EXHIBIT 99.(b)
RIGHTS AGREEMENT
dated as of
June 1, 1999
between
eGames, Inc.
and
STOCK TRANS, INC.
as Rights Agent
TABLE OF CONTENTS
Page
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Section 1. Definitions.............................................. 1
Section 2. Appointment of Rights Agent.............................. 4
Section 3. Issue of Right Certificates.............................. 4
Section 4. Form of Right Certificates............................... 6
Section 5. Countersignature and Registration........................ 6
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates............. 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights................................................... 7
Section 8. Cancellation and Destruction of Right Certificates....... 9
Section 9. Reservation and Availability of Capital Series A
Preferred Stock.......................................... 9
Section 10. Preference Series A Preferred Stock Record Dat........... 11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights...................................... 11
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares................................................... 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power............................................ 20
Section 14. Fractional Rights and Fractional Shares.................. 21
Section 15. Rights of Action......................................... 23
Section 16. Agreement of Right Holders............................... 23
Section 17. Right Certificate Holder Not Deemed a Series A
Preferred Stockholder.................................... 24
Section 18. Concerning the Rights Agent.............................. 24
Section 19. Merger or Consolidation or Change of Name of Rights Agent 25
Section 20. Duties of Rights Agent................................... 25
Section 21. Change of Rights Agent................................... 27
Section 22. Issuance of New Right Certificates....................... 28
Section 23. Redemption............................................... 28
Section 24. Exchange................................................. 29
Section 25. Notice of Proposed Actions............................... 30
Section 26. Notices.................................................. 31
Section 27. Supplements and Amendments............................... 32
Section 28. Successors............................................... 32
Section 29. Determinations and Actions by the Board of Directors,
etc...................................................... 32
Section 30. Benefits of this Agreement............................... 33
Section 31. Severability............................................. 33
Section 32. Governing Law............................................ 33
Section 33. Counterparts............................................. 34
Section 34. Descriptive Headings..................................... 34
EXHIBITS
Exhibit A - Form of Certificate of Designation of Series A Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of the Rights
RIGHTS AGREEMENT
AGREEMENT dated as of June 1, 1999, between eGames, Inc., a
Pennsylvania corporation (the "Company"), and Stock Trans, Inc. as Rights Agent
(the "Rights Agent"),
W I T N E S S E T H
WHEREAS, on June 1, 1999 the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share of
Common Stock, without par value, of the Company (the "Common Stock") outstanding
at the closing of business on June 21, 1999 (the "Record Date"), and has
authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of this agreement) for each share of Common Stock
issued between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as defined in Section 1 hereof),
each Right initially representing the right to purchase one one-hundredth of a
share of Series A Preferred Stock (as hereinafter defined); and
WHEREAS, the Board of Directors of the Company has considered whether
approval of this Agreement and the distribution of the Rights is in the best
interests of the Company and all other pertinent factors; and
WHEREAS, the Board of Directors of the Company has concluded that
approval of this Agreement and the distribution of the Rights is in the best
interests of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereby agree as follows:
Section 1. Definitions. The following terms, as used herein, have the
following meanings:
"Acquiring Person" means any Person who, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 15% or more of
the shares of Voting Stock then outstanding, but shall not include the Company,
any of its Subsidiaries, any employee benefit plan of the Company or any of its
Subsidiaries or any Person organized, appointed or established by the Company or
any of its Subsidiaries for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
solely as a result of an acquisition of shares of Voting Stock by the Company
which, by reducing the number of shares of Voting Stock outstanding, increases
the proportionate number of shares of Voting Stock beneficially owned by such
Person (together with all Affiliates and Associates of such Person) to 15% or
more of the shares of Voting Stock then outstanding.
"Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own", any securities:
(a) which such Person or any of its Affiliates or Associates,
directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act as in effect on
the date hereof);
(b) which such Person or any of its Affiliates or Associates,
directly or indirectly, has
(i) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence
of certain events or the passage of time or both)
pursuant to any agreement, arrangement or
understanding (whether or not in writing) or
otherwise (other than pursuant to the Rights);
provided that a Person shall not be deemed the
"Beneficial Owner" of or to "beneficially own"
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
its Affiliates or Associates until such tendered
securities are accepted for payment or exchange; or
(i) the right to vote (whether such right is
exercisable immediately or only upon the occurrence
of certain events or the passage of time or both)
pursuant to any agreement, arrangement or
understanding (whether or not in writing) or
otherwise; provided that a Person shall not be deemed
the "Beneficial Owner" of or to "beneficially own"
any security under this clause as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or
understanding (A) arises solely from a revocable
proxy or consent given in response to a public proxy
or consent solicitation made pursuant to the
applicable rules and regulations under the Exchange
Act and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with
which such Person or any of its Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in subparagraph
(b)(ii) immediately above) or disposing of any such
securities.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the Commonwealth of Pennsylvania are authorized or
obligated by law or executive order to close.
"Close of business" on any given date means 5:00 P.M., Eastern Standard
time, on such date; provided that if such date is not a Business Day "close of
business" means 5:00 P.M., Eastern Standard time, on the next succeeding
Business Day.
"Common Stock" means the Common Stock, without par value, of the
Company, except that, when used with reference to any Person other than the
Company, "Common Stock" means the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Continuing Director" means (i) any member of the Board of Directors of
the Company, while such Person is a member of the Board, who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or a representative
or nominee of an Acquiring Person or of any such Affiliate or Associate and was
a member of the Board prior to the date of this Agreement, or (ii) any person
who subsequently becomes a member of the Board, while such person is a member of
the Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election or election to
the Board is recommended or approved by a majority of the Continuing Directors.
"Distribution Date" means the earlier of (a) the close of business on
the tenth calendar day (or such later day as may be designated by action of a
majority of the Continuing Directors) after the Stock Acquisition Date and (b)
the close of business on the tenth Business Day (or such later day as may be
designated by action of a majority of the Continuing Directors) after the date
of the commencement of a tender or exchange offer by any Person if, upon
consummation thereof, such Person would be an Acquiring Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the earliest of (a) the Final Expiration Date
and (b) the time at which all Rights are redeemed as provided in Section 23 or
exchanged as provided in Section 24.
"Final Expiration Date" means the close of business on June 1, 2009.
"Person" means an individual, corporation, partnership, association,
trust or any other entity or organization.
"Purchase Price" means the price (subject to adjustment as provided
herein) at which a holder of a Right may purchase one one-hundredth of a share
of Series A Preferred Stock (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $35.00.
"Section 11(a)(ii) Event" means any event described in the first clause
of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x), (y) or (z)
of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A Preferred Stock, without
par value, of the Company, having the terms set forth in the form of certificate
of designation attached hereto as Exhibit A.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities
or other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such first Person.
"Trading Day" means a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day.
"Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
"Voting Stock" means all of the outstanding shares of Common Stock, and
the outstanding shares of any class or series of stock having preference over
the Common Stock as to dividends or as to liquidation entitled to vote on each
matter on which the holders of Common Stock shall be entitled to vote, and
reference to a percentage of shares of Voting Stock shall refer to the
percentage of votes entitled to be cast by such shares.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable. If the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and any
Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Prior to the Distribution Date, (i) the Rights will be
evidenced by the certificates for the Common Stock and not by
separate Right Certificates (as hereinafter defined) and the
registered holders of the Common Stock shall be deemed to be
the registered holders of the associated Rights, and (ii) the
Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock. Upon the
request of a record holder of Common Stock, the Company will
send a summary of the Rights substantially in the form of
Exhibit C hereto, by first-class, postage prepaid mail, to
such holder.
(b) As soon as practicable after the Company has notified the
Rights Agent of the occurrence of the Distribution Date, the
Rights Agent will send, by first-class, insured, postage
prepaid mail, to each record holder 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 Right Certificates evidencing one Right (subject to
adjustment as provided herein) for each share of Common Stock
so held. If an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p), the
Company shall, at the time of distribution of the Right
Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Right
Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.
From and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of Common
Stock outstanding as of the Record Date. Rights shall also be
issued in respect of all shares of Common Stock issued (on
original issuance or out of treasury) after the Record Date
but prior to the earlier of the Distribution Date and the
Expiration Date, provided that unless otherwise adjusted
pursuant to Section 11, not more than one Right shall attach
to any one share issued from treasury. In addition, in
connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration
Date, the Company (i) shall, with respect to shares of Common
Stock so issued or sold (x) pursuant to the exercise of stock
options or under any employee plan or arrangement or (y) upon
the exercise, conversion, redemption or exchange of other
securities issued by the Company prior to the Distribution
Date and (ii) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue
Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided that
no such Right Certificate shall be issued if, and to the
extent that, (i) the Company shall be advised by counsel that
such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom
such Right Certificate would be issued or (ii) appropriate
adjustment shall otherwise have been made in lieu of the
issuance thereof.
(d) Certificates for the Common Stock issued after the Record
Date but prior to the earlier of the Distribution Date and the
Expiration Date, shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences certain Rights as set
forth in a Rights Agreement between eGames, Inc. and
Stock Trans, Inc. dated as of June 1, 1999 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of the
Company. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request
therefor. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be evidenced
by separate certificates and no longer be evidenced
by this certificate, may be redeemed or exchanged or
may expire. As set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was
or becomes an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder,
may be null and void.
Section 4. Form of Right Certificates.
(a) The certificates evidencing the Rights (and the forms of
assignment, election to purchase and certificates to be
printed on the reverse thereof) (the "Right Certificates")
shall be substantially in the form of Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any
rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The
Right Certificates, whenever distributed, shall be dated as of
the Record Date.
(b) Any Right Certificate representing Rights beneficially
owned by any Person referred to in clauses (i), (ii) or (iii)
of the first sentence of Section 7(d) shall (to the extent
feasible) contain the following legend: The Rights represented
by this Right Certificate are or were beneficially owned by a
Person who was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and void
in the circumstances specified in Section 7(d) of such
Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any
Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of
the Company whose manual or facsimile signature is affixed to
the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates
may, nevertheless, be countersigned by the Rights Agent and
issued and delivered with the same force and effect as though
the Person who signed such Right Certificates had not ceased
to be such officer of the Company. Any Right Certificate may
be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this
Rights Agreement any such Person was not such an officer. (b)
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices
designated as the place for surrender of Right Certificates
upon exercise, transfer or exchange, books for registration
and transfer of the Right Certificates. Such books shall show
with respect to each Right Certificate the name and address of
the registered holder thereof, the number of Rights indicated
on the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.
(a) At any time after the Distribution Date and prior to the
Expiration Date, any Right Certificate or Certificates may,
upon the terms and subject to the conditions set forth below
in this Section 6(a), be transferred or exchanged for another
Right Certificate or Certificates evidencing a like number of
Rights as the Right Certificate or Certificates surrendered.
Any registered holder desiring to transfer or exchange any
Right Certificate or Certificates shall surrender such Right
Certificate or Certificates (with, in the case of a transfer,
the form of assignment and certificate on the reverse side
thereof duly executed) to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate or
Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(e). Upon
satisfaction of the foregoing requirements, the Rights Agent
shall, subject to Sections 4(b), 7(d), 14 and 24, countersign
and deliver to the Person entitled thereto a Right Certificate
or Certificates as so requested. The Company may require
payment of a sum sufficient to cover any transfer tax or other
governmental charge that may be imposed in connection with any
transfer or exchange of any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will issue and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein, including Sections 7(d) and (e), 9(c), 11(a),
23 and 24) in whole or in part at any time after the
Distribution Date and prior to the Expiration Date upon
surrender of the Right Certificate, with the form of election
to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal office or
offices of the Rights Agent designated for such purpose,
together with payment (in lawful money of the United States of
America by certified check or bank draft payable to the order
of the Company) of the aggregate Purchase Price with respect
to the Rights then to be exercised and an amount equal to any
applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and
subject to Section 20(k), the Rights Agent shall thereupon
promptly (i)(A) requisition from any transfer agent of the
Series A Preferred Stock (or make available, if the Rights
Agent is the transfer agent therefor) certificates for the
total number of one one-hundredths of a share of Series A
Preferred Stock to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all
such requests) or (B) if the Company shall have elected to
deposit the shares of Series A Preferred Stock issuable upon
exercise of the Rights with a depositary agent, requisition
from the depositary agent depositary receipts representing
such number of one one-hundredths of a share of Series A
Preferred Stock as are to be purchased (in which case
certificates for the shares of Series A Preferred Stock
represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance
with Section 14 and (iii) after receipt of such certificates
or depositary receipts and cash, if any, cause the same to be
delivered to or upon the order of the registered holder of
such Right Certificate (with such certificates or receipts
registered in such name or names as may be designated by such
holder). If the Company is obligated to deliver Common Stock,
other securities or assets pursuant to this Agreement, the
Company will make all arrangements necessary so that such
other securities and assets are available for delivery by the
Rights Agent, if and when appropriate.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a
new Right Certificate evidencing the number of Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of
such Right Certificate, registered in such name or names as
may be designated by such holder, subject to the provisions of
Section 14.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or in any such Associate or Affiliate) or to
any Person with whom the Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Continuing Directors have
determined or determine is part of a course of conduct, plan,
arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(d) shall become null
and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(d) and Section
4(b) are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to an
Acquiring Person or its Affiliates and Associates or any
transferee of any of them hereunder.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported transfer
pursuant to Section 6 or exercise pursuant to this Section 7
unless such registered holder (i) shall have completed and
signed the certificate contained in the form of assignment or
election to purchase, as the case may be, set forth on the
reverse side of the Right Certificate surrendered for such
transfer or exercise, as the case may be, (ii) shall not have
indicated an affirmative response to clause 1 or 2 thereof and
(iii) shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall
request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation, and the Rights Agent shall cancel,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy or cause to be destroyed such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available a number of shares of Series A
Preferred Stock which are authorized but not outstanding or
otherwise reserved for issuance sufficient to permit the
exercise in full of all outstanding Rights as provided in this
Agreement.
