Document:

pfsw-ex101_6.htm

 

Exhibit 10.1

 

NOMINATION AND STANDSTILL AGREEMENT

 

This Nomination and Standstill Agreement, dated March 15, 2019 (this “Agreement”), is by and among the persons and entities listed on Schedule A hereto (collectively, the “Ajdler Group” or the “Investors”, and individually a “member” of the Ajdler Group) and PFSweb, Inc. (the “Company”).

 

In consideration of and reliance upon the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

	
 
	
1.
	
Board Matters.

 

(a)The Company agrees, as promptly as practicable following the execution of this Agreement, that the Board of Directors of the Company (the “Board”) shall take the necessary actions to (i) increase the size of the Board (ii) appoint Mr. Rob Frankfurt (“Mr. Frankfurt”) to fill a newly created vacancy on the Board and (iii) nominate Mr. Frankfurt for election to the Board as part of the Company’s director slate for its 2019 Annual Meeting.

 

(b)Prior to the date of this Agreement, Mr. Frankfurt has submitted to the Company a fully completed copy of the Company’s D&O Questionnaire and other onboarding materials. Mr. Frankfurt shall timely provide the Company with his consent to be named in the Company’s proxy statement and to serve on the Board if elected (the “Nomination Documents”) in connection with the Company’s obligation in subsection (a)(iii) above.

 

(c)Upon becoming a member of the Board, Mr. Frankfurt shall have the same rights (including for the avoidance of doubt with respect to consideration for committee appointments) and duties as any other Board member. At all times from the date of this Agreement through to the date he terminates his service as a member of the Board, Mr. Frankfurt shall comply with all written policies, procedures, processes, codes, rules, standards and guidelines applicable to Board members, and of which Mr. Frankfurt has been provided written copies in advance (or which have been filed with the Securities and Exchange Commission (the “SEC”) or posted on the Company’s website), including but not limited to the Company’s corporate governance guidelines, corporate code of conduct, code of ethics, director stock ownership guidelines and insider trading policy and shall preserve the confidentiality of Company business and information, including discussions or matters considered in meetings of the Board or Board committees, subject to the confidentiality provisions in Section 2.

 

(d) The Company has agreed with the Ajdler Group to include Mr. Frankfurt in the Company’s slate of directors for the 2019 Annual Meeting, and the Company shall use reasonable commercial efforts to cause Mr. Frankfurt to be elected (including by recommending that the Company’s stockholders vote in favor of the election of Mr. Frankfurt, including Mr. Frankfurt in the Company’s proxy statement and proxy card for such annual meeting and otherwise supporting Mr. Frankfurt for election in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees in the aggregate) (collectively, the “Election Support Efforts”), and the Ajdler Group agrees not to nominate director candidates or conduct a proxy contest regarding any matter, including the election of directors or the submission of a shareholder proposal, with respect to the 2019 Annual Meeting.

 

(e)The Ajdler Group agrees that the Board or any of its committees may recuse Mr. Frankfurt from any Board or committee meeting or portion thereof at which the Board or such committee is evaluating or taking action with respect to (i) the exercise of the Company’s rights or enforcement of any of the obligations under this Agreement; (ii) any action taken in response to actions taken or proposed by an Investor with respect to the Company; (iii) Mr. Frankfurt’s breach of this Agreement or failure to comply with the Company’s charter, bylaws or policies that are applicable to all directors or (iv) any proposed transaction between the Company and any Investor.

Engine Capital - 1

 

(f)If Mr. Frankfurt is unable to serve as a director or nominee prior to the expiration of the Standstill Period (as defined in Section 4 below) and at such time as Ajdler Group’s maintains a Minimum Ownership Threshold (defined below), the Ajdler Group shall have the ability to recommend a replacement person(s) (any such person shall be referred to as a "Ajdler Replacement Appointee") (x) for nomination for election to the Board if Mr. Frankfurt had been nominated for election to the Board or (y) for appointment to the Board if Mr. Frankfurt had been serving on the Board, each in accordance with this Section 1(f). Any Replacement Appointee must (i) qualify as “independent” of the Company pursuant to the listing standards of the NASDAQ, (ii) have relevant business and financial expertise to be a director of the Company, (iii) be independent of each member of Ajdler Group and (iv) be reasonably acceptable to the Board (such acceptance not to be unreasonably withheld). Upon the recommendation of an Ajdler Replacement Appointee by the Ajdler Group, the Board and any applicable committee thereof shall make its determination regarding whether such Ajdler Replacement Appointee meets the foregoing criteria no later than ten (10) business days after such recommendation; provided, however, that if the Board does not accept such Ajdler Replacement Appointee as recommended, the parties shall continue to follow the procedures of this Section l(f) until an Ajdler Replacement Appointee is appointed or elected to the Board as recommended. Upon an Ajdler Replacement Appointee's appointment to the Board, the Board shall take all actions necessary to appoint such Ajdler Replacement Appointee to any applicable committee of the Board of which Mr. Frankfurt was a member immediately prior to his being unable to serve. The provisions of this Section 1(f) shall apply to any Ajdler Replacement Appointee nominated or appointed to the Board who becomes unable to serve as a director or nominee prior to the expiration of the Standstill Period. For the purposes of this subsection “Minimum Ownership Threshold” shall mean the Ajdler Group, together with all controlled Affiliates of the members of the Ajdler Group (such controlled Affiliates, collectively and individually, the “Ajdler Affiliates”), collectively beneficially own (as defined in Rule 13d-3 promulgated by the SEC under the Exchange Act), an aggregate Net Long Position of at least three percent (3%) of the number of outstanding Voting Securities (as defined in Section 6(b)below) (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like) and “Net Long Position” shall mean such shares of Common Stock beneficially owned, directly or indirectly, that constitute such person’s net long position as defined in Rule 14e-4 under the Exchange Act mutatis mutandis; provided that “Net Long Position” shall not include any shares as to which such person does not have the right to vote or direct the vote or as to which such person has entered into a derivative or other agreement, arrangement or understanding that hedges or transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of such shares.

