EXHIBIT 99.2
PURCHASE AND VOTING AGREEMENT dated as of
May 16, 2001, between AMTRAN, INC., an Indiana
corporation (the "Company"), and INTERNATIONAL
LEASE FINANCE CORPORATION, a California corporation
("ILFC").
WHEREAS, in connection with a possible merger (the "Merger") of
the Company with a corporation owned, directly or indirectly, by J. Xxxxxx
Xxxxxxxxx pursuant to which shares of the common stock, without par value,
of the Company ("Common Stock"), other than shares of Common Stock owned,
directly or indirectly, by J. Xxxxxx Xxxxxxxxx, would be converted into the
right to receive cash at a price per share of Common Stock (the
"Transaction Price") to be specified in an Agreement and Plan of Merger
which may be entered into by the Company with respect to the Merger (the
"Merger Agreement"), the Company and ILFC wish to set forth the terms and
conditions relating to (i) certain modifications to the terms of the shares
of Series B Preferred Stock, without par value, of the Company ("Series B
Preferred Stock") to be effected immediately prior to the Merger, (ii) the
Company's agreement to purchase, and ILFC's agreement to sell, shares of
Series B Preferred Stock concurrently with consummation of the Merger and
(iii) certain other matters with respect to the continuing business
relationship between the Company and ILFC; and
WHEREAS ILFC owns 300 shares of Series B Preferred Stock
(together with any other shares of capital stock of the Company acquired by
ILFC after the date hereof and during the term of this Agreement, being
collectively referred to herein as the "Subject Shares").
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of ILFC. ILFC hereby
represents and warrants to the Company as of the date hereof as follows:
(a) Authority; Execution and Delivery; Enforceability. ILFC has
all requisite corporate power and authority to execute this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery by ILFC of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of ILFC. ILFC has duly executed and delivered this
Agreement, and this Agreement constitutes the legal, valid and binding
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obligation of ILFC, enforceable against ILFC in accordance with its terms.
The execution and delivery by ILFC of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with
the terms hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien (as defined below) upon any of the properties or
assets of ILFC under, any provision of any contract to which ILFC is a
party or by which any properties or assets of ILFC are bound or, subject to
the filings and other matters referred to in the next sentence, any
provision of any judgment or law applicable to ILFC or the properties or
assets of ILFC. No consent of, or registration, declaration or filing with,
any governmental entity is required to be obtained or made by or with
respect to ILFC in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated
hereby, other than (i) the filing with the office of the Secretary of State
of the State of Indiana of Articles of Amendment to the Articles of
Incorporation of the Company (the "Amendment"), substantially in the form
of Exhibit A and (ii) such reports under Sections 13(d) and 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions
contemplated hereby.
(b) The Subject Shares. ILFC is the record and beneficial owner
of and has good and marketable title to, the Subject Shares, free and clear
of any pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"). ILFC
has the sole right to vote the Subject Shares, and none of the Subject
Shares is subject to any voting trust or other agreement, arrangement or
restriction with respect to the voting of the Subject Shares, other than
the Purchase and Investor Rights Agreement dated as of September 19, 2000,
between the Company and ILFC (the "Existing Agreement") and as contemplated
by this Agreement.
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to ILFC as of the date hereof as
follows:
(a) Authority; Execution and Delivery; Enforceability. The
Company has all requisite corporate power and authority to execute this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by the Company of this Agreement and
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consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company,
except for Board Approval (as defined below) and receipt of the Amendment
Shareholder Approval (as defined in Section 3(a)). The Company has duly
executed and delivered this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. The execution and delivery by the
Company of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company under, any provision of any contract to
which the Company is a party or by which any properties or assets of the
Company are bound or, subject to the filings and other matters referred to
in the next sentence, any provision of any judgment or law applicable to
the Company or the properties or assets of the Company. No consent of, or
registration, declaration or filing with, any governmental entity is
required to be obtained or made by or with respect to the Company in
connection with the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, other than (i)
the filing with the office of Secretary of State of the State of Indiana of
the Amendment, (ii) such reports under the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated hereby
and (iii) such other consents, registrations, declarations and filings as
may be required in connection with the Merger.
(b) Resolutions. This Agreement is subject to the approval of the
Board of Directors of the Company (the "Board Approval"). At such time as
the Board Approval is obtained, the Board of Directors of the Company will
also adopt resolutions recommending that the holders of the outstanding
shares of Common Stock and the holders of the outstanding shares of Series
B Preferred Stock vote to approve the Amendment (the "Board
Recommendation").
SECTION 3. Covenants of ILFC. ILFC covenants and agrees as
follows:
(a) (1) At any meeting of the shareholders of the Company called
to seek the approval of the Amendment by the requisite number of
shareholders of the Company entitled to vote thereon (the "Amendment
Shareholder Approval") or in
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any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Amendment is sought, ILFC
shall, including by executing an irrevocable written consent if requested by
the Company, vote (or cause to be voted) the Subject Shares in favor of
granting the Amendment Shareholder Approval.
(2) IRREVOCABLE PROXY. ILFC hereby irrevocably grants to, and
appoints, each of the Company, Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxxxxx, or
any of them, and any individual designated in writing by any of them, and
each of them individually, as ILFC's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of ILFC, to
vote the Subject Shares, or grant a consent or approval in respect of the
Subject Shares in a manner consistent with this Section 3. ILFC understands
and acknowledges that the Company will enter into the Merger Agreement in
reliance upon ILFC's execution and delivery of this Agreement. ILFC hereby
affirms that the irrevocable proxy set forth in this Section 3(a)(2) is
given in connection with the agreement of the Company to purchase the
Purchase Shares (as defined in Section 5(a)) pursuant to this Agreement.
ILFC hereby further affirms that this irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. ILFC hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause to be
done by virtue hereof. Such irrevocable proxy is executed and intended to
be irrevocable in accordance with Section 30-3 of the Indiana Business
Corporation Law. The irrevocable proxy granted hereunder shall
automatically terminate upon the termination of this Section 3.
(b) Other than this Agreement, ILFC shall not (i) sell, transfer,
pledge, assign or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other arrangement
(including any profit sharing arrangement) with respect to the Transfer of,
any Subject Shares to any person other than pursuant to this Agreement,
(ii) enter into any voting arrangement, whether by proxy, voting agreement
or otherwise, with respect to any Subject Shares and shall not commit or
agree to take any of the foregoing actions or (iii) convert any Subject
Shares into shares of Common Stock.
(c) ILFC shall use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the Company in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this
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Agreement. ILFC shall not issue any press release or make any other public
statement with respect to this Agreement without the prior consent of the
Company, except as may be required by applicable law.
SECTION 4. Certain Covenants of the Company. (a) Subject to
receipt of the Amendment Shareholder Approval and the satisfaction or
waiver of all conditions to the Merger on or prior to the closing date of
the Merger, the Company agrees to file with the office of the Secretary of
State of the State of Indiana, immediately prior to the effective time of
the Merger, the Amendment.
(b) The Company agrees that the Merger Agreement shall provide
that shares of Series B Preferred Stock shall remain outstanding at the
effective time of the Merger, subject to the purchase of shares of Series B
Preferred Stock provided for in Section 5 hereof.
(c) The Company agrees that it shall include in the proxy
statement and related materials prepared by the Company in connection with
the Merger all information required to be therein with respect to the
Amendment, including the Board Recommendation, and that it shall submit the
Amendment to a vote of the holders of the outstanding shares of the Common
Stock and the holders of the outstanding shares of Series B Preferred
Stock, voting as separate classes, at the meeting of shareholders at which
the Merger and the Merger Agreement are to be voted upon.