(b) So long as the Series A Preferred Stock issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all
securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use reasonable efforts (i) to file, as
soon as practicable following the earliest date after the
occurrence of a Section 11(a)(ii) Event as of which the
consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the
Distribution Date, as the case may be, a registration
statement under the Securities Act with respect to the
securities issuable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as
practicable after such filing and (iii) to cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the
securities or blue sky laws of the various states in
connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed 90
days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable for securities
in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, such exercise
therefor shall not be permitted under applicable law or a
registration statement in respect of such securities shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all one
one-hundredths of a share of Series A Preferred Stock or all
shares of Common Stock, as the case may be, issuable upon
exercise of Rights shall, at the time of delivery of the
certificates for such securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and
fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer
taxes and other governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates
and of any certificates for Series A Preferred Stock upon the
exercise of Rights. The Company shall not, however, be
required to pay any transfer tax or other governmental charge
which may be payable in respect of any transfer involved in
the issuance or delivery of any Right Certificates or of any
certificates for Series A Preferred Stock to a Person other
than the registered holder of the applicable Right
Certificate, and prior to any such transfer, issuance or
delivery any such tax or other governmental charge shall have
been paid by the holder of such Right Certificate or it shall
have been established to the Company's satisfaction that no
such tax or other governmental charge is due.
Section 10. Series A Preferred Stock Record Date.
Each Person (other than the Company) in whose name any certificate for
Series A Preferred Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of such Series A
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any transfer taxes or other
governmental charges) was made; provided that if the date of such surrender and
payment is a date upon which the transfer books of the Company relating to the
Series A Preferred Stock are closed, such Person shall be deemed to have become
the record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the applicable transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a Series A
Preferred Stockholder of the Company with respect to shares for which the Rights
shall be exercisable, including the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.
(a) (i) If the Company shall at any time after the
date of this Agreement (A) pay a dividend on the
Series A Preferred Stock payable in shares of Series
A Preferred Stock, (B) subdivide the outstanding
Series A Preferred Stock into a greater number of
shares, (C) combine the outstanding Series A
Preferred Stock into a smaller number of shares or
(D) issue any shares of its capital stock in a
reclassification of the Series A Preferred Stock
(including any such reclassification in connection
with a consolidation or merger involving the
Company), the Purchase Price in effect immediately
prior to the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares
of Series A Preferred Stock or other capital stock
issuable on such date shall be proportionately
adjusted so that each holder of a Right shall (except
as otherwise provided herein, including Section 7(d))
thereafter be entitled to receive, upon exercise
thereof at the Purchase Price in effect immediately
prior to such date, the aggregate number and kind of
shares of Series A Preferred Stock or other capital
stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at
a time when the applicable transfer books of the
Company were open, such holder would have been
entitled to receive upon such exercise and by virtue
of such dividend, subdivision, combination or
reclassification. If an event occurs which requires
an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its
Affiliates and Associates, shall, at any time after
the date of this Agreement, become an Acquiring
Person, then proper provision shall promptly be made
so that each holder of a Right shall (except as
otherwise provided herein, including Section 7(d))
thereafter be entitled to receive, upon exercise
thereof on or after the Distribution Date at the
Purchase Price in effect immediately prior to the
first occurrence of a Section 11(a)(ii) Event, in
lieu of Series A Preferred Stock, such number of duly
authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Company
(such shares being referred to herein as the
"Adjustment Shares") as shall be equal to the result
obtained by dividing (x) the product obtained by
multiplying the Purchase Price in effect immediately
prior to the first occurrence of a Section 11(a)(ii)
Event by the number of one one-hundredths of a share
of Series A Preferred Stock for which a Right was
exercisable immediately prior to such first
occurrence (such product being thereafter referred to
as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (y) 50% of the current
market price (determined pursuant to Section
11(d)(i)) per share of Common Stock on the date of
such first occurrence; provided that if the
transaction that would otherwise give rise to the
foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which
are authorized by the Company's articles of
incorporation but not outstanding or reserved for
issuance other than upon exercise of the Rights is
not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the
Company shall, with respect to each Right, make
adequate provision to substitute for the Adjustment
Shares, upon payment of the Purchase Price then in
effect, (A) (to the extent available) Common Stock
and then, (B) (to the extent available) other equity
securities of the Company which a majority of the
Continuing Directors has determined to be essentially
equivalent to shares of Common Stock in respect to
dividend, liquidation and voting rights (such
securities being referred to herein as "common stock
equivalents") and then, if necessary, (C) other
equity or debt securities of the Company, cash or
other assets, a reduction in the Purchase Price or
any combination of the foregoing, having an aggregate
value (as determined by the Continuing Directors
based upon the advice of a nationally recognized
investment banking firm selected by the Continuing
Directors) equal to the value of the Adjustment
Shares; provided that (x) the Company may, and (y) if
the Company shall not have made adequate provision as
required above to deliver value within 30 days
following the later of the first occurrence of a
Section 11(a)(ii) Event and the first date that the
right to redeem the Rights pursuant to Section 23
shall expire, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price,
(1) (to the extent available) Common Stock and then
(2) (to the extent available) common stock
equivalents and then, if necessary, (3) other equity
or debt securities of the Company, cash or other
assets or any combination of the foregoing, having an
aggregate value (as determined by the Continuing
Directors based upon the advice of a nationally
recognized investment banking firm selected by the
Continuing Directors) equal to the excess of the
value of the Adjustment Shares over the Purchase
Price. If the Continuing Directors of the Company
shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the
Rights, the 30 day period set forth above (such
period, as it may be extended, being referred to
herein as the "Substitution Period") may be extended
to the extent necessary, but not more than 90 days
following the first occurrence of a Section 11(a)(ii)
Event, in order that the Company may seek stockholder
approval for the authorization of such additional
shares. To the extent that the Company determines
that some action is to be taken pursuant to the first
and/or second sentence of this Section 11(a)(iii),
the Company (X) shall provide, subject to Section
7(d), that such action shall apply uniformly to all
outstanding Rights and (Y) may suspend the
exercisability of the Rights until the expiration of
the Substitution Period in order to seek any
authorization of additional shares and/or to decide
the appropriate form and value of any consideration
to be delivered as referred to in such first and/or
second sentence. If any such suspension occurs, the
Company shall issue a public announcement stating
that the exercisability of the Rights has been
temporarily suspended, as well as a public
announcement at such time as the suspension is no
longer in effect.