  

2.Information/Confidentiality.  It is understood that Mr. Frankfurt and any Ajdler Replacement Appointee will receive certain non-public information (whether oral or written, or electronic media) concerning the Company in the role of a Board member. The Ajdler Group acknowledges that Mr. Frankfurt and any Ajdler Replacement Appointee will be required to hold such information in confidence and not make any disclosure of information concerning the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws upon the advice of counsel, (ii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iii) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement. The Ajdler Group further confirms that Mr. Frankfurt and any Ajdler Replacement Appointee Mr. Frankfurt shall, upon learning that disclosure of such information concerning the Company is (i) required to comply with federal and state securities law and (ii) sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to the Company and allow the Company to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. The Ajdler Group confirms that Mr. Frankfurt and any Ajdler Replacement Appointee will agree that if the Company is not successful in precluding the requested court or governmental body from requiring disclosure of such information, it will furnish only that portion of the information that is legally required in the opinion of its counsel, provided that such individual shall exercise reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the information. The provisions of this Section are without limitation, and do not restrict, modify or waive, any confidentiality or nondisclosure obligations of Mr. Frankfurt or any Ajdler Replacement Appointee arising by reason of such person’s service as a member of the Board or any committee thereof. 

Engine Capital - 2

 

3.Voting Commitment.  At the 2019 Annual Meeting, and at any meeting of the Company’s stockholders held prior to the expiration of the Standstill Period (defined in Section 4), each of the Investors agrees to comply with this Agreement and to cause the Investor Shares (as defined below) (i) to be present for purposes of establishing a quorum; and (ii) to be voted by proxy in favor of the election of all director candidates nominated by the Board; and (iii) to be voted by proxy in accordance with the Board’s recommendation with respect to each other matter submitted to and recommended for stockholder approval by the Board, including the ratification of the appointment of the Company’s designated independent registered public accounting firm for fiscal year ending December 31, 2019; provided, however, that on each such matter other than proposals relating to the election or removal of directors, to the extent both of Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co., LLC (“Glass Lewis”) recommend otherwise, the Investors may vote the Investor Shares in accordance with the ISS and Glass Lewis recommendation on such matter; provided further, the Investors may vote the Investor Shares in their discretion with respect to any tender offer, exchange offer, merger, consolidation, business combination or other change-of-control transaction of the Company. “Investor Shares” means any and all Voting Securities held beneficially or of record as of an applicable record date by the Investors and, with respect to Investors that are entities, the Affiliates and Associates (as each term is defined in Section 4) of such Investors, and, with respect to Investors that are individuals, the Family Members (as defined in Section 4) of such Investor.

 

4.Standstill.  Each Investor agrees that, from the date of this Agreement until the expiration of the Standstill Period, neither it nor any of its Affiliates or Associates or Family Members will, and it will cause each of its Affiliates and Associates and Family Members not to, directly or indirectly, in any manner, acting alone or in concert with others, take any of the following actions or advise, recommend, request, encourage, solicit, influence or induce any other person to take any of the following actions, or announce any intention to take any of the following actions:

 

(a)submit any stockholder proposal pursuant to Rule 14a-8 promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise, or any notice of nomination or bring any other business for consideration, or nominate any candidate for election to the Board;

 

(b) seek or encourage any person to submit nominations in the furtherance of a “Contested solicitation” for the election or removal of directors, or seek the removal of any member of the Board, initiate or participate in any removal contest, or knowingly initiate, encourage or participate in any “withhold” or similar campaign, or seek a change in the size or composition of the Board or the committees of the Board;

  

(c)knowingly initiate, encourage or engage, directly or indirectly, in any “solicitation” (as defined in Rule 14a-1 of Regulation 14A) of proxies (or written consents) or otherwise become a “participant in a solicitation” (as such term is defined in Instruction 3 of Schedule 14A of Regulation 14A under the Exchange Act) in opposition to the recommendation or proposal of the Board, or recommend or request or induce or attempt to induce or seek to advise, encourage or influence any other person with respect to the voting of any voting stock of the Company (including any withholding from voting) at any annual or special meeting of stockholders or grant a proxy with respect to the voting of any voting stock of the Company to any person other than to the Board or persons appointed as proxies by the Board;

 

(d)publicly or privately encourage or support any other stockholder to take any of the actions described in (a) and (b) of this Section 4;

 

(e)seek to call, or to request the call of, a special meeting of the Company’s stockholders for any purpose, including to amend any provision of the Company’s charter or Bylaws;

 

(f)make a request for a list of the Company’s stockholders or for any books and records of the Company; provided however, Mr. Frankfurt or any Ajdler Replacement Appointee shall have the right to request stock list materials or other books and records of the Company in its capacity as a director, if elected, of the Company;

Engine Capital - 3

 

(g)form, join in or in any other way participate in a “group” as a person or persons acting as a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to the voting stock of the Company (other than a “group” that consists solely of all or some of the persons parties to this Agreement or any of their respective Affiliates or Associates);

 

(h)deposit any shares of voting stock of the Company in a voting trust or similar arrangement or subject any shares of voting stock of the Company to any voting agreement or pooling arrangement, other than any such voting trust, arrangement or agreement solely among the Investors and otherwise in accordance with this Agreement;

 

(i)nominate, give notice of an intent to nominate, recommend or seek to place a representative or other Affiliate, Associate or nominee on the Board or vote for any nominee or nominees for election to the Board, other than those nominated or supported by the Board not in violation of the terms of this Agreement;

 

(j)acquire or agree, offer, seek or propose to acquire, or cause to be acquired, ownership (including beneficial ownership) of any of the assets or business of the Company or any rights or options to acquire any such assets or business from any person;

 

(k)other than at the express written request of a majority of the members of the Board, make, seek, propose, or make any statement with respect to, or solicit, negotiate with, or provide any information to any person with respect to, a merger, consolidation, acquisition of control or other business combination, tender or exchange offer, purchase, sale or transfer of assets or , dissolution, liquidation, reorganization, change in structure or composition of the Board, change in the executive officers of the Company, change to the Company’s organization documents, change in capital structure, recapitalization, dividend or distribution or change in dividend or distribution policy, share repurchase or similar transaction involving the Company, its subsidiaries or its business, whether or not any such transaction involves a change of control of the Company or make any public communication in opposition to any Company acquisition or disposition activity approved by the Board; provided, however, nothing herein shall limit the ability of the Investors to disclose, publicly or otherwise, how it intends to vote with respect to any announced tender offer, exchange offer, merger, consolidation, business combination or other change-of-control transaction that is being submitted for the approval of shareholders, and the reasons therefor, so long as any such activity is otherwise in compliance with the requirements of this Agreement;

 

(l)disclose publicly, or privately in a manner that could reasonably be expected to become public, any intention, plan or arrangement inconsistent with the foregoing or publicly request or advance any proposal to amend, modify or waive the terms of this Agreement; provided that the Investors may make confidential requests to the Board to amend, modify or waive any provision of this Section 4, which the Board may accept or reject in its sole discretion, so long as any such request is not publicly disclosed by the Investors and is made by the Investors in a manner that does not require the public disclosure of such request by the Company, the Investors or any other person;

