FIRST AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT
FIRST AMENDMENT, dated as of February 28, 1999, to the Amended and Restated
Rights Agreement, dated as of April 1, 1998 (the "Rights Agreement"), between
Norstan, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, National Association (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may
from time to time supplement or amend the Rights Agreement in accordance with
the provisions of Section 27 thereof;
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its shareholders to amend the Rights Agreement to
modify the definition of an "Acquiring Person" by increasing the permitted
holdings of certain Persons.
NOW, THEREFORE, the Company and the Rights Agent hereby amend the Rights
Agreement as follows:
1. AMENDMENT TO THE RIGHTS AGREEMENT.
A. Section 1(a) of the Rights Agreement is hereby amended to read in its
entirety as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of a majority of the
Board of Directors shall be the Beneficial Owner (as such term is
hereinafter defined) of voting securities having 15% or more of the then
voting power of the Company or who was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be the
Beneficial Owner of voting securities having 15% or more of the then voting
power of the Company. Notwithstanding any provision to the contrary
contained herein, with respect to any Person who or which, together with
all Affiliates and Associates of such Person, as of February 28, 1999, was
the Beneficial Owner of voting securities having 10% or more of the voting
power of the Company, such Person shall not become an Acquiring Person
unless and until such Person, without the prior approval of a majority of
the Board of Directors, thereafter becomes the Beneficial Owner of voting
securities having 18% or more of the then voting power of the Company or
who was such a Beneficial Owner at any time after the date hereof, whether
or not such person continues to be the Beneficial Owner of voting
securities having 18% or more of the then voting power of the Company.
Notwithstanding the foregoing, (A) the term Acquiring Person shall not
include (i) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any
entity organized, appointed or established by the Company for or pursuant
to the terms of any such plan, or (ii) any Person, who or which together
with all Affiliates of such Person becomes the Beneficial Owner of 15% or
more of the then outstanding shares of Common Stock as a result of the
acquisition of Common Stock directly from the Company (provided, however,
that if, after such acquisition, such Person or any Affiliate of such
Person becomes the Beneficial Owner of any additional shares of Common
Stock in an acquisition not made directly from the Company, then such
Person shall be deemed an Acquiring Person), and (B) no Person shall be
deemed to be an Acquiring Person either (X) as a result of the acquisition
of Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate number of shares
Beneficially Owned by such Person together with all Affiliates of such
Person; except that if (i) such Person would become an Acquiring Person
(but for the operation of this subclause (X)) as a result of the
acquisition of Common Stock by the Company, and (ii) after such share
acquisition by the Company, such Person or any Affiliate of such Person
becomes the Beneficial Owner of any additional shares of Common Stock, then
such Person shall be deemed an Acquiring Person or (Y) if (i) such Person
or any Affiliate of such Person inadvertently becomes the Beneficial Owner
of 15% or more (or 18% or more in the case of any Person who or which,
together with all Affiliates and Associates of such Person, as of February
28, 1999, was the Beneficial Owner of voting securities having 10% or more
of the voting power of the Company) of the outstanding shares of Common
Stock, and (ii) within eight (8) calendar days thereafter such Person
notifies the Board of Directors that such Person did so inadvertently and
(iii) within two (2) days after such notification, such Person is the
Beneficial Owner of less than 15% (or less than 18% in the case of any
Person who or which, together with all Affiliates and Associates of such
Person, as of February 28, 1999, was the Beneficial Owner of voting
securities having 10% or more of the voting power of the Company) of the
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outstanding shares of Common Stock. For purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on the date of
this Agreement (the "Exchange Act").
B. Section 3(a) of the Rights Agreement is hereby amended to read in its
entirety as follows:
(a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock Acquisition Date, or (ii) the close of
business on the tenth Business Day after the date of the commencement of,
or first public announcement of the intent of any Person (other than the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan), to commence (which intention to commence remains in effect for
five Business Days after such announcement), a tender or exchange offer
which would result in such person becoming the Beneficial Owner of 15% or
more (or 18% or more in the case of any Person who or which, together with
all Affiliates and Associates of such Person, as of February 28, 1999, was
the Beneficial Owner of voting securities having 10% or more of the voting
power of the Company) of the then outstanding shares of Common Stock
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights), (the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y)
the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying shares
of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, postage prepaid mail, to each record holder
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of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or
more rights certificates, in substantially the form of Exhibit A hereto
(the "Rights Certificates"), evidencing one Right for each share of Common
Stock so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
2. MISCELLANEOUS.
(a) Except as otherwise expressly provided, or unless the context
otherwise requires, all capitalized terms used herein have the meanings ascribed
to them in the Rights Agreement.
(b) This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall constitute but one and
the same document.
(c) Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first written above.
NORSTAN, INC.
By: /s/ Kenneth S. MacKenzie
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Its: Chief Financial Officer
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NORWEST BANK MINNESOTA, N.A.
By: /s/ Nancy Rosengren
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Its: Vice President
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