rights has expired, no supplement or amendment mayextend the period for redemption of the Rights, or otherwise provide for theirredemption; and provided further that from and after the time that theRights are no longer redeemable, this Agreement shall not be amended in anymanner which would adversely affect the interests of the

 

 

 

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holdersof Rights (other than an Acquiring Person and its Affiliates and Associates).Any such supplement or amendment will be evidenced by a writing signed by theCompany and the Rights Agent.

 

                Section 28. Successors. All thecovenants and provisions of this Agreement by or for the benefit of the Companyor the Rights Agent shall bind and inure to the benefit of their respectivesuccessors and assigns hereunder.

 

                Section 29. Benefits or thisAgreement. Nothing in this Agreement shall be construed to give to anyperson or corporation other than the Company , the Rights Agent and theregistered holders of the Right Certificates (and, prior to the DistributionDate, the Common Shares) any legal or equitable right, remedy or claim underthis Agreement; but this Agreement shall be for the sole and exclusive benefitof the Company, the Rights Agent and the registered holders of the RightCertificates (and, prior to the Distribution Date, the Common Shares).

 

                Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court ofcompetent jurisdiction or other authority to be invalid, void or unenforceable,then such term, provision, covenant or restriction shall be enforced to themaximum extent permissible, and the remainder of the terms, provisions,covenants and restrictions of this Agreement shall remain in full force andeffect and shall in no way be affected, impaired or invalidated.

 

                Section 31. Governing Law. ThisAgreement and each Right Certificate issued hereunder shall be deemed to be acontract made under the laws of the State of Delaware and for all purposesshall be governed by and construed in accordance with the laws of such State applicableto contracts to be made and performed entirely within such State.

 

                Section 32. Counterparts. ThisAgreement may be executed in any number of counterparts and each of suchcounterparts shall for all purposes be deemed to be an original, and all suchcounterparts shall together constitute but one and the same instrument.

 

                Section 33. Descriptive Headings.Descriptive headings of the several Sections of this Agreement are inserted forconvenience only and shall not control or affect the meaning or construction ofany of the provisions thereof.

 

                Section 34. Entire Agreement. ThisAgreeement contains the entire agreement between the parties with respect tothe subject matter hereof.

 

 

 

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                IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be duly executed and attested, all as of the day and yearfirst above written.

 

 

 
|    |   |   | Company:                         |                                                  |
|---------|--------|--------|----------------------------------|-------------------------------------------------------|
|    |   |   |                             |                                                  |
|    |   |   | **RACOTEK, INC.**                |
|    |   |   |                             |                                                  |
| Attest: |   |   |                             |                                                  |
|    |   |   |                             |                                                  |
| By:     |   |   | By:                              |                                                  |
|    |   |   |                             |                                                  |
| Title:  |   |   | Title:                           | Vice President of Finance and                         |
|    |   |   |                             | Administration, Chief Financial Officer and Secretary |
|    |   |   |                             |                                                  |
|    |   |   |                             |                                                  |
|    |   |   | Rights Agent:                    |                                                  |
|    |   |   |                             |                                                  |
|    |   |   | **NORWEST BANK MINNESOTA, N.A.** |
|    |   |   |                             |                                                  |
| Attest: |   |   |                             |                                                  |
|    |   |   |                             |                                                  |
| By:     |   |   | By:                              |                                                  |
|    |   |   |                             |                                                  |
| Title:  |   |   | Title                            |                                                  |
|         |        |        |                                  |                                                       |  |  |  |  |  |  |  |

 

 

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**Exhibit A**

FORM

 

of

 

CERTIFICATE OF DESIGNATIONS

 

of

 

SERIES A JUNIOR PARTICIPATING PREFERREDSTOCK

 

of

 

 

RACOTEK, INC.