SECTION 5. Purchase of Shares. (a) ILFC shall sell, transfer and
assign to the Company, and the Company shall purchase from ILFC, such
number of shares of Series B Preferred Stock as the Company shall designate
to ILFC in writing not less than 2 days prior to the date on which such
shares are to be purchased by the Company, which number of shares shall be
not less than 5% nor more than 10% of the shares of Series B Preferred
Stock owned by ILFC (such shares being hereinafter referred to as the
"Purchase Shares"), at the ILFC Purchase Closing (as defined below) for
aggregate consideration consisting of a senior unsecured note of the
Company due January 15, 2002 (the "ILFC Note"), in an aggregate principal
amount equal to the ILFC Purchase Price (as defined below) and bearing
interest on such aggregate principal amount at a rate equal to 7.38% per
annum. The "ILFC Purchase Price" shall equal the product of (i) the number
of shares of Common Stock into which the Purchase Shares would be
convertible at the Conversion Price in effect at the time of the ILFC
Purchase Closing (as determined in accordance with the Amendment but
disregarding
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Section 6(c) thereof) and (ii) the Transaction Spread (as defined in the
Amendment).
(b) The closing of the purchase of the Purchase Shares (the "ILFC
Purchase Closing") shall take place at the offices of Cravath, Swaine &
Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 concurrently with the
closing of the Merger. At the ILFC Purchase Closing, ILFC shall deliver to
the Company a certificate representing the Purchase Shares and Amtran shall
deliver to ILFC the ILFC Note.
(c) The obligations of each party with respect to the purchase
and sale of the Purchase Shares shall be subject to receipt of the
Amendment Shareholder Approval and to the satisfaction or waiver of all
conditions to the Merger on or prior to the date of the ILFC Purchase
Closing.
SECTION 6. Termination. Other than the provisions of Section 7
(which will terminate in accordance with the terms thereof), this Agreement
shall terminate on the earlier of (i) the effective time of the Merger and
(ii) October 31, 2001 or such later date on which the Merger Agreement is
terminated.
SECTION 7. Additional Matters. (a) The Company agrees that, at
the time the Merger and the transactions contemplated by this Agreement are
consummated, it will enter into a lease agreement with ILFC with respect to
a Boeing 737-800 aircraft substantially in the form attached as Exhibit B
hereto.
(b) The Company agrees that, if the Merger and the transactions
contemplated by this Agreement are consummated, it will pay to ILFC an
annual fleet consulting fee of $100,000, payable in advance, for a period
of 4 years commencing on the date on which the Merger is consummated. In
exchange for such fee, ILFC will assist the Company in the management of
its buyer-furnished-equipment and advise the Company with respect to fleet
retirement and other fleet management issues.
(c) The parties hereby waive the application of Section 5 of the
Existing Agreement to the purchase of shares of Series B Preferred Stock
contemplated by Section 5. The parties agree that except as provided in the
preceding sentence, the Existing Agreement shall remain in full force and
effect and shall not be amended or superseded by this Agreement.
(d) Each of the Company and ILFC shall, from time to time,
execute and deliver, or cause to be executed and
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delivered, such additional or further consents, documents and other
instruments as the other party may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
SECTION 8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered in accordance with
Section 9 of the Existing Agreement.
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
(f) Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Existing Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among
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the parties with respect to the subject matter hereof. This Agreement is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law thereof, except to extent the Indiana Business Corporation
Law is mandatorily applicable to the irrevocable proxy granted herein.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole
or in part, by operation of law or otherwise, by the Company without the
prior written consent of ILFC or by ILFC without the prior written consent
of the Company, and any purported assignment without such consent shall be
void. Subject to the preceding sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
(i) Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any New
York state court or any Federal court located in the State of New York,
this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any New York state court or
any Federal court located in the State of New York in the event any dispute
arises out of this Agreement or any transaction contemplated by this
Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, (iii) agrees that it will not bring any action relating to this
Agreement or any Transaction contemplated by this Agreement in any court
other than a New York state court or any Federal court sitting in the State
of New York and (iv) waives any right to trial by jury with respect to any
claim or proceeding related to or arising out of this Agreement or any
transaction contemplated hereby.
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IN WITNESS WHEREOF, each party has duly executed this Agreement,
all as of the date first written above.
AMTRAN, INC.,
by /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President & CFO
INTERNATIONAL LEASE FINANCE
CORPORATION,
by /s/ Xxxx X. Xxxx
--------------------------
Name: Xxxx X. Xxxx
Title: Chief Financial Officer
EXHIBIT A
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
AMTRAN, INC.
Date of Incorporation: October 23, 1984
AMTRAN, INC. (hereinafter referred to as the "Corporation"), an
Indiana corporation existing pursuant to the provisions of the Indiana
Business Corporation Law, as amended (hereinafter referred to as the
"Act"), desiring to give notice of corporate action effectuating amendment
of its Articles of Incorporation, as previously restated (the "Articles of
Incorporation"), certifies the following facts:
ARTICLE I
The Amendment
1. Name. The name of the Corporation following this amendment
continues to be Amtran, Inc.
2. Amendment and Restatement of Article XII. Upon effectiveness
of these Articles of Amendment, Article XII of the Corporation's Articles
of Incorporation shall be amended and restated in its entirety to read
exactly as follows:
ARTICLE XII
Designations, Rights and Preferences of
Series B Preferred Stock
The designations, rights, preferences, limitations and
restrictions of the shares of Preferred Stock, without par value, to be
designated as "Series B Preferred Stock" (in addition to those set forth
elsewhere in the Corporation's Articles of Incorporation) are hereby fixed
as follows:
1. Number of Shares. The number of shares of Series B Preferred
Stock shall initially be 300 shares, which number from time to time may be
increased or decreased (but not decreased below the number of shares of the
series then outstanding) in accordance with the provisions of the Act,
subject to the rights of holders of the Series B Preferred Stock under
Section 8 hereof. Shares of Series B
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Preferred Stock redeemed or purchased by the Corporation, or converted into
Common Stock of the Corporation in accordance with the provisions hereof,
shall be canceled and shall revert to authorized but unissued shares of
Preferred Stock undesignated as to series.
2. Definitions and Construction. As used in this Article XII,
(a) "business day" means each day that is not a Saturday, Sunday
or other day on which banking institutions in the City of New York are
authorized or required by law or executive order to be closed;
(b) "Common Stock" means the common stock of the Corporation,
without par value;
(c) "herein", "hereof", "hereunder" and other like words mean or
refer to this Article XII;
(d) "Junior Stock" means the Common Stock and any other class or
series of stock of the Corporation hereafter authorized (other than the
Series A1 Preferred Stock), the terms of which do not expressly provide
that such class or series ranks senior to or on a parity with the Series B
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding up or dissolution of the Corporation;
(e) "outstanding", when used with reference to shares of stock,
means issued shares, excluding shares held by the Corporation or a
subsidiary;
(f) "Parity Stock" means the Series A1 Preferred Stock and any
class or series of stock of the Corporation authorized, the terms of which
expressly provide that such class or series will rank on a parity with the
Series B Preferred Stock as to dividend distributions and distributions
upon the liquidation, winding up or dissolution of the Corporation;
(g) "person" means any corporation, partnership, trust,
organization, association or other entity or individual;
(h) "Public Offering" means an offering of shares of Common Stock
registered under the Securities Act of 1933, as amended, by the Corporation
or one or more of its shareholders of at least 15% of the then-outstanding
shares of Common Stock following which offering shares of Common
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Stock are listed on any national securities exchange or authorized for
quotation on the Nasdaq National Market (or any successor market thereto).
(i) "Series A Preferred Stock means, collectively, all series of
preferred stock designated as Series A1, Series A2, Series A3 or any other
series designated by the words "Series A" in which the A is immediately
followed by any number;
(j) "Transaction" means a transaction effected through a merger
of a corporation owned, directly or indirectly, by J. Xxxxxx Xxxxxxxxx in
which the shares of Common Stock (other than shares of Common Stock owned,
directly or indirectly, by J. Xxxxxx Xxxxxxxxx) are converted into the
right to receive cash.
(k) "Transaction Price" means the amount of cash receivable
pursuant to the Transaction by a holder of one share of Common Stock at the
time the Transaction becomes effective.
(l) "Transaction Spread" means the difference between (1) the
Transaction Price and (2) the Conversion Price (as defined in Section 6(d))
in effect on the Transaction Effective Date (as defined in Section 3). The
Transaction Spread shall be appropriately adjusted to reflect any stock
splits, combinations or recapitalizations.
(m) headings are for convenience of reference only and shall not
define, limit or affect any of the provisions hereof; and
(n) references to Sections are to Sections of this Article XII.