For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price
per share of Common Stock (as determined pursuant to
Section 11(d)) on the later of the date of the first
occurrence of a Section 11(a)(ii) Event and the first
date that the right to redeem the Rights pursuant to
Section 23 shall expire; any common stock equivalent
shall be deemed to have the same value as the Common
Stock on such date; and the value of other securities
or assets shall be determined pursuant to Section
11(d)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Series A Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after
such record date) Series A Preferred Stock (or securities
having the same rights, privileges and preferences as the
shares of Series A Preferred Stock ("equivalent preference
stock")) or securities convertible into or exercisable for
stock (or equivalent preference Series A Preferred Stock) at a
price per share of Series A Preferred Stock (or equivalent
preference Series A Preferred Stock) (in each case, taking
account of any conversion or exercise price) less than the
current market price (as determined pursuant to Section 11(d))
per share of Series A Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such date by a fraction, the numerator of
which shall be the number of shares of Series A Preferred
Stock outstanding on such record date, plus the number of
shares of Series A Preferred Stock which the aggregate price
(taking account of any conversion or exercise price) of the
total number of shares of Series A Preferred Stock (and/or
equivalent preference stock) so to be offered would purchase
at such current market price and the denominator of which
shall be the number of shares of Series A Preferred Stock
outstanding on such record date plus the number of additional
shares of Series A Preferred Stock (and/or equivalent
preference stock) so to be offered. In case such subscription
price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Shares of Series A
Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and if such rights,
options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Series A Preferred Stock
(including any such distribution made in connection with a
consolidation or merger involving the Company) of evidences of
indebtedness, equity securities other than Series A Preferred
Stock, assets (other than a regular periodic cash dividend out
of the earnings or retained earnings of the Company) or
rights, options or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market
price (as determined pursuant to Section 11(d)) per share of
Series A Preferred Stock on such record date, less the value
(as determined pursuant to Section 11(d)(iii)) of such
evidences of indebtedness, equity securities, assets, rights,
options or warrants so to be distributed with respect to one
share of Series A Preferred Stock and the denominator of which
shall be such current market price per share of Series A
Preferred Stock. Such adjustment shall be made successively
whenever such a record date is fixed, and if such distribution
is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder
other than computations made pursuant to Section
11(a)(ii) or 14, the "current market price" per share
of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days
immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), the
"current market price" per share of Common Stock on
any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock
for the 10 consecutive Trading Days immediately
following such date; and for purposes of computations
made pursuant to Section 14, the "current market
price" per share of Common Stock for any Trading Day
shall be deemed to be the closing price per share of
Common Stock for such Trading Day; provided that if
the current market price per share of the Common
Stock is determined during a period following the
announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities
exercisable for or convertible into shares of such
Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as
set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then,
and in each such case, the "current market price"
shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day
shall be the last sale price, or, in case no such
sale takes place on such day, the average of the
closing bid and asked prices, in either case as
reported on the principal national securities
exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted
price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use or, if on
any such date the shares of Common Stock are not
quoted by any such organization, the average of the
closing bid and asked prices as furnished by a
professional market maker making a market in the
Common Stock selected by the Board of Directors of
the Company, or, if at the time of such selection
there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no market
maker is making a market in the Common Stock, the
fair value of such shares on such date as determined
in good faith by the Board of Directors of the
Company (or, if at the time of such determination
there is an Acquiring Person, by a majority of the
Continuing Directors) shall be used. If the Common
Stock is not publicly held or not so listed or
traded, the "current market price" per share means
the fair value per share as determined in good faith
by the Board of Directors of the Company, or, if at
the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors, or
if there are no Continuing Directors, by a nationally
recognized investment banking firm selected by the
Board of Directors having no current or former
relationship with an Acquiring Person, which
determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Series A
Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in
Section 11(d)(i) (other than the last sentence
thereof). If the current market price per share of
Series A Preferred Stock cannot be determined in such
manner, the "current market price" per share of
Series A Preferred Stock shall be conclusively deemed
to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date
of this Agreement) multiplied by the current market
price per share of Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last
sentence thereof)). If neither the Common Stock nor
the Series A Preferred Stock is publicly held or so
listed or traded, the "current market price" per
share of the Series A Preferred Stock shall be
determined in the same manner as set forth in the
last sentence of Section 11(d)(i). For all purposes
of this Agreement, the "current market price" of one
one-hundredth of a share of Series A Preferred Stock
shall be equal to the "current market price" of one
share of Series A Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder,
the value of any securities or assets other than
Common Stock or Series A Preferred Stock shall be the
fair value as determined in good faith by the Board
of Directors of the Company, or, if at the time of
such determination there is an Acquiring Person, by a
majority of the Continuing Directors then in office,
or, if there are no Continuing Directors, by a
nationally recognized investment banking firm
selected by the Board of Directors having no current
or former relationship with an Acquiring Person,
which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive
for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least
1% in the Purchase Price; provided that any adjustments which
by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Series A Preferred Stock, as the
case may be.
(f) If at any time, as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a), the holder of any Right
shall be entitled to receive upon exercise of such Right any
shares of capital stock other than Series A Preferred Stock,
thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the Series A Preferred Stock contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Series A Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made hereunder shall evidence the right to
purchase, at the Purchase Price then in effect, the then
applicable number of one one-hundredths of a share of Series A
Preferred Stock and other capital stock of the Company
issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Section
11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right
to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Series A Preferred Stock
(calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-hundredths of a share
for which a Right was exercisable immediately prior to this
adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one
one-hundredths of a share of Series A Preferred Stock issuable
upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a share of
Series A Preferred Stock for which such Right was exercisable
immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after
such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a share of Series
A Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth
of a share and the number of shares which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of
the number of one one-hundredths of a share of Series A
Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable
such number of one one-hundredths of a share of Series A
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the
number of one one-hundredths of a share of Series A Preferred
Stock or other capital Series A Preferred Stock of the
Company, if any, issuable upon such exercise over and above
the number of one one-hundredths of a share of Series A
Preferred Stock or other capital Series A Preferred Stock of
the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment;
provided that the Company shall deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to
be advisable in order that any consolidation or subdivision of
the Series A Preferred Stock, issuance wholly for cash of any
Series A Preferred Stock at less than the current market
price, issuance wholly for cash of Series A Preferred Stock or
securities which by their terms are convertible into or
exercisable for Series A Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to the holders of
its Series A Preferred Stock, shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it will not at any
time after the Distribution Date (i) consolidate, merge or
otherwise combine with or (ii) sell or otherwise transfer
(and/or permit any of its Subsidiaries to sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons
if (x) at the time of or immediately after such consolidation,
merger, combination or sale there are any rights, warrants or
other instruments or securities outstanding or any agreements
or arrangements in effect which would substantially diminish
or otherwise eliminate the benefits intended to be afforded by
the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger, combination or sale, the
stockholders of a Person who constitutes, or would constitute,
the "Principal Party" for the purposes of Section 13 shall
have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the
Distribution Date, it will not, except as permitted by
Sections 23, 24 and 27, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is
reasonably foreseeable that such action will substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, if at any time after the date hereof and prior to
the Distribution Date the Company shall (i) pay a dividend on
the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock into
a larger number of shares or (iii) combine the outstanding