 

(Pursuant to Section 151 of the

 

Delaware General Corporation Law)

 

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                Racotek, Inc., a corporationorganized and existing under the General Corporation Law of the State ofDelaware (hereinafter called the “Corporation”), hereby certifies that thefollowing resolution was adopted by the Board of Directors of the Corporationas required by Section 151 of the General Corporation Law at a meeting dulycalled and held on September 7, 1994:

 

                RESOLVED, that pursuant to theauthority granted to and vested in the Board of Directors of this Corporation(hereinafter called the “Board of Directors” or the “Board”) in accordance withthe provisions of the Certificate of Incorporation of the Corporation, theBoard of Directors hereby creates a series of Preferred Stock, par value $0.01per share ( the “Preferred Stock”), of the Corporation and hereby states thedesignation and number of shares, and fixes the relative rights, preferences,and limitations thereof as follows:

 

                Series A Junior ParticipatingPreferred Stock:

 

                Section 1. Designation andAmount. The shares of such series shall be designated as “Series A JuniorParticipating Preferred Stock” (the “Series A Preferred Stock”) and the numberof shares constituting the Series A Preferred Stock shall be 350,000. Suchnumber of shares may be increased or decreased by resolution of the Board ofDirectors; provided, that no decrease shall reduce the number of sharesof Series A Preferred Stock to a number less than the number of shares thenoutstanding plus the number of shares reserved for issuance upon the exerciseof outstanding options, rights or warrants or upon the conversion of anyoutstanding securities issued by the Corporation convertible into Series APreferred Stock.

 

 

 

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                Section 2. Dividends andDistributions.

 

                                   (A)       Subject to the rights of the holders ofany shares of any series of Preferred Stock (or any other stock) ranking priorand superior to the Series A Preferred Stock with respect to dividends, theholders of shares of Series A Preferred Stock shall be entitled to receive,when, as and if declared by the Board of Directors out of funds legallyavailable for the purpose, quarterly dividends payable in cash on the first dayof March, June, September and December in each year (each such date beingreferred to herein as a “Quarterly Dividend Payment Date”), commencing on thefirst Quarterly Dividend Payment Date after the first issuance of a share orfraction of a share of Series A Preferred Stock, in an amount (if any) pershare (rounded to the nearest cent), subject to the provision for adjustmenthereinafter set forth, equal to 100 times the aggregate per share amount of allcash dividends, and 100 times the aggregate per share amount (payable in kind)of all non-cash dividends or other distributions, other than a dividend payablein shares of Common Stock, par value $0.01 per share (the “Common Stock”), ofthe Company or a subdivision of the outstanding shares of Common Stock (byreclassification or otherwise), declared on the Common Stock since theimmediately preceding Quarterly Dividend Payment Date or, with respect to thefirst Quarterly Dividend Payment Date, since the first issuance of any share orfraction of a share of Series A Preferred Stock. In the event the Corporationshall at any time declare or pay any dividend on the Common Stock payable inshares of Common Stock, or effect a subdivision or combination or consolidationof the outstanding shares of Common Stock (by reclassification or otherwisethan by payment of a dividend in shares of Common Stock) into a greater orlesser number of shares of Common Stock, then in each such case the amount towhich holders of shares of Series A Preferred Stock were entitled immediatelyprior to such event under the preceding sentence shall be adjusted bymultiplying such amount by a fraction, the numerator of which is the number ofshares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that wereoutstanding immediately prior to such event.

 

                                (B)           The Corporation shall declare adividend or distribution on the Series A Preferred Stock as provided inparagraph (A) of this Section immediately after it declares a dividend ordistribution on the Common Stock (other than a dividend payable in shares ofCommon Stock).

 

                                (C)           Dividends due pursuant to paragraph(A) of this Section shall begin to accrue and be cumulative on outstandingshares of Series A Preferred Stock from the Quarterly Dividend Payment Datenext preceding the date of issue of such shares, unless the date of issue ofsuch shares is prior to the record date for the first Quarterly DividendPayment Date, in which case dividends on such shares shall begin to accrue fromthe date of issue of such shares, or unless the date of issue is a QuarterlyDividend Payment Date or is a date after the record date for the determinationof holders of shares of Series A Preferred Stock entitled to receive aquarterly dividend and before such Quarterly Dividend Payment Date, in eitherof which events such dividends shall begin to accrue and be cumulative fromsuch Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series APreferred Stock in an amount less than the total amount of such dividends atthe time accrued and payable on such shares shall be allocated pro rata on ashare-by-share basis among all such shares at the time outstanding. The Boardof Directors may fix a record date for the determination of holders of sharesof Series A Preferred Stock entitled to receive payment of a dividend or

 

 

 

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distributiondeclared thereon, which record date shall be not more than 60 days prior to thedate fixed for the payment thereof.