3. Dividends. The holders of Series B Preferred Stock shall be
entitled to receive, when and if declared by the Board of Directors, but
only out of funds legally available therefor, cumulative cash dividends at
the annual rate of 5.0% of the Liquidation Amount (as defined below) (the
"Dividend Rate") per share, and no more, payable quarterly in equal amounts
of 1.25% of the Liquidation Amount on the 15th day of December, March, June
and September, respectively, in each year (or if any such date is not a
business day, on the next succeeding business day) commencing on December
15, 2000, with respect to the quarterly dividend period (or portion
thereof) ending on the day preceding such respective dividend payment date,
to holders of record on the respective date, not more than 60
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nor less than ten days preceding such dividend payment date, fixed for such
purpose by the Board of Directors in advance of payment of each particular
dividend. The Dividend Rate shall increase to 5.66% per annum effective on
the date the Transaction is consummated (the "Transaction Effective Date")
and shall further increase to 6.5% per annum on the date which is the
fourth anniversary of the Transaction Effective Date; provided, however,
that from and after the date on which a Public Offering is consummated the
Dividend Rate shall be 5.0% per annum. If the Corporation fails to pay any
quarterly dividend and such failure is not cured within ten days of the
date on which the dividend was payable, whether or not the funds are
legally available therefor, the Dividend Rate shall increase as follows:
(i) if the Corporation has issued on or prior to December 31, 2000, any
series of Series A Preferred Stock, the Dividend Rate shall increase to the
highest rate of interest per annum payable on any such series of Series A
Preferred Stock issued and outstanding on such date, and (ii) if the
Corporation has not issued on or before December 31, 2000, any series of
Series A Preferred Stock, the Dividend Rate shall increase to 9.8% per
annum. Following the payment of all accrued and unpaid dividends that have
become due and payable, the Dividend Rate will revert to the Dividend Rate
that otherwise would have been in effect on such date. Dividends shall
accrue daily and shall be payable on the Series B Preferred Stock for any
period shorter than a full quarterly period shall be computed on the basis
of a 360-day year consisting of twelve 30-day months. Dividends on shares
of Series B Preferred Stock shall be cumulative from the last dividend
payment date, or if no dividends have been paid on the outstanding shares
of Series B Preferred Stock, from the date of issuance, whether or not the
Corporation has the funds legally available therefor. Accumulations of
dividends on outstanding shares of Series B Preferred Stock shall bear
interest at the rate of 9.5% per annum.
So long as any shares of Series B Preferred Stock remain
outstanding, the Corporation may not pay or declare any dividend, nor make
any distribution on any Junior Stock, other than a dividend payable solely
in Junior Stock, and shall not purchase, redeem or otherwise acquire for
consideration, directly or indirectly (other than as a result of a
reclassification of Junior Stock into Junior Stock, or the exchange or
conversion of one share of Junior Stock for or into another share of Junior
Stock, and other than through the use of the proceeds of a substantially
contemporaneous sale of other shares of Junior Stock), unless (i) all
accrued and unpaid dividends (including any
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interest thereon) on all outstanding shares of Series B Preferred Stock
have been paid in full and the full dividend thereon for the then current
quarterly dividend period shall have been paid or declared and set apart
for payment and (ii) all prior redemption requirements with respect to
Series B Preferred Stock shall have been complied with. When dividends are
not paid in full upon the Series B Preferred Stock and any Parity Stock,
all dividends declared upon shares of Series B Preferred Stock and all
Parity Stock shall be declared pro rata so that the amount of dividends
declared per share on the Series B Preferred Stock and all such Parity
Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of Series B Preferred Stock and all such
Parity Stock bear to each other. Subject to the foregoing, and not
otherwise, such dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors may be declared and paid on any Junior
Stock from time to time out of any funds legally available therefor, and
the Series B Preferred Stock shall not be entitled to participate therein.
4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary (any such event being a
"Liquidation Transaction") the Series B Preferred Stock shall rank prior to
any shares of Junior Stock, so that in the event of any Liquidation
Transaction, whether voluntary or involuntary, the holders of Series B
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, before any distribution is made to holders of
Junior Stock, an amount per share equal to $100,000 per share (the
"Liquidation Amount") for each outstanding share of Series B Preferred
Stock, plus an amount equal to all accrued and unpaid dividends (including
any interest thereon) (such sum being referred to as the "Liquidation
Preference" for the Series B Preferred Stock).
(b) If, upon any Liquidation Transaction, the assets of the
Corporation, or proceeds thereof, shall be insufficient to pay the full
Liquidation Preference to all holders of the Series B Preferred Stock, then
such assets, or the proceeds thereof, shall be divided and distributed pro
rata among the holders of the Series B Preferred Stock and the holders of
any Parity Stock in accordance with the aggregate respective liquidation
preferences of the Series B Preferred Stock and all such Parity Stock.
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(c) After payment shall have been made in full to all holders of
Series B Preferred Stock, as provided in this Section 4, the holders of the
Junior Stock shall, subject to the respective terms and provisions applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the shares of Series B Preferred Stock
shall not be entitled to share therein.
5. Redemption and Repurchase.
(a) Change of Control.
(i) Optional Redemption by the Corporation. If, on or before the
third anniversary of the initial issuance of the Series B Preferred Stock,
any person (other than J. Xxxxxx Xxxxxxxxx or any person or entity
controlled by him) acquires or enters into an agreement with the
Corporation to acquire capital stock of the Corporation representing a
majority of the voting power represented by all outstanding capital stock
of the Corporation (such event being referred to as a "Change of Control"),
the Corporation may redeem for cash, in whole at any time, all shares of
Series B Preferred Stock at the time outstanding, upon notice given as
hereinafter specified within 30 days following a Change of Control, at a
redemption price per share equal to the sum of (i) the Liquidation Amount,
(ii) all accrued and unpaid dividends (including any interest thereon) to
the date of redemption, (iii) a premium equal to 9.5% per annum of the
Liquidation Amount calculated from the date of issuance of the shares of
Series B Preferred Stock to the date of redemption and (iv) an additional
premium equal to the product of (x) the number of shares into which the
outstanding shares of Series B Preferred Stock are convertible at the
Conversion Price in effect on the date of such repurchase and (y) the
Transaction Spread.
(ii) Mandatory Repurchase at the Option of the Holder. If a
Change of Control occurs on or before the third anniversary of the initial
issuance of the Series B Preferred Stock, all but not less than all of the
holders of Series B Preferred Stock may require the Corporation to
repurchase for cash, in whole at any time, all shares of Series B Preferred
Stock at the time outstanding, upon notice given as hereinafter specified
within 45 days following a Change of Control, at a purchase price
("Repurchase Price") per share equal to the sum of (i) the Liquidation
Amount, (ii) all accrued and unpaid dividends (including any interest
thereon) to the date of repurchase, (iii) a premium equal to the difference
between (x) the
7
amount obtained when the highest dividend rate per annum payable on any
series of Series A Preferred Stock issued and outstanding on the date of
repurchase is multiplied by the Liquidation Amount calculated from the date
of issuance of the shares of Series B Preferred Stock to the date of
repurchase and (y) 5% per annum of the Liquidation Amount calculated from
the date of issuance of the shares of Series B Preferred Stock to the date
of repurchase and (iv) an additional premium equal to the product of (x)
the number of shares into which the outstanding shares of Series B
Preferred Stock are convertible at the Conversion Price in effect on the
date of such repurchase and (y) the Transaction Spread. A notice of
mandatory repurchase under this section 5(a)(ii) (a "Repurchase Notice")
may be given to the Corporation at any time within the 45 days following a
Change of Control, by all but not less than all of the holders of Series B
Preferred Stock. To be valid, a Repurchase Notice must (i) specify a date
of repurchase (the "Repurchase Date") that is a business day not earlier
than 45 days following the date of receipt by the Corporation of the
Repurchase Notice, (ii) be signed by all registered holders of Series B
Preferred Stock and (iii) be delivered to the Corporation at its corporate
headquarters to the attention of its Corporate Secretary by first class
mail, overnight courier or by hand. Once given, a Repurchase Notice will be
irrevocable. On and after the Repurchase Date, the sole right of the
holders of Series B Preferred Stock shall be to receive the Repurchase
Price without interest against delivery of certificates representing Series
B Preferred Stock.