 

(m)take any action challenging the validity or enforceability of any provisions of this Section 4; 

 

(n)institute, solicit, assist or join any litigation, arbitration or other proceeding against or involving the Company or any of its current or former directors or officers (including derivative actions), other than to enforce the provisions of this Agreement;

 

(o)enter into any negotiations, discussions, agreement, arrangement or understanding with any person concerning any of the foregoing (other than this Agreement) or encourage or solicit any person to undertake any of the foregoing activities; 

 

(p)propose, acquire, offer or seek to acquire, agree to acquire or acquire rights to acquire (whether publicly or otherwise, except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of the Company or beneficial ownership thereof or any voting rights decoupled from the underlying voting securities in excess of ten percent (10%) of the Company’s then-outstanding Common Stock; and

Engine Capital - 4

 

 

(q)other than in open market sale transactions or through a broker or dealer where the identity of the purchaser is not known, or in underwritten widely dispersed public offerings, sell, offer or agree to sell, directly or indirectly, its shares of Common Stock, through swap or hedging transaction or otherwise, any security of the Company or any right decoupled from such underlying security held by Investors to any third party that would to Investor’s knowledge result in such third party, together with its Affiliates, owning, controlling or otherwise having any beneficial or other ownership interest of any third party who, together with its Affiliates, has a beneficial ownership interest in the aggregate of 5% or more of the shares of Common Stock outstanding at such time, except in each case either (A) in a transaction approved by the Board or (B) to a third party who is entitled, and following such transaction continues to be entitled, to file statements on Schedule 13G pursuant to Rule 13d-1(b) or Rule 13d-1(c) promulgated under the Exchange Act.

 

Notwithstanding the foregoing, nothing in this Agreement shall prohibit or restrict the Investors from:  (A) communicating privately with the Board or the Chief Executive Officer of the Company regarding any matter, so long as such communications are not intended to, and would not reasonably be expected to, require any public disclosure of such communications, or (B) taking any action necessary to comply with any law, rule or regulation or any action required by any governmental or regulatory authority or stock exchange that has, or may have, jurisdiction over the Investors or any of their respective Affiliates or Associates, provided that a breach by Investor of this Agreement is not the cause of the applicable requirement.

 

As used in this Agreement:

 

(i)                    the terms “Affiliate” and “Associate” shall have the respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include all persons or entities that at any time during the term of this Agreement become Affiliates or Associates of any person or entity referred to in this Agreement;

 

(ii)                  the terms “beneficial owner,” “beneficially owns” and “beneficial ownership” shall have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;

  

(iii)                the term “Family Members” shall mean, with respect to an Investor, the spouse of such Investor and the children (including by adoption) of such Investor;

 

(iv)              the terms “person” or “persons” shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization or other entity of any kind or nature; and

 

(v)                  the term “Standstill Period” shall mean the period commencing on the date of this Agreement and ending on the date that is fifteen (15) business days prior to the nomination deadline in connection with the nomination of directors at the 2020 Annual Meeting pursuant to the Company’s Bylaws. 

 

5.Public Announcements.  No earlier than 8:00 a.m. U.S. Eastern Standard Time, on the date hereof, the Company shall announce this Agreement and the material terms hereof by means of a press release in the respective form attached hereto as Exhibit A (the “Press Release”).  Neither the Company nor the Ajdler Group shall make any public announcement or statement that contradicts or disagrees with the statements made in the Press Release, except as required by law or the rules of any stock exchange or with the prior written consent of the other party.  The Company acknowledges that the Ajdler Group intends to file this Agreement and the Press Release (if any) with the Securities and Exchange Commission as an exhibit to its Schedule 13D pursuant to an amendment.

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6.Representations and Warranties of the Ajdler Group.  

 

(a)Each member of the Ajdler Group represents and warrants that: (i) such party has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (ii) this Agreement has been duly and validly authorized, executed and delivered by it and is a valid and binding obligation of such party, enforceable against such party in accordance with its terms; (iii) this Agreement will not result in a violation of any terms or conditions of any agreements to which such person is a party or by which such party may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party; and (iv) there is currently no pending or outstanding litigation between the Ajdler Group and the Company or affiliates thereof.

 

(b)Each member of the Ajdler Group represents and warrants that, as of the date of this Agreement, (i) the Ajdler Group collectively beneficially own, an aggregate of [1,169,727] shares of common stock, par value $0.001, of the Company (“Common Stock”); (ii) except for such ownership, no member of the Ajdler Group, individually or in the aggregate with all other members of the Ajdler Group and Ajdler Affiliates, has any other beneficial ownership of, and/or economic exposure to, any Voting Securities, including through any derivative transaction described in the definition of “beneficial ownership” above; (iii) the Ajdler Group, collectively with the Ajdler Affiliates, have a Net Long Position of [1,169,727] shares of Common Stock and (iv) the members of the Ajdler Group are the only controlled Affiliates of any member of the Ajdler Group that beneficially own any shares of Common Stock.  As used in this Agreement, the term “beneficial ownership” of “Voting Securities” means ownership of: (i) Voting Securities, (ii) rights or options to own or acquire any Voting Securities (whether such right or option is exercisable immediately or only after the passage of time or upon the satisfaction of one or more conditions (whether or not within the control of such person), compliance with regulatory requirements or otherwise) and (iii) any other economic exposure to Voting Securities, including through any derivative transaction that gives any such person or any of such person’s controlled Affiliates the economic equivalent of ownership of an amount of Voting Securities due to the fact that the value of the derivative is explicitly determined by reference to the price or value of Voting Securities, or which provides such person or any of such person’s controlled Affiliates an opportunity, directly or indirectly, to profit, or to share in any profit, derived from any increase in the value of Voting Securities, in any case without regard to whether (x) such derivative conveys any voting rights in Voting Securities to such person or any of such person’s Affiliates, (y) the derivative is required to be, or capable of being, settled through delivery of Voting Securities, or (z) such person or any of such person’s Affiliates may have entered into other transactions that hedge the economic effect of such beneficial ownership of Voting Securities.  For purposes of this Section, no Person shall be, or be deemed to be, the “Beneficial Owner” of, or to “beneficially own,” any securities beneficially owned by any director of the Company to the extent such securities were acquired directly from the Company by such director as or pursuant to director compensation for serving as a director of the Company. “Voting Securities” shall mean any securities of the Company which at present or upon conversion entitle the beneficial owner or holder thereof to vote for the election of directors of the Company.