Common Stock into a smaller number of shares, the number of
Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter as contemplated
by Section 3(c), shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by
a fraction, the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be
the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Series A Preferred
Stock and the Common Stock, a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common
Stock) in the manner set forth in Section 26. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, merge
into, or otherwise combine with, any other Person, and the
Company shall not be the continuing or surviving corporation
of such consolidation, merger or combination, (y) any Person
shall merge into, or otherwise combine with, the Company, and
the Company shall be the continuing or surviving corporation
of such merger or combination and, in connection with such
merger or combination, all or part of the outstanding shares
of Common Stock shall be changed into or exchanged for other
stock or securities of the Company or any other Person, cash
or any other property, or (z) the Company and/or one or more
of its Subsidiaries shall sell or otherwise transfer, in one
transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, then, and in each such
case, proper provision shall promptly be made so that (1) each
holder of a Right shall thereafter be entitled to receive,
upon exercise thereof at the Purchase Price in effect
immediately prior to the first occurrence of any Triggering
Event, such number of duly authorized, validly issued, fully
paid and nonassessable shares of freely tradeable Common Stock
of the Principal Party (as hereinafter defined), not subject
to any rights of call or first refusal, liens, encumbrances or
other claims, as shall be equal to the result obtained by
dividing (A) the product obtained by multiplying the Purchase
Price in effect immediately prior to the first occurrence of
any Triggering Event by the number of one one-hundredths of a
share of Series A Preferred Stock for which a Right was
exercisable immediately prior to such first occurrence (such
product being thereafter referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (B)
50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of the Common Stock of such
Principal Party on the date of consummation of such
consolidation, merger, combination, sale or transfer; (2) the
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, combination,
sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (3) the term "Company"
shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; and (4) such Principal
Party shall take such steps (including the authorization and
reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in
accordance with this Section 13(a)) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" means (i) in the case of any transaction
described in Section 13(a)(x) or (y), the Person that is the
issuer of any securities into which shares of Common Stock of
the Company are converted in such merger, consolidation or
combination, and if no securities are so issued, the Person
that survives or results from such merger, consolidation or
combination; and (ii) in the case of any transaction described
in Section 13(a)(z), the Person that is the party receiving
the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided that in any such case, (A) if the Common Stock of
such Person is not at such time and has not been continuously
over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such
other Person; and (B) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, combination, sale or transfer unless the Principal
Party shall have a sufficient number of authorized shares of
its Common Stock which are not outstanding or otherwise
reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in Section 13(a)
and (b) and providing that, as soon as practicable after the
date of any consolidation, merger, combination, sale or
transfer mentioned in Section 13(a), the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the securities issuable upon
exercise of the Rights, and will use its best efforts to cause
such registration statement (A) to become effective as soon as
practicable after such filing and (B) to remain effective
(with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date and (ii) deliver
to holders of the Rights historical financial statements for
the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10
under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, combinations, sales or other transfers. If any Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
Section 11(p), or to distribute Right Certificates which
evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the
same fraction of the current market price of a whole Right.
For purposes of this Section 14(a), the current market price
of a whole Right shall be the closing price of a Right for the
Trading Day immediately prior to the date on which such
fractional Rights would otherwise have been issuable. The
closing price of a Right for any day shall be the last sale
price, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, in either case as
reported on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the
Board of Directors of the Company or, if at the time of such
selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no such market maker
is making a market in the Rights, the current market price of
the Rights on such date shall be as determined in good faith
by the Board of Directors of the Company or, if at the time of
such determination there is an Acquiring Person, by a majority
of the Continuing Directors.
(b) The Company shall not be required to issue fractions of
shares of Series A Preferred Stock (other than fractions which
are multiples of one one-hundredth of a share of Series A
Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Series A
Preferred Stock (other than fractions which are multiples of
one one-hundredth of a share of Series A Preferred Stock). In
lieu of any such fractional shares of Series A Preferred
Stock, the Company shall pay to the registered holders of
Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction
of the current market price of one one-hundredth of a share of
Series A Preferred Stock. For purposes of this Section 14(b),
the current market price of one one-hundredth of a share of
Series A Preferred Stock shall be one one-hundredth of the
closing price of a share of Series A Preferred Stock (as
determined pursuant to Section 11(d)) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of any Triggering Event or upon
any exchange pursuant to Section 24, the Company shall not be
required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to
the registered holders of Right Certificates at the time such
Rights are exercised or exchanged as herein provided an amount
in cash equal to the same fraction of the current market price
of a share of Common Stock. For purposes of this Section
14(c), the current market price of a share of Common Stock
shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right except as
permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of certificates representing Common
Stock); and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of any certificate representing Common Stock) without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of any certificate representing Common Stock),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of,
any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Sections 6 and 7, the Company and the Rights
Agent may deem and treat the Person in whose name a Right
Certificate (or, prior to the Distribution Date, a certificate
representing shares of Common Stock) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificate or on the certificate representing shares of
Common Stock made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of
Section 7(d), shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining
performance of such obligation; provided that the Company must
use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a Stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to Stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting Stockholders (except as provided
in Section 25), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the execution or
administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense (including reasonable
attorneys' fees), incurred without gross negligence, bad faith
or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection
with the administration of this Agreement or the exercise or
performance of its duties hereunder, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with the administration of this
Agreement or the exercise or performance of its duties
hereunder in reliance upon any Right Certificate or
certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding
to the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the
part of any of the parties hereto; provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at
the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name;
and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without
limitation, the identity of any "Acquiring Person" and the
determination of "current market price") be proved or
established by the Company prior to taking, suffering or
omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman
of the Board, the President or any Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any
Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken, suffered or omitted in good
faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change
in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(d)) or any adjustment in
the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13, 23 or 24,
or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common
Stock or Series A Preferred Stock to be issued pursuant to
this Agreement or any Right Certificate or as to whether any
shares of Common Stock or Series A Preferred Stock will, when
issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments, clarifications and assurances as may reasonably
be requested by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement, and the Rights Agent shall not be liable for any
action taken, suffered or omitted to be taken by it in good
faith while awaiting written responses from the Company to any
such request.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the President
or any Vice President or the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken, suffered or omitted to be
taken by it in good faith in accordance with instructions of
any such officer.
(h) The Rights Agent and any Series A Preferred Stockholder,
director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not the Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company or to
any holders of Rights resulting from any such act, default,
neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights, nor shall the
Rights Agent be under any duty or responsibility to institute
any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or
more holders of Rights Certificates shall furnish the Rights
Agent with security and indemnity to its satisfaction for any
costs and expenses which may be incurred.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the cases may be, has either not been completed
or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first
consulting with the Company.