(b) Optional Redemption. On or after the third anniversary of the
initial issuance of the Series B Preferred Stock, the Corporation may
redeem for cash, in whole at any time, or in part from time to time, the
shares of Series B Preferred Stock at the time outstanding, upon notice
given as hereinafter specified, at the redemption price in effect at the
redemption date as provided in this Section 5. If redeemed during the
12-month period commencing on the anniversary date of the initial issuance
of Series B Preferred Stock in the years set forth below the redemption
price shall be the Liquidation Amount plus all accrued and unpaid dividends
(including any interest thereon) to the date of redemption plus (i) a
premium (expressed as a percentage of the Liquidation Amount) as follows:
2003 3.60%
2004 3.30%
2005 3.00%
8
2006 2.70%
2007 2.40%
2008 2.10%
2009 1.80%
2010 1.50%
2011 1.20%
2012 .90%
2013 .60%
2014 .30%
2015 and thereafter no redemption premium, and
(ii) an additional premium equal to the product of (x) the number of shares
into which the outstanding shares of Series B Preferred Stock to be
redeemed are convertible at the Conversion Price in effect on the date of
such optional redemption date and (y) the Transaction Spread.
(c) Mandatory Redemption. The Corporation shall redeem any
outstanding shares of Series B Preferred Stock on the anniversary of the
initial issuance of the Series B Preferred Stock in 2015 for an amount in
cash equal to the Liquidation Amount plus all accrued and unpaid dividends
(including any interest thereon).
(d) Notice of Redemption. So long as the Series B Preferred Stock
is not registered under the Securities Act of 1933, as amended (the
"Securities Act"), notice of every redemption of Series B Preferred Stock
shall be mailed by first class mail, postage prepaid, addressed to the
holders of record of the shares to be redeemed at their respective last
addresses as they appear on the books of the Corporation. If the
Corporation registers the outstanding shares of Series B Preferred Stock
under the Securities Act, then such notice shall be made by mail as
described in the preceding sentence and, the Corporation shall also publish
any notice of redemption by means of the Dow Xxxxx News Service or such
other similar news wire service or newspaper. Such mailing and any such
publication shall be at least ten days and not more than 45 days prior to
the date fixed for redemption. Any notice that is mailed or published, as
the case may be, in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the shareholder receives
such notice. Furthermore, the validity of the proceedings for the
redemption of any shares of Series B Preferred Stock of any shareholder
shall not be affected by any defect in any notice given to any other
shareholder. Such notice shall set forth
(A) the time and date for the redemption;
9
(B) the number of shares to be redeemed and if less than all
shares of Series B Preferred Stock held by a holder are to
be redeemed, the number of such holder's shares to be
redeemed;
(C) the redemption price;
(D) the place or places where certificates for the shares are to
be surrendered for redemption;
(E) that dividends on the shares to be redeemed will cease to
accrue on the redemption date (unless the Corporation shall
default in redeeming the shares on the redemption date); and
(F) that the right to convert such shares shall terminate at the
close of business on the redemption date.
(e) Redemptions in Part. In case of any redemption of only a part
of the shares of Series B Preferred Stock at the time outstanding, the
redemption may be pro rata, by lot or by any other method as may be
determined by the Board of Directors in its sole discretion to be equitable
as set forth in a certificate of the Secretary or Assistant Secretary of
the Corporation filed with the transfer agent or agents for the Series B
Preferred Stock. The Board of Directors shall have full power and
authority, subject to the provisions herein contained, to prescribe the
terms and conditions upon which Series B Preferred Stock shall be redeemed
from time to time.
(f) Effect of Redemption. If notice of redemption shall have been
duly given, and if on or before the redemption date specified therein all
funds necessary for such redemptions shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro
rata benefit of the holders of the shares called for redemption, so as to
be and continue to be available therefor, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancelation, on and after such redemption date, all shares
so called for redemption shall no longer be deemed outstanding and all
rights with respect to such shares shall forthwith on such redemption date
cease and terminate, except only the right of the holders thereof to
receive the amount payable on redemption thereof, without interest. Any
funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or
repaid to the Corporation,
10
after which time the holders of the shares so called for redemption shall
look only to the Corporation for payment thereof. A holder of shares of
Series B Preferred Stock called for redemption shall be entitled to convert
such shares in accordance with the provisions of Section 6 up until the
close of business on the redemption date.
Any funds so deposited or set aside by the Corporation which
shall not be required for such redemption because of the exercise of any
right of conversion set forth in Section 6 below subsequent to the date of
such deposit shall be released or repaid to the Corporation forthwith.
6. Conversion. The holders of the Series B Preferred Stock shall
have conversion rights as follows:
(a) Right to Convert. On the terms and subject to the conditions
of this Section 6, the holder of a share of Series B Preferred Stock shall
have the right, at its option, at any time to convert such share into that
number of shares of fully paid and non-assessable Common Stock (calculated
as to each conversion to the nearest 1/100th of a share) obtained by
dividing the Liquidation Amount, by the Conversion Price (as defined in
Section 6(d)) and by surrender of such share pursuant to Section 6(b). The
shares of Common Stock issuable upon such conversion are hereinafter
referred to as the "Conversion Shares". No payment or adjustment shall be
made upon any conversion on account of any dividends accrued on the shares
of Series B Preferred Stock surrendered for conversion or on account of any
dividends on the Common Stock issued upon conversion for which the record
date is on or prior to the conversion date.
Holders of shares of Series B Preferred Stock at the close of
business on a record date for any payment of declared dividends shall be
entitled to receive the dividend payable on such shares on the
corresponding dividend payment date notwithstanding the optional conversion
of such shares following such record date and prior to the corresponding
dividend payment date.
(b) Conversion Procedures. In order to exercise the conversion
privilege, the holder of any shares of the Series B Preferred Stock shall
surrender the certificate representing such shares at the principal office
of the Corporation, with a written notice stating that such holder elects
to convert all or a specified whole number of such shares pursuant to this
Section 6 and specifying the name or names in which such holder wishes the
certificate or certificates for Conversion Shares to be issued. Unless the
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Conversion Shares are to be issued in the same name as the name in which
such shares of Series B Preferred Stock are registered, the certificate
representing the shares surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder or its duly authorized attorney. As promptly as
practicable after such surrender of a certificate for shares of the Series
B Preferred Stock to be converted, and in any event within five business
days thereafter, the Corporation shall issue and deliver at such office to
such holder, or on such holder's written order, (i) a certificate or
certificates for the applicable number of full Conversion Shares, (ii) if
less than the full number of shares of Series B Preferred Stock evidenced
by the surrendered certificate is being converted, a new certificate, of
like tenor, for the number of shares of Series B Preferred Stock evidenced
by such surrendered certificate less the number of shares being converted
and (iii) the cash payment in settlement of any fractional Conversion Share
as provided in Section 6(c). Upon conversion of any shares of Series B
Preferred Stock, the holder thereof shall be entitled to receive an amount
equal to all declared and unpaid dividends on such shares.
In the case of the exercise of the conversion privilege under
Section 6(a), each conversion shall be deemed to have been effected
immediately after the close of business on the date on which the
certificate for shares of Series B Preferred Stock to be converted is
surrendered and such notice is received by the Corporation as aforesaid,
and the person or persons in whose name or names any certificate or
certificates for Conversion Shares are issuable shall be deemed to have
become the holder or holders of record of such Conversion Shares at such
time on such date and such conversion shall be at the applicable Conversion
Price in effect at such time on such date, unless the stock transfer books
of the Corporation are closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at
the close of business on the next day on which such stock transfer books
are open (provided that if such books shall remain closed for five days,
such fifth day shall be the date any such person shall become such a
holder), but such conversion shall be at the Conversion Price in effect on
the date on which such certificate was surrendered and such notice was
received. Upon delivery, all Conversion Shares shall be duly authorized,
validly issued, fully paid, non-assessable, free of all liens and charges
and not subject to any preemptive or subscription rights.