(c)Each member of the Ajdler Group and/or Investor agrees that it will cause each of its Affiliates and Associates to comply with the terms of this Agreement.

 

(d)As of the date of this Agreement, the Ajdler Group has not, directly or indirectly, compensated or agreed to compensate Mr. Frankfurt for his service as a director of the Company with any cash, securities (including any rights or options convertible into or exercisable for or exchangeable into securities or any profit sharing agreement or arrangement) or other form of compensation directly or indirectly related to the Company or its securities.

 

(e)Each member of the Ajdler Group and/or Investor acknowledges that they are aware, and agree to advise their directors, officers, employees, agents and representatives who are informed as to the matters which are the subject of this Agreement and Mr. Frankfurt that the United States securities laws prohibit any person who has received or has material, non-public information from the Company or any other issuer of securities from purchasing or selling securities of the Company or such issuer and from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities in reliance on such information. 

 

Engine Capital - 6

 

7.Representation and Warranty of the Company.  The Company represents and warrants to Ajdler Group that (a) the Company has the corporate power and authority to execute this Agreement and to bind it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by the Company constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any law, rule, regulation, order, judgment or decree applicable to the Company, or (ii) result in any breach or violation of or constitute a default (or an event which, with notice or lapse of time or both, could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.

 

8.Mutual Non-Disparagement.  Prior to the Termination Date (as defined in Section 13 below), no party shall permit any of its officers, directors, employees, members, or representatives or that of its Affiliates to, without the written consent of the other party, make any public statement that constitutes or would reasonably be expected to constitute an ad hominem attack on or otherwise disparages any other party, any current or former directors of the Company in their capacity as such (including any director who was serving immediately prior to this Agreement), officers or employees (including with respect to such persons’ service at the other party), any other party’s subsidiaries, or any other party’s subsidiaries’ business or any of its or its subsidiaries’ current directors, officers or employees, including the business and current or former directors, officers and employees of such other party’s controlled Affiliates, as applicable. The restrictions in this Section shall not (a) apply (i) in any compelled testimony or production of information, whether by legal process, subpoena or as part of a response to a request for information from any governmental or regulatory authority with jurisdiction over the party from whom information is sought, in each case, to the extent required, or (ii) to any disclosure required by applicable law, rules or regulations; or (b) prohibit (i) any person from reporting what it reasonably believes, after consultation with outside counsel, to be violations of federal law or regulation to any governmental authority pursuant to Section 21F of the Exchange Act or Rule 21F promulgated thereunder, or (ii) any party from responding to any public statement made by the other party of the nature described in this Section if such statement by the other party was made in breach of this Agreement.

 

9.Expenses. Promptly following the execution of this Agreement, the Company shall reimburse Ajdler Group for not more than $10,000 of it reasonably incurred and documented out-of-pocket fees and expenses (including reasonable legal fees) incurred in connection with the negotiation and execution of this Agreement.

 

10.Remedies; Forum and Governing Law.  The parties hereto recognize and agree that if for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy.  Accordingly, each party agrees that in addition to other remedies the other party shall be entitled to at law or equity, the other party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Court of Chancery or other federal or state courts of the State of Delaware.  In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law.  Furthermore, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery or other federal or state courts of the State of Delaware in the event any dispute arises out of this Agreement or the transactions contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it shall not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Court of Chancery or other federal or state courts of the State of Delaware, and each of the parties irrevocably waives the right to trial by jury, (d) agrees to waive any bonding requirement under any applicable law, in the case any other party seeks to enforce the terms by way of equitable relief and (e) irrevocably consents to service of process by a reputable overnight mail delivery service, signature requested, to the address of such party’s principal place of business or as otherwise provided by applicable law.  THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE.

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11.No Waiver.  Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement.  The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

12.Entire Agreement; Prior Agreement.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by the parties hereto.

 

13.Termination. This Agreement shall immediately and automatically terminate and be of no further effect and no Party shall have any further right or obligation under this Agreement on the expiration of the Standstill Period (the “Termination Date”). In the event of a material breach by one party of its obligations hereunder, the obligations of the other party shall terminate if such breach (if capable of being cured) has not been cured within 10 days following written notice of such breach from the other party, or, if impossible to cure within 10 days, such party has not taken substantive action to correct within 10 days following written notice of such breach.

Notwithstanding the foregoing, the provisions of Sections 2 and 9 through 18 shall survive any termination of this Agreement.

 

14.Notices.  All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, if (a) given by electronic mail, when such electronic mail is transmitted to as set forth below and the appropriate confirmation is received or (b) if given by any other means, when actually received during normal business hours at the address specified in this subsection:

 

 

			
	
 
	
If to the Company:
	
 

	
 
	
 
	
 

	
 
	
PFSweb, Inc.
	
 

	
 
	
505 Millennium Drive
	
 

	
 
	
Allen, Texas 75013
	
 

	
 
	
Email: MKlint@pfsweb.com
	
 

	
 
	
Attention: Vice President, General Counsel & Secretary
	
 

	
 
	
 
	
 

	
 
	
With a copy to (which shall not constitute notice):
	
 

	
 
	
 
	
 

	
 
	
Chiesa Shahinian & Giantomasi PC
	
 

	
 
	
One Boland Drive
	
 

	
 
	
West Orange, New Jersey 07052
	
 

	
 
	
Email: MBienenfeld@csglaw.com
	
 

	
 
	
Attention: Morris Bienenfeld
	
 

	
 
	
 
	
 

	
 
	
If to the Ajdler Group:
	
 

	
 
	
 
	
 

	
 
	
Arnaud Ajdler
	
 

	
 
	
1370 Broadway, 5th Floor
	
 

	
 
	
New York, New York 10018
	
 

	
 
	
Email: AAjdler@enginecap.com
	
 

	
 
	
 
	
 

	
 
	
With a copy to (which shall not constitute notice):
	
 

	
 
	
 
	
 

	
 
	
Olshan Frome Wolosky LLP
	
 

	
 
	
1325 Avenue of the Americas
	
 

	
 
	
New York, New York 10019
	
 

	
 
	
Email: Afreedman@olshanlaw.com
	
 

	
 
	
Attention: Andrew Freedman
	
 

	
 
	
 
	
 

Engine Capital - 8

 

  

15.Severability.  If at any time subsequent to the date hereof, any provision of this Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or unenforceability of such provision shall have no effect upon the legality or enforceability of any other provision of this Agreement.