 

                Section 3. Voting Rights.The holders of shares of Series A Preferred Stock shall have the followingvoting rights:

 

                              (A)            Subject to the provision foradjustment hereinafter set forth, each share of Series A Preferred Stock shallentitle the holder thereof to 100 votes on all matters submitted to a vote ofthe stockholders of the Corporation. In the event the Corporation shall at anytime declare or pay any dividend on the Common Stock payable in shares ofCommon Stock, or effect a subdivision or combination or consolidation of theoutstanding shares of Common Stock (by reclassification or otherwise than bypayment of a dividend in shares of Common Stock) into a greater or lessernumber of shares of Common Stock, then in each such case the number of votesper share to which holders of shares of Series A Preferred Stock were entitledimmediately prior to such event shall be adjusted by multiplying such number bya fraction, the numerator of which is the number of shares of Common Stockoutstanding immediately after such event and the denominator of which is thenumber of shares of Common Stock that were outstanding immediately prior tosuch event.

 

                              (B)            Except as otherwise provided herein,in any other Certificate of Designations creating a series of Preferred Stockor any similar stock, or by law, the holders of shares of Series A PreferredStock and the holders of shares of Common Stock and any other capital stock ofthe Corporation having general voting rights shall vote together as one classon all matters submitted to a vote of stockholders of the Corporation.

 

                              (C)            Except as set forth herein, or asotherwise provided by law, holders of Series A Preferred Stock shall have no specialvoting rights and their consent shall not be required (except to the extentthey are entitled to vote with holders of Common Stock as set forth herein) fortaking any corporate action.

 

                Section 4. CertainRestrictions.

 

                              (A)            Whenever quarterly dividends orother dividends or distributions payable on the Series A Preferred Stock asprovided in Section 2 are in arrears, thereafter and until all accrued andunpaid dividends and distributions, whether or not declared, on shares ofSeries A Preferred Stock outstanding shall have been paid in full, theCorporation shall not:

 

                                                (i)            declare or pay dividends, or makeany other distributions, on any shares of stock ranking junior (either as todividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock;

 

                                                (ii)           declare or pay dividends, or make anyother distributions, on any shares of stock ranking on a parity (either as todividends or upon liquidation, dissolution or winding up) with the Series APreferred Stock, except dividends paid ratably on the Series A Preferred Stockand all such parity stock on which dividends are payable or in arrears inproportion to the total amounts to which the holders of all such shares arethen entitled; or

 

 

 

3

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                                                (iii)          redeem or purchase or otherwiseacquire for consideration shares of any stock ranking junior (either as todividends or upon liquidation, dissolution or winding up) to the Series APreferred Stock, provided that the Corporation may at any time redeem, purchaseor otherwise acquire shares of any such junior stock in exchange for shares ofany stock of the Corporation ranking junior (as to dividends and upondissolution, liquidation or winding up) to the Series A Preferred Stock.

 

                              (B)            The Corporation shall not permit anysubsidiary of the Corporation to purchase or otherwise acquire forconsideration any shares of stock of the Corporation unless the Corporationcould, under paragraph (A) of this Section 4, purchase or otherwise acquiresuch shares at such time and in such manner.

 

                Section 5.Reacquired Shares.Any shares of Series A Preferred Stock purchased or otherwise acquired by theCorporation in any manner whatsoever shall be retired and cancelled promptlyafter the acquisition thereof. All such shares shall upon their cancellationbecome authorized but unissued shares of Preferred Stock and may be reissued aspart of a new series of Preferred Stock subject to the conditions andrestrictions on issuance set forth herein, in the Certificate of Incorporation,or in any other Certificate of Designations creating a series of PreferredStock or any similar stock or as otherwise required by law.