12
(c) Settlement of Fractional Conversion Shares. No fractional
Conversion Shares or scrip representing fractions of Conversion Shares
shall be issued upon conversion of shares of the Series B Preferred Stock.
Instead of any fractional Conversion Share otherwise deliverable, the
Corporation shall pay to the holder of the converted shares an amount in
cash equal to the Current Market Price (as defined below) or, if shares of
Common Stock are not authorized for quotation on the Nasdaq National Market
System (the "NASDAQ") and no Current Market Price can be determined on such
date pursuant to the methods specified in Section 6(e), the Valuation Price
(as defined in Section 9) of such fractional Conversion Share on the date
of conversion. If more than one share is surrendered for conversion at one
time by the same holder, the number of full Conversion Shares shall be
computed on the basis of the aggregate number of shares so surrendered. The
"Current Market Price" per share of Common Stock on any day is the average
of the high and low sales prices of the Corporation's Common Stock on the
NASDAQ for the 10 consecutive trading days preceding such day rounded up to
the nearest whole cent. A "trading day" is a day on which the principal
national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the
Common Stock is not then listed or admitted to trading on any national
securities exchange, any day other than Saturday, Sunday or a federal
holiday.
(d) The "Conversion Price" shall be $15.67 and may be adjusted
from time to time pursuant to this Section 6(d). The Conversion Price shall
be adjusted from time to time as follows:
(i) If, after the date of initial issuance of the Series B
Preferred Stock, the Corporation (A) pays a dividend or makes a
distribution on the Common Stock in shares of Common Stock, (B) subdivides
or combines its outstanding shares of Common Stock into a greater or
smaller number of shares or (C) issues by reclassification of the Common
Stock any shares of capital stock of the Corporation, the Conversion Price
in effect immediately prior to such action shall be adjusted so that the
holder of any share of Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive, at the time of such conversion,
the number of shares of Common Stock or other capital stock of the
Corporation that it would have owned or been entitled to receive
immediately following such action had such share been converted immediately
prior to such action or the record date therefor, whichever is earlier.
13
Such adjustment shall become effective immediately after the record date,
in the case of a dividend or distribution, or immediately after the
effective date, in the case of a subdivision, combination or
reclassification.
(ii) If, after the date of initial issuance of the Series B
Preferred Stock, the Corporation issues any Additional Shares (as defined
below) for a consideration per share below (x) the closing price as of 4:30
pm on the principal market on which the Common Stock is traded on the
trading day immediately prior to the date on which the Corporation shall
have agreed to such issuance or (y) if shares of Common Stock are not
traded on any national securities exchange or authorized for quotation on
the Nasdaq Stock Market, the Valuation Price on the trading day immediately
prior to the date on which the Corporation shall have agreed to such
issuance (with the price determined under clause (x) or (y), as applicable,
being referred to as the "Closing Price"), then in each case the Conversion
Price shall be adjusted by multiplying the Conversion Price in effect
immediately prior to such issuance by a fraction,
(A) the numerator of which shall be the number of shares of
Common Stock and Share Equivalents (as defined below) outstanding
immediately prior to the issuance of such Additional Shares plus
the number of shares of Common Stock that the aggregate
consideration for such Additional Shares would purchase at a
consideration per share equal to such Closing Price, and
(B) the denominator of which shall be the number of shares of
Common Stock and Share Equivalents outstanding immediately prior
to the issuance of such Additional Shares plus the number of
Additional Shares so issued.
Such adjustment for the Series B Preferred Stock shall become effective
immediately after the issuance of such Additional Shares.
"Additional Shares" shall mean any shares of Common Stock of the
Corporation issued by the Corporation after the date of issuance of the
Series B Preferred Stock excluding Permitted Issuances. "Share Equivalents"
shall mean the Common Stock deliverable upon conversion or exercise of all
outstanding Series B Preferred Stock, convertible securities, options,
warrants and rights of the Corporation as of the date such computation is
made and as
14
of the time such computation is effective as specified herein.
"Permitted Issuances" shall mean:
(A) any stock options which have been granted and remain
unexercised as of the date of issuance of the Series B Preferred
Stock, which shall include any such stock options the terms of
which have been modified in connection with the Transaction;
(B) stock options granted and shares issued to employees,
directors and consultants after the issuance of the Series B
Preferred Stock in the aggregate amount of 500,000 shares (which
number shall be appropriately adjusted to reflect any stock
splits, combinations or recapitalizations) of Common Stock per
annum (commencing with the year 2000) pursuant to the
Corporation's stock plans, provided that if the aggregate number
of stock options granted per annum pursuant to the Corporation's
stock plans is less than 500,000, "Permitted Issuances" shall
include that number of stock options equal to the difference
between 500,000 and the actual number of stock options granted
per annum pursuant to the Corporation's stock plans, which stock
options of Common Stock may be granted in subsequent years;
(C) additional options granted and shares issued in an amount
equal to options granted and shares issued pursuant to the
foregoing clauses (A) and (B) to the extent such shares are
returned to the Corporation's stock plans upon the lapse of
unexercised stock options or the repurchase (at original purchase
price) of unvested shares;
(D) any shares issued upon exercise of options granted pursuant
to the foregoing clauses (A)-(C) including as a result of the
operation of anti dilution adjustments provided for therein;
(E) any shares issued pursuant to employee stock purchase,
savings or ownership plans, including all shares issued to a
trust formed in respect thereof;
(F) any shares issued upon conversion of the Series B Preferred
Stock (including adjustments to the conversion ratio), any stock
options granted and shares issued upon the exercise thereof
approved by the holders of a majority of the Series B Preferred
Stock,
15
and any shares issued to the holders of the Series B Preferred
Stock in connection with any contractual rights related to such
approved shares or options; and
(G) any shares issued pursuant to the exercise, conversion or
exchange of other securities.
(iii) If after the date of initial issuance of the Series B
Preferred Stock the Corporation issues any warrants, options or other
rights entitling the holders thereof to subscribe for or purchase either
any Additional Shares or evidences of debt, shares of capital stock or
other securities that are convertible into or exchangeable for, with or
without payment of additional consideration, Additional Shares (such
warrants, options or other rights being called "Rights" and such
convertible or exchangeable evidences of debt, shares of capital stock or
other securities being called "Convertible Securities"), and the
consideration per share for which Additional Shares may at any time
thereafter be issuable pursuant to such Rights or Convertible Securities
(when added to the consideration per share of Common Stock, if any,
received for such Rights or Convertible Securities) is less than the
Conversion Price then in effect, the Conversion Price shall be adjusted as
provided in Section 6(d)(ii) on the basis that,
(A) the maximum number of Additional Shares issuable pursuant to
all such Rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been
issued, and
(B) the aggregate consideration (plus the consideration, if any,
received for such Rights and Convertible Securities) for such
maximum number of Additional Shares shall be deemed to be the
consideration received and receivable by the Corporation for the
issuance of such Additional Shares pursuant to such Rights or
Convertible Securities.
No adjustment of the Conversion Price shall be made under this Section
6(d)(iii) upon (x) the issuance of any Convertible Securities issued
pursuant to the exercise of any Rights, to the extent that such adjustment
was previously made upon the issuance of such Rights pursuant to Section
6(d)(iii) or (y) the granting of any stock options that qualify as
Permitted Issuances under clause (B) or (C) of the definition thereof.
(iv) For purposes of Section 6(d)(iii), the relevant Conversion
Price shall be the Conversion Price in
16
effect immediately prior to the earlier of (A) the record date for the
holders of Common Stock entitled to receive the Rights or Convertible
Securities and (B) the initial issuance of the Rights or Convertible
Securities, and the adjustment provided for in either such Section shall
become effective immediately after the earlier of the times specified in
clauses (A) and (B).
(v) No adjustment of the Conversion Price shall be made under
Section 6(d)(ii) upon the issuance of any Additional Shares pursuant to the
exercise of any Rights or any conversion or exchange rights pursuant to any
Convertible Securities, if such adjustment was previously made in
connection with the issuance of such Rights or Convertible Securities (or
in connection with the issuance of any Rights therefor) pursuant to Section
6(d)(iii).