 

16.Counterparts.  This Agreement may be executed in two or more counterparts (including by facsimile or PDF) which together shall constitute a single agreement.

 

17.Successors and Assigns.  This Agreement shall not be assignable or assigned, directly or indirectly, by operation of law or otherwise, by any of the parties to this Agreement.

 

18.No Third Party Beneficiaries.  This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other persons.

 

19.Interpretation and Construction.  Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent counsel.  Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regards to events of drafting or preparation.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  The term “including” shall be deemed to mean “including without limitation” in all instances and all pronouns shall be deemed to include the corresponding masculine, feminine or neuter forms.

 

[next page is signature page]

 

 

 

Engine Capital - 9

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or caused the same to be executed by its duly authorized representative as of the date first above written.

 

 

			
	
 
	
Very truly yours,

	
 
	
 

	
 
	
PFSweb, Inc.

	
 
	
 

	
 
	
By:
	
/s/ Melanie S Klint

	
 
	
Name:
	
Melanie Stapp Klint

	
 
	
Tittle:
	
VP, General Counsel & Secretary

 

Accepted and agreed as of the date first written above:

 

 

				
	
 
	
ARNAUD AJDLER

	
 
	
 

	
 
	
/s/ Arnaud Ajdler

	
 
	
Arnaud Ajdler

	
 
	
 

	
 
	
ENGINE CAPITAL, L.P.

	
 
	
 

	
 
	
By:
	
Engine Investments, LLC, its General Partner

	
 
	
 

	
 
	
By:
	
/s/ Arnaud Ajdler

	
 
	
Name:
	
Arnaud Ajdler

	
 
	
Title:
	
Managing Member

	
 
	
 

	
 
	
ENGINE JET CAPITAL, L.P.

	
 
	
 

	
 
	
By:
	
Engine Investments, LLC, its General Partner

	
 
	
 

	
 
	
By:
	
/s/ Arnaud Ajdler

	
 
	
Name:
	
Arnaud Ajdler

	
 
	
Title:
	
Managing Member

	
 
	
 

	
 
	
ENGINE CAPITAL MANAGEMENT, L.P.

	
 
	
 

	
 
	
By:
	
Engine Investments, LLC, its General Partner

	
 
	
 
	
 

	
 
	
By:
	
/s/ Arnaud Ajdler

	
 
	
Name:
	
Arnaud Ajdler

	
 
	
Title:
	
Managing Member

	
 
	
 

	
 
	
ENGINE CAPITAL MANAGEMENT GP, LLC

	
 
	
 

	
 
	
By:
	
/s/ Arnaud Ajdler

	
 
	
Name:
	
Arnaud Ajdler

	
 
	
Title:
	
Managing Member

 

	
 
	
 

	
 
	
ENGINE INVESTMENTS, LLC

	
 
	
 

	
 
	
By:
	
/s/Arnaud Ajdler

	
 
	
Name:
	
Arnaud Ajdler

	
 
	
Title:
	
Managing Member

 

 

Engine Capital - 10

 

SCHEDULE A

 

Arnaud Ajdler

Engine Capital, L.P.

Engine Jet Capital, L.P.

Engine Capital Management, L.P.

Engine Capital Management GP, LLC

Engine Investments, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engine Capital - 11

 

Exhibit A

 

Press Release

 PFSweb to Appoint Robert Frankfurt to Board of Directors

Allen, TX – March 18, 2019 – PFSweb, Inc. (NASDAQ: PFSW), a global commerce services company, today announced that, after discussions with representatives of the Engine Capital, LP, the Company’s Board of Directors (the “Board”) has voted to appoint Robert Frankfurt as a director of the Board effective immediately.  The Board will also nominate Mr. Frankfurt for election as a director in the Company’s proxy statement for its 2019 annual meeting of stockholders in connection with a settlement and standstill agreement entered into on March 15, 2019 with Arnaud Ajdler, Engine Capital, LP, Engine Jet Capital LP, Engine Capital Management, LP, Engine Capital Management GP, LLC, and Engine Investments, LLC. (the “Ajdler Group”).

Mr. Frankfurt, 53, is currently President and Founder of Myca Partners (“Myca”).  Prior to founding Myca in 2006, Mr. Frankfurt spent more than a decade as a Partner and senior portfolio manager at various investment partnerships including Steel Partners and Sandell Asset Management.  Mr. Frankfurt began his career as a financial analyst in the mergers and acquisitions department of Bear, Stearns & Co. and later joined Hambro Bank America as an associate focused on merger and acquisition and venture capital transactions.  Mr. Frankfurt graduated from the Wharton School of Business in 1987 with a B.S. in Economics and he received his MBA at the Anderson Graduate School of Management at UCLA in 1995 where he was a Venture Capital Fellow and served as Alumni Class President. 

A copy of the settlement and standstill agreement will be filed with the Securities and Exchange Commission by the Company on Form 8-K

About PFSweb, Inc.

PFSweb (NASDAQ:PFSW) is a global commerce services company that manages the online customer shopping experience on behalf of major branded manufacturers and retailers. Across two business units – LiveArea for strategy consulting, creative design, digital marketing, and web development services, and PFS for order fulfillment, contact center, payment processing/fraud management, and order management services – they provide solutions to a broad range of Fortune 500® companies and household brand names such as Procter & Gamble, L’Oréal USA, Ralph Lauren, PANDORA, ASICS, the United States Mint, and many more. PFSweb enables these brands to provide a more convenient and brand-centric online shopping experience through both traditional and online business channels. The company is headquartered in Allen, TX with additional locations around the globe. For more information, please visit www.pfsweb.com.

Investor Relations:

Sean Mansouri or Scott Liolios

Liolios

1-949-574-3860

PFSW@liolios.com 

 

 

 

Engine Capital - 12EX-4.2

 Exhibit 4.2 

KLA-TENCOR CORPORATION 

Officer’s Certificate 

March 20, 2019 
 Reference
is made to the Indenture dated as of November 6, 2014 (the “Indenture”) between KLA-Tencor Corporation (the “Company,”) and Wells Fargo Bank, National Association, as
trustee (the “Trustee”). Pursuant to Sections 102, 201 and 301 of the Indenture, the undersigned officer does hereby certify, in connection with the issuance of $800,000,000 aggregate principal amount of 4.10% Senior Notes due
2029 (the “2029 Notes”) and $400,000,000 aggregate principal amount of 5.00% Senior Notes due 2049 (the “2049 Notes” and, together with the 2029 Notes, the “Notes”): 

1. The undersigned has read all such covenants or conditions and the definitions relating thereto provided for in the Indenture
relating to the issuance, delivery and authentication of the Notes pursuant to Section 301 of the Indenture. 
 2. The
statements of the undersigned contained herein are based upon a review of the Indenture and upon an examination of the relevant records of the Company. 