(l) The Rights Agent shall not be liable for failure to
perform any duties except as specifically set forth herein and
no implied covenants or obligations shall be read into this
Agreement against the Rights Agent whose duties and
obligations are ministerial and shall be determined solely by
the express provisions hereof.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock and the
Series A Preferred Stock by registered or certified mail, and, subsequent to the
Distribution Date, to the holders of the Right Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock and the
Series A Preferred Stock by registered or certified mail, and, subsequent to the
Distribution Date, to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of any state of the United
States, in good standing, having an office in the Commonwealth of Pennsylvania,
which is authorized under such laws to exercise stock transfer or corporate
trust powers and is subject to supervision or examination by federal or state
authority and which, at the time of its appointment as Rights Agent, has, or is
an Affiliate of a corporation which has, a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate of a corporation described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Series A Preferred Stock, and, subsequent to the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of Series A Preferred Stock issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the close of business
on the tenth (10th) day after the Stock Acquisition Date (or
such later date as a majority of the Continuing Directors may
designate prior to such time as the Rights are no longer
redeemable), and (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); provided, however, that if the Board
of Directors of the Company authorizes redemption of the
Rights in either of the circumstances set forth in clauses (x)
or (y) below, then there must be Continuing Directors in
office and such authorization shall require the concurrence of
a majority of the Continuing Directors: (x) such authorization
occurs on or after the Stock Acquisition Date, or (y) such
authorization occurs on or within eighteen (18) months of the
date of a change (resulting from a proxy or consent
solicitation) in a majority of the directors of the Company in
office at the commencement of such solicitation if any Person
who is a participant in such solicitation has stated (or if
upon the commencement of such solicitation, a majority of the
directors of the Company has determined in good faith) that
such Person (or any of its Affiliates or Associates) intends
to take, or may consider taking, any action which would result
in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event. Notwithstanding
anything in this Agreement to the contrary, the Rights shall
not be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights and without any
further action and without any notice, the right to exercise
the Rights will terminate and thereafter the only right of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give
notice of such redemption to the Rights Agent and the holders
of the Rights in the manner set forth in Section 26; provided
that the failure to give, or any defect in, such notice shall
not affect the validity of such redemption. Any notice which
is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in Section 23 or
24 (except by reason of the initial distribution of the Rights
to holders of record of Common Stock and Series A Preferred
Stock on the Record Date), and other than in connection with
the purchase, acquisition or redemption of shares of Common
Stock or Series A Preferred Stock prior to the Distribution
Date.
Section 24. Exchange.
(a) At any time after any Person becomes an Acquiring Person,
a majority of the Continuing Directors may, at their option,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to Section 7(d)) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company,
any of its Subsidiaries, any employee benefit plan of the
Company or any of its Subsidiaries or any Person organized,
appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the shares of
Voting Stock then outstanding.
(b) Immediately upon the action of the Continuing Directors
electing to exchange any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right
to exercise such Rights will terminate and thereafter the only
right of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly thereafter give notice of such
exchange to the Rights Agent and the holders of the Rights to
be exchanged in the manner set forth in Section 26; provided
that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and,
in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to Section 7(d)) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute common stock equivalents (as
defined in Section 11(a)(iii)) for shares of Common Stock
exchangeable for Rights, at the initial rate of one common
stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend,
liquidation and voting rights of common stock equivalents
pursuant to the terms thereof, so that each common stock
equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and
voting rights as one share of Common Stock.
Section 25. Notice of Proposed Actions.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Series A Preferred Stock or to
make any other distribution to the holders of Series A
Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the Company), or (ii)
to offer to the holders of its stock rights or warrants to
subscribe for or to purchase any additional shares of Series A
Preferred Stock or shares of Series A Preferred Stock of any
class or any other securities, rights or options, or (iii) to
effect any reclassification of its Series A Preferred Stock
(other than a reclassification involving only the subdivision
or combination of outstanding shares of Series A Preferred
Stock) or (iv) to effect any consolidation or merger with any
other Person, or to effect and/or to permit one or more of its
Subsidiaries to effect any sale or other transfer, in one
transaction or a series of related transactions, of assets or
earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a
Right, to the extent feasible and in accordance with Section
26, a notice of such proposed action, which shall specify the
record date for the purposes of any such dividend,
distribution or offering of rights or warrants, or the date on
which any such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of
Series A Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the Series A
Preferred Stock entitled to participate in such dividend,
distribution or offering, and in the case of any such other
action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by
the holders of Series A Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this
Section or any defect therein shall not affect the legality or
validity of the action taken by the Company or the vote upon
any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filing by
the Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this
Agreement and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case,
(1) the Company shall as soon as practicable thereafter give
to each holder of a Right, in accordance with Section 26, a
notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) or 13, as the case may be, and
(2) all references in Section 25(a) to Series A Preferred
Stock shall be deemed thereafter to refer to Common Stock or
other capital stock, as the case may be.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right to or on the Company shall be
sufficiently given or made if sent by first-class mail (postage prepaid) to the
address of the Company indicated on the signature page hereof or such other
address as the Company shall specify in writing to the Rights Agent. Subject to
the provisions of Section 21, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail
(postage prepaid) to the address of the Rights Agent indicated on the signature
page hereof or such other address as the Rights Agent shall specify in writing
to the Company. Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
(or, prior to the Distribution Date, to the holder of any certificate
representing shares of Common Stock or Series A Preferred Stock) shall be
sufficiently given or made if sent by first-class mail (postage prepaid) to the
address of such holder shown on the registry books of the Company.
Section 27. Supplements and Amendments.
The Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (c) to change or supplement the provisions
hereof in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, (x) after the Stock Acquisition Date or (y) on or
within eighteen (18) months of the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors of the Company in office at
the commencement of such solicitation, if any Person who is a participant in
such solicitation has stated (or if upon the commencement of such solicitation,
a majority of the directors of the Company has determined in good faith) that
such Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action
which would result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event, any supplement or amendment shall be
effective only if there are Continuing Directors then in office, and such
supplement or amendment shall have been approved by a majority of such
Continuing Directors. Upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment is
in compliance with the terms of this Section, the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
(a) For all purposes of this Agreement, any calculation of the
number of shares of Voting Stock outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding shares of Voting 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) under
the Exchange Act as in effect on the date of this Agreement.
(b) The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the
Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the
administration of this Agreement, including the right and
power to (i) interpret the provisions of this Agreement and
(ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a
determination to redeem or exchange or not to redeem or
exchange the Rights or to amend the Agreement).
(c) All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or
made by the Board (with, where specifically provided for
herein, the concurrence of the Continuing Directors) in good
faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors of
the Company or the Continuing Directors to any liability to
the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, of the certificates
representing the shares of Common Stock) and any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
certificates representing the shares of Common Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided that, notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid, void
or unenforceable and the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors or Continuing Directors, as the
case may be. Without limiting the foregoing, if any provisions requiring that a
determination be made by less than the entire Board (or at a time or with the
concurrence of a group of directors consisting of less than the entire Board) is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, such determination shall then be made by the Board in
accordance with applicable law and the Company's articles of incorporation and
bylaws.
Section 32. Governing Law.
This Agreement, each Right and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, except that the rights and obligations of
the Rights Agent shall be governed by the law of the Commonwealth of
Pennsylvania.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.