(vi) If any Rights or Convertible Securities (or any portions
thereof) that gave rise to an adjustment pursuant to Section 6(d)(iii)
expire or terminate without the exercise thereof and/or if by reason of the
provisions of such Rights or Convertible Securities there has been any
increase, with the passage of time or otherwise, in the consideration
payable upon the exercise thereof, the Conversion Price shall be readjusted
(but to no greater extent than originally adjusted) on the basis of,
(A) eliminating from the computation Additional Shares
corresponding to such expired or terminated Rights or conversion
or exchange rights,
(B) treating the Additional Shares, if any, actually issued or
issuable pursuant to the previous exercise of such Rights or
conversion or exchange rights as having been issued for the
consideration actually received and receivable therefor, and
(C) treating any such Rights or conversion or exchange rights
that remain outstanding as being subject to exercise on the basis
of the consideration payable upon the exercise or conversion
thereof as is in effect at such time,
provided, however, that any consideration actually received by the
Corporation in connection with the issuance of such Rights shall form part
of the readjustment computation even though such Rights expired without
being exercised. The Conversion Price shall be adjusted as provided in
Section 6(d)(ii) and any applicable provisions of Section 6(d)(iii) as a
result of any increase in the number of Additional
17
Shares issuable, or any decrease in the consideration payable upon any
issuance of Additional Shares, pursuant to any anti dilution provisions of
any Rights or Convertible Securities.
(vii) (A) If any Additional Shares, Convertible Securities or
Rights are issued for cash, the consideration received therefor shall
be deemed to be the amount of cash received.
(B) If any Additional Shares, Convertible Securities or Rights
are offered by the Corporation for subscription, the consideration
received therefor shall be deemed to be the subscription price.
(C) If any Additional Shares, Convertible Securities or Rights
are sold to underwriters or dealers for public offering without a
subscription offering, the consideration received therefor shall be
deemed to be the public offering price.
(D) In any case covered by Section 6(d)(vii) (A), (B) or (C), in
determining the amount of any consideration received by the
Corporation in whole or in part other than in cash, the amount of such
consideration shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board of Directors,
and evidence of such determination shall be filed with the minutes of
the Corporation. If Additional Shares are issued as part of a unit
with Rights, the consideration received for the Rights shall be deemed
to be the portion of the consideration received for such unit
determined in good faith at the time of issuance by the Board of
Directors, and evidence of such determination shall be filed with the
minutes of the Corporation. If the Board of Directors does not make
any such determination, the consideration received for the Rights
shall be deemed to be zero. In either event, the consideration
received for the Additional Shares shall be deemed to be the
consideration received for such unit less the consideration deemed to
have been received for the Rights.
(E) In any case covered by Section 6(d)(vii) (A), (B), (C) or
(D), in determining the amount of consideration received by the
Corporation, (I) any amounts received or receivable for accrued
interest or accrued dividends shall be excluded and (II) any
compensation, underwriting commissions or concessions
18
or expenses paid or incurred in connection therewith shall not be
deducted.
(F) In any case covered by Section 6(d)(vii) (A), (B), (C) or
(D), there shall be added to the consideration received by the
Corporation at the time of issuance or sale (I) the minimum aggregate
amount of additional consideration payable to the Corporation upon the
exercise of Rights that relate to Convertible Securities and (II) the
minimum aggregate amount of consideration payable upon the conversion
or exchange thereof.
(G) If any Additional Shares, Convertible Securities or Rights
are issued in connection with any merger, consolidation or other
reorganization in which the Corporation is the surviving corporation,
the amount of consideration received therefor shall be deemed to be
the fair market value, as determined in good faith by the Board, of
such portion of the assets and business of the non-surviving person or
persons as the Board of Directors determines in good faith to be
attributable to such Additional Shares, Convertible securities or
Rights, and evidence of such determination shall be filed with the
minutes of the Corporation.
(viii) If the Corporation effects any merger, consolidation or
other reorganization to which the Corporation is a party (other than (x) a
merger or consolidation in which the Company is the surviving or continuing
corporation and in which each share of Common Stock outstanding immediately
prior to the merger or consolidation remains unchanged in all material
respects and (y) the Transaction), any sale or conveyance to another person
of all or substantially all the assets of the Corporation or any statutory
exchange of securities with another person (including any exchange effected
in connection with a merger of a third person into the Corporation), then
effective provision shall be made in such transaction so that the holder of
each share of Series B Preferred Stock then outstanding shall have the
right thereafter to convert such share into the kind and amount of
consideration receivable pursuant to such transaction by a holder of the
number of shares of Common Stock into which such share of Series B
Preferred Stock might have been converted immediately prior to such
transaction, assuming such holder of Common Stock failed to exercise its
rights of election, if any, as to the kind or amount of consideration
receivable upon such transaction (provided that if the kind
19
or amount of consideration receivable pursuant to such transaction is not
the same for each share of Common Stock in respect of which such rights of
election shall not have been exercised ("non-electing share"), then, for
purposes of this Section 6(d)(viii), the kind and amount of consideration
receivable pursuant to such transaction for each non-electing share shall
be deemed to be the kind and amount so receivable per share by a plurality
of the non- electing shares). Thereafter, the holders of shares of Series B
Preferred Stock shall be entitled to appropriate adjustments with respect
to their conversion rights to the end that the provisions set forth in this
Section 6 shall correspondingly be made applicable, as nearly as may
reasonably be, to any consideration thereafter deliverable on conversion of
shares of the Series B Preferred Stock. Notwithstanding the foregoing, this
Section 6(d)(viii) shall not apply with regard to the Series B Preferred
Stock to an event which is treated as a liquidation, dissolution or
winding-up of the Corporation with respect to such series pursuant to
Section 4.
(ix) If the Corporation distributes generally to holders of its
outstanding shares of Common Stock, evidences of its debt, securities or
other assets (excluding any cash dividends if the annualized per share
amount thereof does not exceed 9.0% of the Current Market Price or, if
shares of Common Stock are not traded on the NASDAQ and no Current Market
Price can be determined on such date pursuant to the methods specified in
Section 6(e), the Valuation Price as of the trading day immediately
preceding the date of declaration of such dividend and excluding any
dividends or distributions payable in Rights or Convertible Securities for
which adjustment is otherwise made pursuant to this Section 6(d)), the
Conversion Price shall be adjusted by multiplying such Conversion Price in
effect immediately prior to the record date for the dividend or
distribution by a fraction of which (x) the numerator shall be the Current
Market Price or, if shares of Common Stock are not traded on the NASDAQ and
no Current Market Price can be determined on such date pursuant to the
methods specified in Section 6(e), the Valuation Price on such record date
less the then fair market value, as determined in good faith by the Board,
of the portion of the evidences of debt, securities or other assets so
distributed or applicable to the holder of one share of Common Stock and
(y) the denominator shall be the Current Market Price or, if shares of
Common Stock are not traded on the NASDAQ and no Current Market Price can
be determined on such date pursuant to the methods specified in Section
6(e), the Valuation Price on such record date. Such
20
adjustment shall become effective immediately after the record date for
such dividend or distribution.
(x) No adjustment in the Conversion Price shall be required to be
made unless it would require an increase or decrease of at least one cent,
but any adjustments not made because of this Section 6(d)(x) shall be
carried forward and taken into account in any subsequent adjustment
otherwise required. All calculations under this Section 6(d) shall be made
to the nearest cent or to the nearest 1/100th of a share, as the case may
be. All adjustments with respect to a transaction or event shall apply to
subsequent such transactions and events. Anything in this Section 6(d) to
the contrary notwithstanding, the Board of Directors shall be entitled (but
shall not be obligated) to make such irrevocable reduction in the
Conversion Price, in addition to the adjustments required by this Section
6(d), as in its discretion it shall determine to be advisable in order to
avoid or diminish any income deemed to be received for United States
Federal income tax purposes by any holder of shares of Common Stock or
Series B Preferred Stock resulting from any event or occurrence giving rise
to an adjustment pursuant to this Section 6(d) or from any similar event or
occurrence, and evidence of the Board of Director's determination of such
adjustment shall be filed with the minutes of the Corporation.