3. The undersigned has, in the opinion of such individual, made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenants or conditions relating thereto has been complied with. 

4. In the opinion of the undersigned, such conditions or covenants contained in the Indenture relating to the issuance,
delivery and authentication of the Notes have been complied with. 
 Capitalized terms used but not otherwise defined herein shall have the
meanings specified in the Indenture. 

 The undersigned does hereby certify, in connection with the issuance of the Notes, that the
terms of the Notes are as follows: 
  

					
	Company:	  	KLA-Tencor Corporation
		
	Trustee, Registrar, Transfer Agent, Authenticating Agent, and Paying Agent:	  	Wells Fargo Bank, National Association
			
	Title:	  	4.10% Senior Notes due 2029	  	5.00% Senior Notes due 2049
			
	Aggregate Principal Amount at Maturity:	  	$800,000,000	  	$400,000,000
			
	Maturity:	  	March 15, 2029	  	March 15, 2049
			
	Interest:	  	4.10% per annum	  	5.00% per annum
		
	Date from which Interest will Accrue:	  	March 20, 2019
		
	Principal and Interest Payment Place:	  	             

Wells Fargo Bank, National Association
 600 South Fourth Street,
7th Floor
 Minneapolis, Minnesota 55415
 Attention: Corporate
Trust Operations

		
	Interest Payment Dates:	  	 March 15 and September 15 of each year, commencing on September 15, 2019.

 
 Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.

		
	Optional Redemption:	  	The Company may at its option redeem each series of Notes, in whole or in part, at any time prior to their maturity on at least 30 but not more than 60 days’ prior notice to each Holder of the Notes to be
redeemed. Notice to the Holders and the Trustee shall be given as set forth in the Indenture.
		
		  	 The redemption price will be equal to the greater of:

 
 (1) 100% of the principal amount of the Notes
to be redeemed or

			
		  	 (2) the sum of the present values of the Remaining Scheduled Payments (as defined in the Notes) discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate (as defined in the Notes) plus:

 
 •  25 basis points in the case
of the 2029 Notes, and
  
 •  30
basis points in the case of the 2049 Notes,
  
 plus, in the case of each of clauses
(1) and (2), accrued and unpaid interest to, but not including, the redemption date;
  

provided that, if the Company redeems:
  

•  any 2029 Notes on or after December 15, 2028, or

 
 •  any 2049 Notes on or after
September 15, 2048,
  
 then the redemption price for those Notes will equal 100%
of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but not including, the relevant redemption date.

		
	Conversion:	  	None.
		
	Sinking Fund:	  	None.
		
	Denominations:	  	$2,000 and multiples of $1,000 thereafter
		
	Change of Control:	  	Upon the occurrence of a Change of Control Triggering Event (as defined in the Notes under “Offer to Repurchase Upon Change of Control Triggering Event”), the Company will be required to make an offer to purchase the Notes
at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase.
		
	Miscellaneous:	  	The terms of the Notes shall include such other terms as are set forth in the form of Notes attached hereto as Exhibit A and in the Indenture.

 [Signature Page Follows] 

 IN WITNESS WHEREOF, the undersigned has hereunto executed this Officer’s Certificate
and caused it to be delivered as of the date first written above. 
  

			
	Name:	 	Bren Higgins
	Title:	 	 Executive Vice President and
 Chief Financial
Officer

 [Signature page to Officer’s Certificate Pursuant to the Indenture] 

 EXHIBIT A 

[FORM OF FACE OF SECURITY] 

KLA-TENCOR CORPORATION 

[Global Securities Legend] 
 THIS GLOBAL SECURITY
IS HELD BY AND REGISTERED IN THE NAME OF THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS SECURITY) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 203 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED PURSUANT TO SECTION 203(a) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 306 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN. 

 [Form of Face of Security] 

KLA-TENCOR CORPORATION 

        % SENIOR NOTE DUE 20         

CUSIP No._________ 
 ISIN
No._________ 
 No. _________    $_________ 

KLA-TENCOR CORPORATION, a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal
sum of                  dollars on                 ,
                 which aggregate principal amount may from time to time be reduced or increased, as appropriate, in accordance with the within-mentioned Indenture and as
reflected in the Schedule of Exchanges of Interests in the Global Security attached hereto, to reflect exchanges or redemptions of the Securities represented hereby, and to pay interest thereon from March 20, 2019 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 15 and September 15 in each year, commencing September 15, 2019, at the rate of          % per
annum, until the principal hereof is paid or made available for payment, provided, however that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of
        % per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest
shall be payable on demand. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest, which shall be the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to
be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holder of the Securities not less than 10 days prior to such Special Record Date. 

Payment of the principal of (and premium, if any) and any such interest on this Security will be made at the office or agency of the Company
maintained for that purpose in Minneapolis, Minnesota, in accordance with the terms of the Indenture referred to or the reverse hereof in such coin or currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts. 

 Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 
 This Security shall be deemed
to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said state. 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 

 

					
	KLA-TENCOR CORPORATION
		
	By:	 	 
		 	Name:	 	Bren Higgins
		 	Title:	 	Executive Vice President and
		 		 	Chief Financial Officer

 CERTIFICATE OF AUTHENTICATION 

This is one of the Securities designated therein referred to in the within-mentioned Indenture. 

Dated: ______________________ 
  

			
	 WELLS FARGO BANK,
 NATIONAL
ASSOCIATION, as Trustee

		
	By:	 	 
		 	Authorized Signatory

 [Form of Reverse of Security] 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to
be issued in one or more series under an Indenture, dated as of November 6, 2014 (herein called the “Indenture”, which term shall have the meaning assigned to it in such instrument), between the Company and Wells Fargo Bank,
National Association, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the
face hereof, initially limited in aggregate principal amount to $                . 

1. Interest. 
 The Company
promises to pay interest on the principal amount of this Security at the rate per annum described above. 
 No reference herein to the
Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and
rate, and in the coin or currency, herein prescribed. 
 2. Paying Agent. 