Section 34. Descriptive Headings.
The captions herein are included for convenience of reference only, do
not constitute a part of this Agreement and shall be ignored in the construction
and interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
eGAMES, INC.
By:/s/ Xxxxxx X. Xxxxx
---------------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
0000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
President and Chief Executive Officer
STOCK TRANS, INC.
By:/s/ Xxxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxxx Xxxxxx
Title: President
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED STOCK
OF
EGAMES, INC.
Pursuant to Section 1522 of the Business Corporation
Law of the Commonwealth of Pennsylvania
We, _________________, [Title], and ____________, [Title], of eGames,
Inc., a corporation organized and existing under the Business Corporation Law of
the Commonwealth of Pennsylvania ("Pennsylvania Law"), in accordance with the
provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, the Board of Directors on June
1, 1999, adopted the following resolution creating a series of Series A
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Preferred Stock" (the "Series A Preferred
Stock"), and the number of shares constituting such series shall be 98,184. Such
number of shares of the Series A Preferred Stock may be increased or decreased
by resolution of the Board of Directors; provided that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares issuable upon
exercise or conversion of outstanding rights, options or other securities issued
by the Corporation.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable on or before June 15, September
15, December 15 and March 15 (or, if any such day is not a
business day, on the next succeeding business day) of each
year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater
of (a) $.01 and (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends or other distributions and 100
times the aggregate per share amount of all non-cash dividends
or other distributions (other than (i) a dividend payable in
shares of Common Stock, without par value, of the Corporation
(the "Common Stock")) or (ii) a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series A Preferred Stock.
If the Corporation shall at any time after June 21, 1999 (the
"Rights Declaration Date") pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, then in each such case the amount
to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution
on the Common Stock (other than as described in clauses (i)
and (ii) of the first sentence of paragraph (A)); provided
that if no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance
of any share or fraction of a share of Series A Preferred
Stock and such first Quarterly Dividend Payment Date), a
dividend of $.01 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Preferred Stock, unless the
date of issue of such shares is on or before the record date
for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be
cumulative from the date of issue of such shares, or unless
the date of issue is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and on or before such
Quarterly Dividend Payment Date, in which case dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on shares of Series A Preferred Stock
in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be
more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights.
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a
vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the
Corporation.
(C) (i) If at any time dividends on any Series A
Preferred Stock shall be in arrears in an amount
equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default
period") which shall extend until such time when all
accrued and unpaid dividends for all previous
quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A
Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock
(including holders of the Series A Preferred Stock)
with dividends in arrears in an amount equal to six
(6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect
two (2) Directors.
(ii) During any default period, such voting right of
the holders of Series A Preferred Stock may be
exercised at any annual meeting of shareholders,
provided that such voting right shall not be
exercised unless the holders of ten percent (10%) in
number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock
of such voting right. At any meeting at which the
holders of Preferred Stock shall exercise such voting
right during an existing default period, they shall
have the right, voting as a class at an annual
meeting, to elect two (2) Directors. If the number
which may be so elected at any meeting does not
amount to the required number, the holders of the
Preferred Stock shall have the right to make such
increase in the number of Directors as shall be
necessary to permit the election by them of the
required number. After the holders of the Preferred
Stock shall have exercised their right to elect
Directors in any default period and during the
continuance of such period, the number of Directors
shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series A
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously
exercised their right to elect Directors, the Board
of Directors may order the calling of a special
meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a
Vice-President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote
pursuant to this Paragraph (C)(iii) shall be given to
each holder of record of Preferred Stock by mailing a
copy of such notice to such holder at such holder's
last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time
not earlier than twenty (20) days and not later than
sixty (60) days after such order or request.
Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called
during the period within sixty (60) days immediately
preceding the date fixed for the next annual meeting
of the shareholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation
if applicable, shall continue to be entitled to elect
the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to
elect two (2) Directors voting as a class, after the
exercise of which right (x) the Directors so elected
by the holders of Preferred Stock shall continue in
office until their successors shall have been elected
by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of
Directors may (except as provided in Paragraph
(C)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore
elected by the holders of the class of stock which
elected the Director whose office shall have become
vacant. References in this Paragraph (C) to Directors
elected by the holders of a particular class of stock
shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred
Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate, and (z)
the number of Directors shall be such number as may
be provided for in the Articles of Incorporation or
By-laws of the Corporation irrespective of any
increase made pursuant to the provisions of Paragraph
(C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided
by law or in the Articles of Incorporation or By-laws
of the Corporation). Any vacancies in the Board of
Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on outstanding shares of Series A Preferred Stock
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such other parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock; provided that
the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in
exchange for shares of stock of the Corporation
ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem, purchase or otherwise acquire for value
any shares of Series A Preferred Stock, or any shares
of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of Directors)
to all holders of Series A Preferred Stock and all
such other parity stock upon such terms as the Board
of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes,
shall determine in good faith will result in fair and
equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any
shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Series A Preferred Stock redeemed, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock
without designation as to series and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors as permitted by the Articles of Incorporation or as otherwise
permitted under Pennsylvania Law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc.
If the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash or any other
property, then in any such case the shares of Series A Preferred Stock shall at
the same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash or any other property, as
the case may be, into which or for which each share of Common Stock is changed
or exchanged. If the Corporation shall at any time after the Rights Declaration
Date pay any dividend on Common Stock payable in shares of Common Stock or
effect a subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption.
The Series A Preferred Stock shall not be redeemable.
Section 9. Fractional Shares.
Series A Preferred Stock may be issued in fractions of a share which
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
Section 10. Rank.
The Series A Preferred Stock shall rank junior (as to dividends and
upon liquidation, dissolution and winding up) to all other series of the
Corporation's preferred stock except any series that specifically provides that
such series shall rank junior to the Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this __ day of ________________, 1999.
-------------------------
[Title]
Attest:
----------------------
[Title]
Exhibit B
[Form of Right Certificate]
No. R- ____________ Rights
[NOT EXERCISABLE AFTER THE EARLIER OF June 1, 2009 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT.](1)
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON
WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY
OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE
RIGHTS AGREEMENT.](2)
-------------
(1) To be inserted on Rights Certificates that relate to Common Stock. (2) If
applicable, insert this portion of the legend and delete the preceding sentence.
RIGHT CERTIFICATE
EGAMES, INC.