 

                Section 6. Liquidation,Dissolution or Winding Up

 

                              (A)            Upon any liquidation, dissolution orwinding up of the Corporation, the holders of shares of Series A PreferredStock shall be entitled to receive, prior and in preference to any distributionof any assets of the Corporation to the holders of Common Stock, the amount of$1.00 per share for each share of Series A Preferred Stock then held by them.Thereafter, the holders of shares of Series A Preferred Stock shall be entitledto receive an aggregate amount per share, subject to the provision foradjustment hereinafter set forth, equal to 100 times the aggregate amount to bedistributed per share to holders of shares of Common Stock plus an amount equalto any accrued and unpaid dividends. In the event the Corporation shall at anytime declare or pay any dividend on the Common Stock payable in shares ofCommon Stock, or effect a subdivision or combination or consolidation of theoutstanding shares of Common Stock (by reclassification or otherwise than bypayment of a dividend in shares of Common Stock) into a greater or lessernumber of shares of Common Stock, then in each such case the aggregate amountto which holders of shares of Series A Preferred Stock were entitledimmediately prior to such event under the preceding sentence shall be adjustedby multiplying such amount by a fraction the numerator of which is the numberof shares of Common Stock outstanding immediately after such event and thedenominator of which is the number of shares of Common Stock that wereoutstanding immediately prior to such event.

 

                              (B)            If the assets of the Corporationlegally available for distribution to the holders of shares of Series APreferred Stock upon liquidation, dissolution or winding up of the Corporationare insufficient to pay the full preferential amount set forth in the firstsentence of paragraph (A) above, then the entire assets of the Corporationlegally available for distribution to the holders of Series A Preferred Stockshall be distributed among such holders in proportion to the shares of Series APreferred Stock then held by them.

 

 

4

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                              (C)            The foregoing rights uponliquidation, dissolution or winding up provided to the holders of Series APreferred Stock shall be subject to the rights of the holders of any otherseries of Preferred Stock (or any other stock) ranking prior and superior tothe Series A Preferred Stock upon liquidation, dissolution or winding up.

 

                Section 7. Consolidation,Merger, etc. In case the Corporation shall enter into any consolidation,merger, combination or other transaction in which the shares of Common Stockare exchanged for or changed into other stock or securities, cash and/or otherproperty, then in any such case each share of Series A Preferred Stock shall atthe same time be similarly exchanged or changed into an amount per share,subject to the provision for adjustment hereinafter set forth, equal to 100times the aggregate amount of stock, securities, cash and/or any other property(payable in kind), as the case may be, into which or for which each share ofCommon Stock is changed or exchanged. In the event the Corporation shall at anytime declare or pay any dividend on the Common Stock payable in shares ofCommon Stock, or effect a subdivision or combination or consolidation of theoutstanding shares of Common Stock (by reclassification or otherwise than bypayment of a dividend in shares of Common Stock) into a greater or lessernumber of shares of Common Stock, then in each such case the amount set forthin the preceding sentence with respect to the exchange or change of shares ofSeries A Preferred Stock shall be adjusted by multiplying such amount by afraction, the numerator of which is the number of shares of Common Stockoutstanding immediately after such event and the denominator of which is thenumber of shares of Common Stock that were outstanding immediately prior tosuch event.

 

                Section 8. No Redemption.The shares of Series A Preferred Stock shall not be redeemable.

 

                IN WITNESS WHEREOF, thisCertificate of Designations is executed on behalf of the Corporation by itsPresident and attested by its Secretary this        day of September, 1994.

 

 
|   | Company:          |                                  |
|--------|-------------------|---------------------------------------|
|   |              |
|   | **RACOTEK, INC.** |
|   |              |
|   | By:               |                                  |
|   |              | President and Chief Executive Officer |
|        |                   |                                       |  |

 
| Attest: |                                                                                 |   |
|---------|--------------------------------------------------------------------------------------|--------|
|    |                                                                                 |   |
| By:     |                                                                                 |   |
|    | Vice President of Finance and Administration, Chief Financial  Officer and Secretary |   |

 

 

 

5

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**Exhibit B**

**FORM OF RIGHT CERTIFICATE**

 
| Certificate No. R- |   | Rights |
|--------------------|--------|--------|

 

NOTEXERCISABLE AFTER SEPTEMBER 12, 2004 OR EARLIER IF REDEMPTION OR EXCHANGEOCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.005 PER RIGHT AND TOEXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

 

**RIGHT CERTIFICATE**

** **

**RACOTEK, INC.**

 