Initially, Wells Fargo Bank, National Association (the “Trustee”) will act as paying agent. The Company may change any paying
agent without notice to the Holders. 
 3. Indenture; Defined Terms. 

This Security is one of the         % Senior Notes due
20         established pursuant to an Officer’s Certificate dated March 20, 2019 and issued pursuant to Sections 102, 201 and 301 of the Indenture. 

For purposes of this Security, unless otherwise defined herein, capitalized terms herein are used as defined in the Indenture. To the extent
the terms of the Indenture and this Security are inconsistent, the terms of the Indenture shall govern. 
 4. Denominations; Transfer;
Exchange. 
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security may be
registered and this Security may be exchanged as provided in the Indenture. 
 The Securities are issuable only in registered form without
coupons in denominations of $2,000 and any integral multiple of $1,000 in excess thereof. 

 No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 
 Prior to
due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. 
 5.
Amendment; Supplement; Waiver. 
 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the Holders of the Securities to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding,
on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security. 
 6. Redemption. 

The Company may at its option redeem the Securities, in whole or in part, at any time prior to their maturity on at least 30 but not more than
60 days’ prior notice to each Holder of the Securities to be redeemed. Notice to the Holders and the Trustee shall be given as set forth in the Indenture. 

The redemption price will be equal to the greater of: 
 (1) 100%
of the principal amount of the Securities to be redeemed or 
 (2) the sum of the present values of the Remaining Scheduled Payments discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months), at a rate equal to the sum of the Treasury Rate plus
                 basis points, plus, in the case of each of clauses (1) and (2), accrued and unpaid interest to, but not including, the redemption date;
provided, if the Company redeems the Securities on or after                  (the “Par Call Date”), then the redemption price for the Securities
will equal 100% of the aggregate principal amount of the Securities to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. 

 “Comparable Treasury Issue” means the United States Treasury security or
securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the Par Call Date. 
 “Comparable
Treasury Price” means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or
(2) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 

“Independent Investment Banker” means one of the Reference Treasury Dealers, appointed by the Company. 

“Reference Treasury Dealer” means J.P. Morgan Securities LLC and its affiliates, their respective successors and three other
nationally recognized investment banking firms that are primary U.S. government securities dealers as selected by the Company. If any of the foregoing or their affiliates shall cease to be a primary U.S. government securities dealer in The City of
New York (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer. 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Company, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m., New
York City time, on the third business day preceding such redemption date. 
 “Remaining Scheduled Payments” means, with
respect to the Securities to be redeemed, the remaining scheduled payments of principal of and interest on the Securities that would be due after the related redemption date but for the redemption (assuming maturity of such Securities on the Par
Call Date). If that redemption date is not an Interest Payment Date with respect to the Securities subject to redemption, the amount of the next succeeding scheduled interest payment on the Securities will be reduced by the amount of interest
accrued on the Securities to the redemption date. 
 “Treasury Rate” means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity or interpolation (on a day count basis) of the interpolated Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date. 
 On and after the redemption date, interest will cease to accrue
on the Securities or any portion thereof called for redemption, unless the Company defaults in the payment of the redemption price and accrued interest. On or before the redemption date, the Company will deposit with a paying agent or the Trustee
money sufficient to pay the redemption price of, and accrued interest on, the Securities to be redeemed on that date. Calculation of the redemption price will be made by the Company or on its behalf by such person as the Company may designate;
provided that such calculation or the correctness thereof shall not be a duty or obligation of the Trustee. 

 7. Offer to Repurchase Upon Change of Control Triggering Event 

Upon the occurrence of a Change of Control Triggering Event (as defined below) with respect to the Securities, unless the Company shall have
exercised its right pursuant to Section 6 hereof to redeem the Securities, the Company will be required to make an offer to repurchase all or, at the Holder’s option, any part (equal to $2,000 or any integral multiple of $1,000 in excess
thereof), of each Holder’s Securities pursuant to the offer described below (the “Change of Control Offer”). In the Change of Control Offer, the Company will be required to offer payment in cash equal to 101% of the aggregate
principal amount of Securities repurchased plus accrued and unpaid interest, if any, on the Securities repurchased, to, but not including, the date of purchase (the “Change of Control Payment”). 

Within 30 days following any Change of Control Triggering Event with respect to the Securities, the Company will be required to give notice to
Holders of the Securities, with a copy to the Trustee, describing the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Securities on the date specified in the notice, which date will
be no earlier than 30 and no later than 60 days from the date such notice is given (the “Change of Control Payment Date”), pursuant to the procedures required by the Securities and described in such notice. The Company must comply
with the requirements of applicable securities laws and regulations in connection with the repurchase of the Securities as a result of a Change of Control Triggering Event. 

On the Change of Control Payment Date, the Company will be required, to the extent lawful, to: 

 

	 	•	 	 accept for payment the Securities or portions of the Securities properly tendered pursuant to the Change of
Control Offer; 

  

	 	•	 	 deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of the Securities or
portions of the Securities properly tendered; and 

  

	 	•	 	 deliver or cause to be delivered to the Trustee the Securities properly accepted together with an Officer’s
Certificate stating the aggregate principal amount of the Securities or portions of the Securities being purchased by the Company. 

The Paying Agent will be required to promptly give, to each Holder who properly tendered Securities, the purchase price for the Securities,
and the Trustee will be required to promptly authenticate and mail (or cause to be transferred by book entry) to each such Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any; provided
that each new Security will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. 

 The Company will not be required to make a Change of Control Offer upon a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Securities properly tendered and not withdrawn
under its offer. In the event that such third party terminates or otherwise fails to complete its offer, the Company will be required to make a Change of Control Offer treating the date of such termination or default as though it were the date of
the Change of Control Triggering Event. 
 The Company will comply with the requirements of Rule
14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Securities as a result of
a Change of Control Triggering Event. To the extent that the provision of any such securities laws or regulations conflicts with this Section 7, the Company will comply with those securities laws and regulations and will not be deemed to have
breached the Company’s obligations under this Section 7 by virtue of any such conflict. For purposes of this Section 7, the following terms will be applicable: 

“Change of Control” means the occurrence of any one of the following: (1) the direct or indirect sale, lease, transfer,
conveyance or other disposition (other than by way of merger, amalgamation, arrangement or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s properties or assets and those of its
subsidiaries, taken as a whole, to one or more persons, other than to the Company or one of its subsidiaries; (2) the first day on which a majority of the members of the Board of Directors of the Company is not composed of Continuing Directors
(as defined below); (3) the consummation of any transaction including, without limitation, any merger, amalgamation, arrangement or consolidation the result of which is that any person becomes the beneficial owner, directly or indirectly, of more
than 50% of the Company’s Voting Stock; (4) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any
of the outstanding Voting Stock of the Company or of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately
prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person immediately after giving effect to such transaction; or (5) the adoption of a plan relating to the
Company’s liquidation or dissolution. For the purposes of this definition, “person” and “beneficial owner” have the meanings used in Section 13(d) of the Exchange Act. 