This Right Certificate certifies that ______________________, or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of June 1, 1999 (the
"Rights Agreement") between eGames, Inc., a Pennsylvania corporation (the
"Company"), and StockTrans, Inc. (the "Rights Agent")) to purchase from the
Company, at any time after the Distribution Date and prior to the Expiration
Date, ___ one-hundredth[s] of a fully paid, nonassessable share of Series A
Preferred Stock (the "Series A Preferred Stock") of the Company at a purchase
price of $35.00 per one one-hundredth of a share (the "Purchase Price"), payable
in lawful money of the United States of America, upon surrender of this Right
Certificate, with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights Agent
designated for such purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) and the Purchase
Price set forth above are as of June 21, 1999, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) a transferee of
an Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such Rights shall become
null and void, and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option, (a) at any time prior to the
earlier of (i) the close of business on the tenth day after the Stock
Acquisition Date (or such later date as a majority of the Continuing Directors
may designate prior to such time as the Rights are no longer redeemable) and
(ii) the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right; or (b) at any time
after any Person becomes an Acquiring Person (but before such Person becomes the
Beneficial Owner of 50% or more of the shares of Voting Stock then outstanding),
exchange all or part of the then outstanding Rights (other than Rights held by
the Acquiring Person and certain related Persons) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right. If the Rights shall be
exchanged in part, the holder of this Right Certificate shall be entitled to
receive upon surrender hereof another Right Certificate or Certificates for the
number of whole Rights not exchanged.
No fractional shares of Series A Preferred Stock are required to be
issued upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are multiples of one one-hundredth of a share of Series A
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Certificates for the number of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of ________________, 199_
eGAMES, INC.
By:____________________________
Title:
[SEAL]
Attest:
-------------------------------
Secretary
Countersigned:
_______________________________, as Rights Agent
By:____________________________
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________________ hereby sells, assigns
and transfers unto ________________________________________________________ this
(Please print name and address of transferee)
Right Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _____________________, 19__
---------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are
not being assigned by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
----------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights
represented by the Right Certificate.)
To: eGames, Inc.
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Series A
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
Please insert social security or other identifying number
----------------------------------------------------------
(Please print name and address)
----------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security or other identifying number
-----------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------
Dated: ________________, 19__
---------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are
___are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
----------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
----------
Exhibit C
EGAMES, INC.
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Formof Security: The Board of Directors has declared a
dividend of one right for each outstanding share of
the Company's Common Stock, without par value (the
"Common Stock"), payable to holders of record as of
the close of business on June 21, 1999 (each a
"Right" and collectively, the "Rights").
Transfer: Prior to the Distribution Date, the Rights will be
evidenced by the certificates for and will be
transferred with the Common Stock and the registered
holders of the Common Stock will be deemed to be the
registered holders of the Rights.
After the Distribution Date, the Rights Agent will
mail separate certificates evidencing the Rights to
each record holder of the Common Stock as of the
close of business on the Distribution Date, and
thereafter the Rights will be transferable separately
from the Common Stock.
Exercise: Prior to the Distribution Date, the Rights
will not be exercisable.
After the Distribution Date, each Right will be
exercisable to purchase, for $35.00 (the "Purchase
Price"), one one-hundredth of a share of Series A
Preferred Stock, without par value, of the Company.
Flip-In: If any person or group (with certain exceptions) (an
"Acquiring Person") becomes the beneficial owner of
15% or more of the Company's Voting Stock, then each
Right (other than Rights beneficially owned by the
Acquiring Person and certain affiliated persons) will
entitle the holder to purchase, for the Purchase
Price, a number of shares of the Company's Common
Stock having a market value of twice the Purchase
Price.
Flip-Over: If, after any person has become an
Acquiring Person, (1) the Company is involved in a
merger or other business combination in which the
Company is not the surviving corporation or its
Common Stock is exchanged for other securities or
assets or (2) the Company and/or one or more of its
subsidiaries sell or otherwise transfer assets or
earning power aggregating more than 50% of the assets
or earning power of the Company and its subsidiaries,
taken as a whole, then each Right will entitle the
holder to purchase, for the Purchase Price, a number
of shares of common stock of the other party to such
business combination or sale (or in certain
circumstances, an affiliate) having a market value of
twice the Purchase Price.
Exchange: At any time after any person has become an Acquiring
Person (but before any person becomes the beneficial
owner of 50% or more of the Company's Voting Stock),
a majority of the Continuing Directors may exchange
all or part of the Rights (other than the Rights
beneficially owned by the Acquiring Person and
certain affiliated persons) for shares of Common
Stock at an exchange ratio of one share of Common
Stock per Right.
Redemption: The Board of Directors may redeem all of the Rights
at a price of $.01 per Right at any time prior to the
close of business on the 10th day after public
announcement that any person has become an Acquiring
Person (subject to extension by a majority of the
Continuing Directors, as described below).
After any person has become an Acquiring Person, the
Rights may be redeemed only with the approval of a
majority of the Continuing Directors.
Continuing Directors: Notwithstanding the foregoing,
there must be Continuing Directors in office, and a
majority of the Continuing Directors must concur, if
the Board of Directors authorizes the (1) exchange of
rights for shares of Common Stock as outlined above,
or (2) redemption or amendment (a) at a time when
there is an Acquiring Person, or (b) on or within 18
months of the date of a change (resulting from a
proxy or consent solicitation) in a majority of the
Directors by a person who has stated an intention to
take action resulting in such person becoming an
Acquiring Person or upon the occurrence of a Flip-in
or Flip-over Event.
Expiration: The Rights will expire on June 1, 2009,
unless earlier exchanged or redeemed.
Amendments: Prior to the Distribution Date, the
Rights Agreement may be amended in any respect.
After the Distribution Date, the Rights Agreement may
be amended in any respect that does not adversely
affect the Rights holders (other than any Acquiring
Person and certain affiliated persons).
After any person has become an Acquiring Person, the
Rights Agreement may be amended only with the
approval of a majority of the Continuing Directors.
Voting Rights: Rights holders have no rights as a
shareholder of the Company, including the right to
vote and to receive dividends.
Anti-dilution The Rights Agreement includes anti-dilution
provisions: provisions designed to prevent efforts to diminish
the efficacy of the Rights.
Taxes: While the dividend of the Rights will not be taxable
to stockholders or to the Company, stockholders or
the Company may, depending upon the circumstances,
recognize taxable income in the event that the Rights
become exercisable as set forth above.
---------------
(1) "Distribution Date" means the earlier of:
(1) the 10th day after public announcement that any person or
group has become the beneficial owner of 15% or more of the
Company's Voting Stock and
(2) the 10th business day after the date of the commencement of a
tender or exchange offer by any person which would, if
consummated, result in such person becoming the beneficial
owner of 15% or more of the Company's Voting Stock,
in each case, subject to extension by a majority of the Continuing Directors.
"Continuing Director" means any member of the Board of Directors who
was a member of the Board prior to June 1, 1999 or any person who is
subsequently elected to the Board if such person is recommended or approved by a
majority of the Continuing Directors. Continuing Directors do not include an
Acquiring Person, an affiliate or associate of an Acquiring Person or any
representative or nominee of the foregoing.
"Voting Stock" means all of the outstanding shares of Common Stock, and
the outstanding shares of any class or series of stock having preference over
the Common Stock as to dividends or as to liquidation entitled to vote on each
matter on which the holders of Common Stock shall be entitled to vote, and
reference to a percentage of shares of Voting Stock shall refer to the
percentage of votes entitled to be cast by such shares. ----------------
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
