AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment"), dated as of
April 3, 2002, is between DATATEC SYSTEMS, INC., a Delaware corporation (the
"Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as rights agent
(the "Rights Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent, entered into a Rights
Agreement dated as of February 24, 1998 (the "Rights Agreement"); and
WHEREAS, concurrently with the execution hereof, the Company has
entered into that certain Subordinated Secured Convertible Debentures and
Warrants Purchase Agreement by and among the Company, Halifax Fund, L.P.
("Halifax"), and Palladin Opportunity Fund, L.L.C. ("Palladin" and together with
Halifax, the "Investors") dated as of April 3, 2002 (the "Purchase Agreement");
and
WHEREAS, the Board of Directors of the Company has approved,
authorized and adopted the Purchase Agreement and the transactions contemplated
thereby; and
WHEREAS, Section 27 of the Rights Agreement permits the amendment of
the Rights Agreement by the Board of Directors of the Company; and
WHEREAS, pursuant to a resolution duly adopted on March 12, 2002,
the Board of Directors of the Company has adopted and authorized the amendment
of the Rights Agreement to amend the definition of "Acquiring Person"; and
WHEREAS, the Board of Directors of the Company has resolved and
determined that such amendment is desirable and consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in connection
with the original adoption of the Rights Agreement.
NOW, THEREFORE,
1. Section 1(a) of the Rights Agreement is hereby amended in its
entirety to read as follows:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of
such Person, after the date hereof, shall become the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the
Common Shares of the Company then outstanding, but shall not include
the Company, any Subsidiary (as such term is hereinafter defined) of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Shares for
or pursuant to the terms of any such plan. Notwithstanding the
foregoing, neither Xxxxx Xxxxxxx nor
Xxxxxxxxxxx X. Xxxxx, shall be deemed an Acquiring Person for any
purpose of this Agreement, provided, that each such Person together
with his Affiliates does not become the Beneficial Owner of 20% or
more of the outstanding shares of Common Stock of the Company; and
neither Halifax Fund, L.P. nor Palladin Opportunity Fund, L.L.C.
shall be deemed an Acquiring Person for any purpose of this
Agreement.
Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares
by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise
be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number
of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions
of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
2. This Amendment to the Rights Agreement shall be effective as of
the date of this Amendment, and all references to the Rights Agreement shall,
from and after such time, be deemed to be references to the Rights Agreement as
amended hereby.
3. The undersigned officer of the Company certifies by execution
hereof that this Amendment is in compliance with the terms of Section 27 of the
Rights Agreement.
4. This Amendment may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument. If any term, provision, covenant or restriction of this Amendment is
held by a court of competent jurisdiction or other authority to be invalid,
illegal, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[SIGNATURES PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
DATATEC SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title: Vice President
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