(xi) Whenever the Conversion Price is adjusted pursuant to this
Section 6(d),
(A) the Corporation shall promptly file with the minutes of the
Corporation a certificate of the Corporation's chief accounting
officer setting forth such Conversion Price (and any change in
the kind or amount of consideration to be received by the holders
of shares of the Series B Preferred Stock upon conversion) after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment and the manner of computing the same,
and
(B) a notice stating that such Conversion Price has been
adjusted, stating the effective date of such adjustment and
enclosing such certificate shall forthwith be mailed by the
Corporation to the holders of shares of the Series B Preferred
Stock at their addresses as shown on the stock books of the
corporation.
(xii) If as a result of any adjustment pursuant to this Section
6(d), the holder of any share of Series B
21
Preferred Stock surrendered for conversion becomes entitled to receive any
consideration other than Common Stock,
(A) the Conversion Price with respect to such other consideration
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 Common Stock contained in this Section 6(d), and
(B) in the case such consideration shall consist of shares of
Common Stock and some other kind of consideration or of two or
more kinds of consideration, the Board shall determine in good
faith the fair allocation of the adjusted Conversion Price
between or among such types of consideration, and evidence of
such determination shall be filed with the minutes of the
corporation.
(e) Alternate Sources for Common Stock Share Prices. If for any
reason the Common Stock is no longer reported on NASDAQ or a national
securities exchange then the high and low price of a share of Common Stock
on the relevant day for purposes of calculating the Current Market Price
shall be determined on the basis of the last reported sale price, regular
way, of the Common Stock as reported on the composite tape, or similar
reporting system, for issues listed or admitted to trading on the principal
national securities exchange on which the Common Stock is then listed or
admitted to trading or, if there is no such reported sale on the day in
question, on the basis of the average of the high and low bid and asked
quotations as so reported or, if the Common Stock is not then listed or
admitted to trading on any national securities exchange or on NASDAQ, on
the basis of the average of the high bid and low asked quotations on the
day in question in the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotation System, or, if not so
quoted, as reported by National Quotation Bureau, Incorporated, or a
similar organization.
(f) Specified Events. For purposes of this Section 6(f), a
"Specified Event" shall occur if (i) the Corporation authorizes the
granting to the holders of the Common Stock of any Rights or of any other
rights, (ii) there is any capital stock reorganization or reclassification
of the Common Stock (other than (x) a subdivision or combination of the
outstanding Common Stock and other than a change in the par value of the
Common Stock and (y) the Transaction), or any merger, consolidation or
other reorganization to which the Corporation is a party, or
22
any statutory exchange of securities with another person and for which
approval of any stockholders of the Corporation is required, or any sale or
transfer of all or substantially all the assets of the Corporation or (iii)
there is a voluntary liquidation, dissolution or winding up of the
Corporation. If a Specified Event occurs, the Corporation shall cause to be
filed with the minutes of the Corporation, and shall cause to be mailed to
the holders of shares of the Series B Preferred Stock at their addresses as
shown on the stock books of the Corporation, at least 10 days prior to the
applicable date specified below, a notice stating,
(A) the date on which a record is to be taken for the purpose of
any distribution or Rights relating to such Specified Event or,
if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such distribution or
Rights are to be determined, or
(B) the date on which the reorganization, reclassification,
consolidation, merger, statutory exchange, sale, transfer,
dissolution, liquidation or winding-up relating to such Specified
Event is expected to become effective, and the date as of which
it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such Specified Event.
(g) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available, free from preemptive and subscription
rights, out of its authorized but unissued shares of Common Stock, for the
purpose of effecting conversions of the Series B Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock not theretofore converted.
For this purpose, the number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series B Preferred Stock shall be
computed as if at the time of computation all such outstanding shares were
held by a single holder.
(h) Listing. With respect to any securities required to be
delivered upon conversion of the Series B Preferred Stock, the Corporation
shall use all commercially reasonable efforts to list or have approved for
quotation such securities prior to such delivery upon each securities
exchange or automated quotation system, if any, on which any securities of
such class are already listed or approved for quotation.
23
(i) Taxes. The Corporation shall pay all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of securities on conversion of the Series B Preferred Stock; provided,
however, that (i) the Corporation shall not be required to pay any tax
payable in respect of any transfer involved in the issue or delivery of
securities in a name other than that of the holder of the shares of Series
B Preferred Stock, to be converted and (ii) no such issue or delivery shall
be made unless and until such holder has paid to the Corporation the amount
of any such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid or provided for.
(j) Termination of Conversion Rights. (i) (A) If shares of Common
Stock are traded on the NASDAQ or a Current Market Price can be determined
pursuant to the methods specified in Section 6(e) and if within any period
of 30 consecutive trading days for a period of at least 20 trading days
(which 20 days must include the last day of the 30 consecutive trading day
period), the average of the high and low sales prices of the Corporation's
Common Stock on the principal market on which such shares trade for such 20
trading days rounded up to the nearest whole cent (the "Average Daily
Trading Price") exceeds 120% of the Conversion Price then in effect or (B)
if shares of Common Stock are not traded on the NASDAQ and no Current
Market Price can be determined on such date pursuant to the methods
specified in Section 6(e), the Valuation Price exceeds 105% of the
Transaction Price, at its option and in its sole discretion upon notice
given as set forth below, the Corporation may terminate the conversion
rights set forth in this Section 6; provided, however, that the Corporation
shall not be permitted to exercise its right to terminate the conversion
rights of the Series B Preferred Stock for a period of 12 months following
the Transaction Effective Date. Beginning on the 10th day following receipt
from the Corporation of the notice setting forth its intention to terminate
the conversion rights and ending on the 45th day after receipt thereof, the
Corporation shall be required to redeem any shares of Series B Preferred
Stock at a redemption price equal to (i) if shares of Common Stock are
traded on the NASDAQ or a Current Market Price on such date can be
determined pursuant to the methods specified in Section 6(e), (x) if prior
to the third anniversary of the initial issuance of the Series B Preferred
Stock, the Liquidation Amount plus all accrued and unpaid dividends or (y)
if on or after the third anniversary of the initial issuance of the Series
B Preferred Stock, the Redemption Price then in effect as set forth in
Section 5(b), or
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(ii) if shares of Common Stock are not traded on the NASDAQ and no Current
Market Price can be determined on such date pursuant to the methods
specified in Section 6(e), the Liquidation Amount plus the product of (A)
the difference between (x) the Valuation Price and (y) the Conversion Price
and (B) the number of shares of Common Stock that would have been issuable
upon conversion of the outstanding shares of Series B Preferred Stock, of
any holder that so requests, which request must be received by the
Corporation on or prior to the 45th day after such holder receives the
notice of the conversion termination. In order to exercise this right, such
holder must submit its request to the Corporation in the manner set forth
in the notice of conversion termination, the certificates for the shares to
be so redeemed and the number of shares to be redeemed if less than the
number represented by the certificate and the name in which to issue any
such shares not so redeemed, if different from the holder. Following the
45th day after the holders receive the conversion termination notice, the
conversion rights for all outstanding shares of Series B Preferred Stock
shall terminate with no further action by the Corporation. For purposes of
this paragraph, a holder shall be deemed to have received notice, if such
notice is sent by facsimile to a facsimile number provided by such party
for such purpose, on the day it is so sent. If sent by first class mail,
postage prepaid, addressed to such holder at the last address for such
holder that appears on the books of the Corporation, notice shall be deemed
to have been received on the third business day after such notice has been
mailed. If notice is also required to be published as set forth in
paragraph (ii) below, notice shall be deemed to have been received on the
day that it is so published.
(ii) So long as the Series B Preferred Stock is not registered
under the Securities Act, notice of the termination of conversion rights
shall be mailed by first class mail, postage prepaid, addressed to the
holders of record of the Series B Preferred Stock at their respective last
addresses as they appear of the books of the Corporation and may be
provided by facsimile to any number provided by the holder for that
purpose. If the Corporation registers the outstanding shares of Series B
Preferred Stock under the Securities Act, then such notice shall be given
by mail as described in the preceding sentence and the Corporation shall
also publish any such notice as set forth in Section 5(c) hereof. The
notice shall set forth:
(A) the Average Daily Trading Price for the 20 trading days in
question or the applicable Valuation Price, as applicable,
the dates for which such
25
amounts are presented, the Conversion Price then in effect
for each such time period and the percentage by which the
Current Market Price, if applicable, exceeds such Conversion
Price;
(B) the redemption price then in effect;
(C) the place or places where certificates for the shares are to
be surrendered for redemption; and
(D) that dividends on the shares to be redeemed will cease to
accrue on the date the holder delivers any shares to the
Corporation for redemption (unless the Corporation shall
default in redeeming the shares on the redemption date).