“Change of Control Triggering Event” means the Securities cease to be rated Investment Grade by at least two of the three
Rating Agencies on any date during the period (the “Trigger Period”) commencing on the date of the first public notice of the occurrence of a Change of Control or the Company’s intention to effect a Change of Control and ending
60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings
change). Unless at least two of the three Rating Agencies are providing a rating for the Securities at the commencement of any Trigger Period, the Securities will be deemed to have ceased to be rated Investment Grade by at least two of the three
Rating Agencies during that Trigger Period. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually
been consummated. 

 “Continuing Directors” means, as of any date of determination, any member
of the Board of Directors of the Company who (1) was a member of the Board of Directors of the Company on the Issue Date; or (2) was nominated for election, elected or appointed to the Board of Directors of the Company with the approval of
a majority of the Continuing Directors who were members of the Board of Directors of the Company at the time of such nomination, election or appointment (either by a specific vote or by approval by such directors of the Company’s proxy
statement in which such member was named as a nominee for election as a director). 
 “Fitch” means Fitch Ratings, Inc.,
and its successors. 
 “Investment Grade” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P or BBB- (or the equivalent) by Fitch, and the equivalent investment grade credit rating from any replacement Rating Agency or Rating
Agencies selected by the Company. 
 “Moody’s” means Moody’s Investors Service, Inc., a subsidiary of
Moody’s Corporation, and its successors. 
 “Rating Agencies” means (a) each of Moody’s, S&P and Fitch
to the extent Fitch makes its rating available; and (b) if any of the Rating Agencies ceases to rate the Securities or fails to make a rating of the Securities publicly available for reasons outside of the Company’s control, a
“nationally recognized statistical rating organization” as such term is defined in Section 3(a)(62) of the Exchange Act that is selected by the Company (as certified by a resolution of the Board of Directors of the Company) as a
replacement for Moody’s, S&P or Fitch, or some or all of them, as the case may be. 
 “S&P” means
Standard & Poor’s Global Ratings, a division of S&P Global Inc., and its successors. 
 “Voting Stock” of
any specified person as of any date means the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person. 

8. Defeasance. 
 The Indenture
contains provisions for defeasance at any time of the entire indebtedness of this Security or certain covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture.

 9. Defaults and Remedies. 

If an Event of Default with respect to the Securities shall occur and be continuing, the principal of the Securities may be declared due and
payable in the manner and with the effect provided in the Indenture. 

 As provided in and subject to the provisions of the Indenture, if any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then Outstanding Securities may declare all the Securities to be due and payable immediately. Upon any such declaration, the entire aggregate
principal amount of, premium, if any, and accrued and unpaid interest on the Securities shall become immediately due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, all Outstanding Securities will become due and payable without further action or notice. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then Outstanding Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Securities notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to payment of principal or interest on any Security) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of
the Securities may waive any existing or past Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of, or interest on, the Securities. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture. 
 10. Authentication. 

This Security shall not be valid until the Trustee manually signs the certificate of authentication on this Note. 

11. Abbreviations and Defined Terms. 

Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 

12. CUSIP Numbers. 
 Pursuant to
a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the
accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon. 

13. Waiver of Liabilities 
 No
past, present or future director, officer, employee, incorporator, agent, stockholder or Affiliate of the Company or any of its Subsidiaries, as applicable, shall have any liability for any obligations of the Company or any of its Subsidiaries under
the Securities, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Security waives and releases all such liabilities. The waiver and release are part of the
consideration for issuance of the Securities. 

 14. Governing Law. 

The laws of the State of New York shall govern the Indenture and this Note thereof. 

 ASSIGNMENT FORM 

To assign this Security, fill in the form below: 
 I or we
assign and transfer this Security to: 
  
  

(Insert assignee’s social security or tax I.D. no.) 
  

 
  

 
  

 
  

 
 (Print or type assignee’s name,
address and zip code) 
 and irrevocably appoint ______________________ as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him. 
  
  

 

			
	 Your Signature:
	 	
                   
                                         
                                         
                                         
                                  

		 	(Sign exactly as your name appears on the other side of this Security)

			
		
	 Your Name:
	 	
                   
                                         
                                         
                                         
  

	
	
Date:______________________

			
		
	Signature Guarantee:	 	                                
                                         
                                         
                                         
                     

  

	*	 NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized
signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other guarantee program
acceptable to the Trustee. 

 [TO BE ATTACHED TO GLOBAL SECURITIES] 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL 

SECURITY 
 The initial outstanding principal
amount of this Global Security is $            . 
 The following exchanges of an interest in
this Global Security for an interest in another Global Security or for a Definitive Security, exchanges of an interest in another Global Security or a Definitive Security for an interest in this Global Security, or exchanges or purchases of a part
of this Global Security have been made: 
  

									
	 Date of Exchange
	  	Amount of decrease in
Principal Amount of
this Global Security	  	Amount of increase in
Principal Amount of
this Global Security	  	Principal Amount of
this Global Security
following such
decrease or increase	  	Signature of authorized
signatory of Trustee or
Securities Custodian

 REPURCHASE EXERCISE NOTICE UPON A CHANGE OF CONTROL 

To:     KLA-Tencor Corporation 

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from KLA-Tencor Corporation
(the “Company”) as to the occurrence of a Change of Control Triggering Event with respect to the Company and hereby directs the Company to pay, or cause the Trustee to pay,
                     an amount in cash equal to 101% of the aggregate principal amount of the Securities, or the portion thereof (which is
$2,000 principal amount or a multiple of $1,000 in excess thereof) below designated, to be repurchased plus interest accrued to, but excluding, the repurchase date, except as provided in the Indenture. 

Dated: _____________ 
 Signature ____________________ 

Principal amount to be repurchased (at least $2,000 or a multiple of $1,000 in excess thereof): _________________ 

Remaining principal amount following such repurchase: ________________ 

Tax Identification No.: 

Signature Guarantee*: 

By:                         
                                     

Authorized Signatory 
  

	*	 Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to
the Trustee).

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