                This certifies that                         or registeredassigns, is the registered owner of the number of Rights set forth above, eachof which entitles the owner thereof, subject to the terms, provisions and conditionsof the Rights Agreement, dated as of September 12, 1994 (the “RightsAgreement”), between Racotek, Inc., a Delaware corporation (the “Company”), andNorwest Bank Minnesota, N.A. (the “Rights Agent”), to purchase from the Companyat any time after the Distribution Date (as such term is defined in the RightsAgreement) and prior to 5:00 p.m., Pacific Time, on September 12, 2004 at theprincipal office of the Rights Agent, or at the office of its successor asRights Agent, one one-hundredth of a fully paid non-assessable share of SeriesA Junior Participating Preferred Stock, par value $0.01 per share (the“Preferred Shares”), of the Company, at a purchase price of $25.00 per oneone-hundredth of a Preferred Share (the “Purchase Price”), upon presentationand surrender of this Right Certificate with the Certification and the Form ofElection to Purchase duly executed. The number of Rights evidenced by thisRight Certificate (and the number of one one-hundredths of a Preferred Sharewhich may be purchased upon exercise hereof) set forth above, and the PurchasePrice set forth above, are the number and Purchase Price as of September 28,1994, based on the Preferred Shares as constituted at such date. As provided inthe Rights Agreement, the Purchase Price and the number of one one-hundredthsof a Preferred Share which may be purchased upon the exercise of the Rightsevidenced by this Right Certificate are subject to modification and adjustmentupon the happening of certain events.

 

                This Right Certificate issubject to all of the terms, provisions and conditions of the Rights Agreement,which terms, provisions and conditions are hereby incorporated herein byreference and made a part hereof and to which Rights Agreement reference ishereby made for a full description of the rights, limitations of rights,obligations, duties and immunities hereunder of the Rights Agent, the Companyand the holders of the Right Certificates. Copies of the Rights Agreement areon file at the principal executive offices of the Company and theabove-mentioned offices of the Rights Agent.

 

                This Right Certificate, with orwithout other Right Certificates, upon surrender at the principal office of theRights Agent, may be exchanged for another Right Certificate or RightCertificates of like tenor and date evidencing Rights entitling the holder topurchase alike aggregate number of Preferred Shares as the Rights evidenced bythe Right Certificate or Right Certificates surrendered shall have entitledsuch holder to purchase. If this Right Certificate shall

 

 

 

 

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beexercised in part, the holder shall be entitled to receive upon surrenderhereof another Right Certificate or Right Certificates for the number of wholeRights not exercised.

 

                Subject to the provisions of theRights Agreement, the Rights evidenced by this Certificate (i) may be redeemedby the Company at a redemption price of $0.005 per Right or (ii) may beexchanged in whole or in part for Preferred Shares or shares of the Company’sCommon Stock, par value $0.01 per share.

 

                No fractional Preferred Shareswill be issued upon the exercise of any Right or Rights evidenced hereby (otherthan fractions which are integral multiples of one one-hundredth of a PreferredShare, which may, at the election of the Company, be evidenced by depositoryreceipts), but in lieu thereof a cash payment will be made, as provided in theRights Agreement.

 

                No holder of this RightCertificate shall be entitled to vote or receive dividends or be deemed for anypurpose the holder of the Preferred Shares or of any other securities of theCompany which may at any time be issuable on the exercise hereof, nor shallanything contained in the Rights Agreement or herein be construed to conferupon the holder hereof, as such, any of the rights of a stockholder of theCompany or any right to vote for the election of directors or upon any mattersubmitted to stockholders at any meeting thereof, or to give or withholdconsent to any corporate action, or to receive notice of meetings or otheractions affecting stockholders (except as provided in the Rights Agreement), orto receive dividends or subscription rights, or otherwise, until the Right orRights evidenced by this Right Certificate shall have been exercised asprovided in the Rights Agreement.

 

                This Right Certificate shall notbe valid or obligatory for any purpose until it shall have been countersignedby the Rights Agent.

 

                WITNESS the facsimile signatureof the proper officers of the Company and its corporate seal. Dated as of:

 

 
| ATTEST: |   |   | Company:          |   |
|---------|--------|--------|-------------------|--------|
|    |   |   |              |
|    |   |   | **RACOTEK, INC.** |
|    |   |   |              |
| By:     |   |   | By:               |   |
|         |        |        |                   |        |  |  |

 

Countersigned:

 

RightsAgent:

 

**NORWEST BANK MINNESOTA, N.A.**

 
| By:    |                 |
|--------|----------------------|
|   | Authorized Signature |

 

 

 

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Form of Reverse Side of Right Certificate

 

**FORM OF ASSIGNMENT**

 

(To be executed by the registered holderif such holder desires to transfer the Right Certificate)

 

                FOR VALUE RECEIVED________________________________________ hereby sells, assigns and transfersunto ______________________________________________________________________(Please print name and address of transferee) this Right Certificate, togetherwith all right, title and interest therein, and does hereby irrevocablyconstitute and appoint ________________________________________ Attorney, totransfer the within Right Certificate on the books of the within-named Company,with full power of substitution.

 

 
| Dated: |   |   |      |
|--------|--------|--------|-----------|
|   |   |   |      |
|   |   |   |      |
|   |   |   | Signature |

 

 

Signature(s)Guaranteed:

 

                SIGNATURE(S) SHOULD BEGUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGSAND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVEDSIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

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                The undersigned hereby certifiesthat the Rights evidenced by this Right Certificate are not beneficially ownedby an Acquiring Person or an Affiliate or Associate thereof (as defined in theRights Agreement).

 
|   |   |   |      |
|--------|--------|--------|-----------|
|   |   |   |      |
|   |   |   | Signature |

 

 

 

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                The undersigned hereby certifiesthat the Rights evidenced by this Right Certificate are not beneficially ownedby an Acquiring Person or an Affiliate or Associate thereof (as defined in theRights Agreement).

 
|   |   |   |      |
|--------|--------|--------|-----------|
|   |   |   |      |
|   |   |   | Signature |

 

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NOTICE

 

                The signature in the foregoingForms of Assignment and Election must conform to the name as written upon theface of this Right Certificate in every particular, without alteration or anychange whatsoever.

 

                In the event the certificationset forth above in the Form of Assignment or the Form of Election to Purchase,as the case may be, is not completed, the Company and the Rights Agent willdeem the beneficial owner of the Rights evidenced by this Right Certificate tobe an Acquiring Person or an Affiliate or Associate thereof (as defined in theRights Agreement) and such Assignment or Election to Purchase will not behonored.

 

 

 

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**FORM OF ELECTION TOPURCHASE**

 

(To be executed if holder desires toexercise the Right Certificate )

 

 

To                             :

 

                The undersigned herebyirrevocably elects to exercise                Rights represented by this Right Certificate to purchase the PreferredShares issuable upon the exercise of such Rights and requests that certificatesfor such Preferred Shares be issued in the name of:

 

 
| Please insert social security 

or other identifying number |   |
|-------------------------------------------------------------|--------|
|                                                        |   |
|                                                        |   |
| (Please print name and address)                             |   |
|                                                        |   |
|                                                        |   |
|                                                        |   |
|                                                        |   |

 

 

If suchnumber of Rights shall not be all the Rights evidenced by this RightCertificate, a new Right Certificate for the balance remaining of such Rightsshall be registered in the name of and delivered to:

 

 
| Please insert social security or 

other identifying number |   |
|-------------------------------------------------------------|--------|
|                                                        |   |
|                                                        |   |
| (Please print name and address)                             |   |
|                                                        |   |
|                                                        |   |
|                                                        |   |
|                                                        |   |

 

 
| Dated: |   | , 1994 |      |
|--------|--------|--------|-----------|
|   |   |   |      |
|   |   |   |      |
|   |   |   | Signature |

 

Signature(s)Guaranteed:

 

                SIGNATURE(S) SHOULD BEGUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGSAND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVEDSIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

 

 

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**Exhibit C**

**SUMMARY OF RIGHTSTO PURCHASE PREFERRED SHARES**

 

                On September 7, 1994, the Boardof Directors of Racotek, Inc. (the "Company”) declared a dividend of onepreferred share purchase right (a “Right”) for each outstanding share of commonstock, par value $0.01 per share (the “Common Shares”), of the Company. Thedividend is payable to stockholders of record on September 28, 1994 (the“Record Date”). In addition, one Right shall be issued with each Common Sharethat becomes outstanding between the Record Date and the earliest of theDistribution Date, the Redemption Date and the Final Expiration Date (as suchterms are hereinafter defined). Each Right entitles the registered holder topurchase from the Company one one-hundredth of a share of Series A JuniorParticipating Preferred Stock, par value $0.01 per share (the “PreferredShares”), of the Company, at a price of $25.00 per one one-hundredth of aPreferred Share (the “Purchase Price”), subject to adjustment. The descriptionand terms of the Rights are set forth in a Rights Agreement (the “RightsAgreement”) between the Company and Norwest Bank Minnesota, N.A., as RightsAgent (the “Rights Agent”).

 

                Until the earlier to occur of (i)10 days following a public announcement or disclosure that a person or group ofaffiliated or associated persons (an “Acquiring Person”), has acquiredbeneficial ownership of 20% or more of the outstanding Common Shares (the dateof such announcement or disclosure being the “Shares Acquisition Date”) or (ii)10 business days (or such later date as may be determined by action of theBoard of Directors prior to such time as any person becomes an AcquiringPerson) following the announcement of an intention to make a tender offer orexchange offer the consummation of which would result in the beneficialownership by a person or group of 20% or more of such outstanding Common Shares(the earlier of such dates being called the “Distribution Date”), the Rights willbe evidenced by Common Share certificates with a copy of this Summary of Rightsattached thereto.

 

                The Rights Agreement providesthat, until the Distribution Date, the Rights will be transferred with and onlywith the Common Shares. Until the Distribution Date (or earlier redemption orexpiration of the Rights), new Common Share certificates issued after theRecord Date, upon transfer or new issuance of Common Shares, will contain anotation incorporating the Rights Agreement by reference. Until the DistributionDate (or earlier redemption or expiration of the Rights), the surrender fortransfer of any certificates for Common Shares, even without such notation or acopy of this Summary of Rights being attached thereto, will also constitute thetransfer of the Rights associated with the Common Shares represented by suchcertificate. As soon as practicable following the Distribution Date, separatecertificates evidencing the Rights (“Right Certificates”) will be mailed toholders of record of the Common Shares as of the Close of Business on theDistribution Date and such separate Right Certificates alone will evidence theRights.

 

 

 

 

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                The Rights are not exercisableuntil the Distribution Date. The Rights will expire on September 12, 2004 (the“Final Expiration Date”), unless the Final Expiration Date is extended orunless the Rights are earlier redeemed or exchanged by the Company, in eachcase, as described below.

 

                The Purchase Price payable, andthe number of Preferred Shares or other securities or property issuable, uponexercise of the Rights are subject to adjustment from time to time to preventdilution (i) in the event of a stock dividend on, or a subdivision, combinationor reclassification of, the Preferred Shares, (ii) upon the grant to holders ofthe Preferred Shares of certain rights or warrants to subscribe for or purchasePreferred Shares at a price, or securities convertible into Preferred Shareswith a conversion price, less than the then current market price of thePreferred Shares or (iii) upon the distribution to holders of the PreferredShares of evidences of indebtedness or assets (excluding regular periodic cashdividends paid out of earnings or retained earnings or dividends payable inPreferred Shares) or of subscription rights or warrants (other than thosereferred to above).

 

                The number of outstanding Rightsand the number of one one-hundredths of a Preferred Share issuable uponexercise of each Right are also subject to adjustment in the event of a stockdividend on the Common Shares payable in Common Shares or subdivisions,consolidations or combinations of the Common Shares occurring, in any suchcase, prior to the Distribution Date.

 

                Preferred Shares purchasableupon exercise of the Rights will not be redeemable. Each Preferred Share willbe entitled to a quarterly dividend payment of 100 times the dividend declaredper Common Share. In the event of liquidation, each Preferred Share will beentitled to a $1.00 preference, and thereafter the holders of the PreferredShares will be entitled to an aggregate payment of 100 times the aggregatepayment made per Common Share. Each Preferred Share will have 100 votes, votingtogether with the Common Shares. Finally, in the event of any merger,consolidation or other transaction in which Common Shares are exchanged, eachPreferred Share will be entitled to receive 100 times the amount received perCommon Share. These rights are protected by customary antidilution provisions.

 

                Because of the nature of thePreferred Shares’ dividend, liquidation and voting rights, the value of the oneone-hundredth interest in a Preferred Share purchasable upon exercise of eachRight should approximate the value of one Common Share.

 

                In the event that any personbecomes an Acquiring Person, proper provision will be made so that each holderof a Right, other than Rights beneficially owned by the Acquiring Person (whichwill thereafter be void), will thereafter have the right to receive uponexercise that number of Common Shares having a market value of two times theexercise price of the Right. If the Company does not have authorized butunissued Common Shares sufficient to satisfy such obligation to issue CommonShares, the Company is obligated to deliver upon payment of the exercise priceof a Right an amount of cash or other securities equivalent in value to theCommon Shares issuable upon exercise of a Right.

 

 

 

2

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                In the event that, after theDistribution Date, the Company is acquired in a merger or other businesscombination transaction by an Acquiring Person, or 50% or more of itsconsolidated assets or earning power are sold to an Acquiring Person, eachholder of a Right, other than Rights beneficially owned by an Acquiring Person,will thereafter have the right to receive, upon the exercise thereof at thethen current exercise price of the Right, that number of shares of common stockof the acquiring company which at the time of such transaction will have amarket value of two times the exercise price of the Right.

 

                At any time after any person becomesan Acquiring Person and prior to the acquisition by such person or group of 50%or more of the outstanding Common Shares, the Board of Directors of the Companymay exchange the Rights (other than Rights owned by such person or group whichhave become void), in whole or in part, at an exchange ratio of one CommonShare, or one one-hundredth of a Preferred Share (or of a share of a class orseries of the Company’s preferred stock having equivalent rights, preferencesand privileges), per Right (subject to adjustment).

 

                With certain exceptions, noadjustment in the Purchase Price will be required until cumulative adjustmentsrequire an adjustment of at least 1% in such Purchase Price. No fractionalPreferred Shares will be issued (other than fractions which are integralmultiples of one one-hundredth of a Preferred Share, which may, at the electionof the Company, be evidenced by depository receipts) and in lieu thereof, anadjustment in cash will be made based on the market price of the PreferredShares on the last trading day prior to the date of exercise.

 

                At any time prior to the earlierof (i) the Close of Business on the tenth day following the Shares AcquisitionDate and (ii) the expiration date of the Rights, the Board of Directors of theCompany may redeem the Rights in whole, but not in part, at a price of $0.005per Right (the “Redemption Price”). The redemption of the Rights may be madeeffective at such time, on such basis and with such conditions as the Board ofDirectors in its sole discretion may establish. Notwithstanding the foregoing,if, and so long as, following the Shares Acquisition Date a majority of themembers of the Board of Directors are persons who were members of the Boardimmediately prior to the Shares Acquisition Date, then the Board may extend theperiod to redeem the Rights, except that after the period for redemption of theRights has expired, the Board may not amend the Agreement to extend the periodfor redemption of the Rights. Immediately upon any redemption of the Rights,the right to exercise the Rights will terminate and the only right of theholders of Rights will be to receive the Redemption Price. Additionally, theRights shall not be exercisable for Common Shares upon a person becoming anAcquiring Person, until the Company’s right to redeem the Rights hasterminated.

 

                The terms of the Rights may beamended by the Board of Directors of the Company without the consent of theholders of the Rights, except that from and after such time as the period forredemption of the Rights has expired, no such amendment may adversely affectthe interests of the holders of the Rights (other than an Acquiring Person).

 

                Until a Right is exercised, theholder thereof, as such, will have no rights as a stockholder of the Company,including, without limitation, the right to vote or to receive dividends.

 

 

 

3

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                A copy of the Rights Agreementhas been filed with the Securities and Exchange Commission as an Exhibit to aRegistration Statement on Form 8-A dated September            , 1994. A copy of the Rights Agreement is availablefree of charge from the Company. This summary description of the Rights doesnot purport to be complete and is qualified in its entirety by reference to theRights Agreement, which is hereby incorporated herein by reference.

 

 

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