7. Status of Shares. Upon any redemption, repurchase, conversion,
exchange or other acquisition by the Corporation of shares of Series B
Preferred Stock, the shares of Series B Preferred Stock, so redeemed,
repurchased, converted, exchanged or acquired shall be retired and canceled
and shall not be available for reissuance.
8. Voting Rights. (a) The holders of shares of the Series B
Preferred Stock shall not have the right to vote on or consent to any
matter as shareholders of the Corporation, except as required by applicable
law or as otherwise provided below. All matters on which the holders of the
Series B Preferred Stock have the right to vote may be approved at an
annual or special meeting by holders of the minimum number of shares of
Series B Preferred Stock that would be required to approve a matter if all
shares were present and voting at a meeting called to consider such matter
or may be approved by one or more written consents signed by all of the
holders of shares of Series B Preferred Stock.
(b) The consent of holders of at least a majority of the
outstanding shares of Series B Preferred Stock (voting separately as a
class but excluding from any calculation any shares of Series B Preferred
Stock held by the Corporation or any subsidiary thereof) shall be necessary
to amend, alter or repeal any of the provisions of this Article XII of the
Articles of Incorporation of the Corporation which would adversely affect
the powers, preferences or rights of the holders of shares of Series B
Preferred Stock then outstanding.
26
(c) If at any time the equivalent of six quarterly dividends
payable on the outstanding shares of Series B Preferred Stock are accrued
and unpaid, whether or not consecutive and whether or not declared, the
holders of all outstanding shares of Series B Preferred Stock, voting as a
single class, together with the holders entitled to vote of each series of
Series A Preferred Stock and the holders entitled to vote of all other
series of Preferred Stock of the Corporation that rank pari passu with or
senior to the Series B Preferred Stock and have similar voting rights,
shall be entitled to elect at the next annual meeting of shareholders of
the Corporation 25% of the directors to the Corporation's Board of
Directors, but no less than two directors (or such greater number as shall
be provided in any other series of Preferred Stock that shall at the time
be entitled to vote with the Series B Preferred Stock to elect directors).
The proportion of the total vote of all holders of Preferred Stock entitled
to vote for such directors attributable to the holders of the Series B
Preferred Stock shall be based on the percentage the aggregate Liquidation
Amount for all outstanding shares of Series B Preferred Stock bears to the
aggregate liquidation amounts of all other shares of Preferred Stock
entitled to vote. Such directors shall serve until all accumulated and
unpaid dividends have been paid or declared and funds sufficient for their
payment have been set aside therefor.
(d) For the avoidance of doubt, except as otherwise set forth in
this Section 8 or as required by law, the holders of the Series B Preferred
Stock shall not have the right to vote or consent with respect to (i) the
increase or decrease in the amount of authorized capital stock of any class
or series, other than increases or decreases in Series B Preferred Stock
(to the extent specified elsewhere herein), (ii) the authorization,
creation (by way of reclassification or otherwise) or issuance by the Board
of Directors of any series of Preferred Stock, other than any series that
will rank senior to the Series B Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding up or
dissolution of the Corporation or any obligation or security convertible
into or exercisable for or exchangeable into or evidencing a right to
purchase, shares of any series of Preferred Stock or the issuance by the
Board of Directors of any previously authorized class of capital stock of
the Corporation, or (iii) any merger, acquisition, disposition or share
exchange involving the Corporation where no shareholder vote is otherwise
required or pursuant to which the holders of the Series B Preferred Stock
receive cash at least equal to the Liquidation Amount.
27
(e) The consent of the holders of at least a majority of the
outstanding shares of Series B Preferred Stock (voting separately as a
class, but excluding from any calculation any shares of Series B Preferred
Stock held by the Corporation or any subsidiary thereof) shall be necessary
to increase the authorized number of shares of Series B Preferred Stock and
to authorize, create or issue any series of Preferred Stock that will rank
senior to the Series B Preferred Stock as to dividend distributions, and
distributions upon the liquidation, winding up or dissolution of the
Corporation.
9. Valuation Procedures. (a) From time to time as a majority of
the Board of Directors of the Corporation shall determine, in good faith,
which determination shall be set forth in written resolutions, and in any
event, not less than once a year, the Corporation shall select in good
faith and engage, at its own expense, an independent, nationally recognized
appraiser, investment bank, accounting firm or consulting firm (the
"Appraiser") to undertake a valuation of the Corporation as of the date of
the most recently ended fiscal quarter (a "Valuation"). The Corporation
shall permit the Appraiser, upon reasonable request, access to its
properties and facilities to allow the Appraiser the opportunity to make an
inspection thereof. The Corporation shall make available to the Appraiser
all such financial information, documents and records of the Corporation as
the Appraiser may reasonably request for the purpose of conducting a
Valuation. The Corporation shall request that the Appraiser use its
reasonable efforts to complete a Valuation within 30 days following the
date on which it was engaged to undertake such Valuation. The Corporation
shall also instruct the Appraiser that it is to produce a report setting
forth in reasonable detail a Valuation and the methodology by which the
Appraiser arrived at such Valuation. The Corporation shall provide a copy
of such report to each holder of shares of Series B Preferred Stock.
(b) The Corporation shall instruct the Appraiser to take into
account the following factors, among others, in arriving at a Valuation:
(i) a Valuation shall be a valuation of the Corporation as an
entirety and, unless the Corporation shall have informed the Appraiser
of plans to the contrary, shall assume that the Corporation will
continue to operate as a going concern for the foreseeable future;
28
(ii) the Appraiser shall consider the most recent budgets and
projections prepared by the Company's management;
(iii) a Valuation shall not reflect any discount for minority
interests or disparate voting rights among classes of the
Corporation's Capital Stock; and
(iv) the Appraiser shall consider, to the extent it deems
appropriate, market valuations of comparable airlines.
(c) The Appraiser shall derive a price per share of Common Stock
from each Valuation, which shall be based on the number of shares of Common
Stock outstanding on the date of such Valuation. Such price per share, as
in effect from time to time, is referred to herein as the "Valuation
Price".
(d) Notwithstanding the foregoing, the Company shall be required
to obtain a Valuation as of the date its most recently ended fiscal quarter
for purposes of determining the Valuation Price applicable to Sections
6(d)(ii), 6(d)(ix) and 6(j) hereof.
ARTICLE II
The foregoing amendment was adopted on [ ], 2001.
ARTICLE III
Manner of Adoption and Vote
As of [ ], 2001, 1/ there were [ ] shares of Common Stock,
without par value, outstanding entitled to cast [ ] votes and
[ ] such votes were represented at the meeting at which the
foregoing amendment was voted upon. Holders of shares of Common Stock cast
[ ] votes in favor of the foregoing amendment and [ ] votes against
the foregoing amendment.
As of [ ], 2001, there were 300 shares of Series B
Preferred Stock, without par value, outstanding
--------------------
1/ The date of the Special Meeting.
29
entitled to cast 300 votes and 300 such votes were represented at the
meeting at which the foregoing amendment was voted upon. Holders of shares
of Series B Preferred Stock cast 300 votes in favor of the foregoing
amendment and 0 votes against the foregoing amendment.
ARTICLE IV
Compliance with Legal Requirements
The manner of the adoption of the Articles of Amendment and the
vote by which they were adopted constitute full legal compliance with the
provisions of the Act, the Articles of Incorporation, and the Bylaws of the
Corporation.
30
IN WITNESS WHEREOF, the undersigned Corporation has caused these
Articles of Amendment to be signed and verified by a duly authorized
officer, acting for and on behalf of such Corporation; and the undersigned
verifies subject to the penalties of perjury that the facts contained
herein are true this [ ]th day of [ ], 2001.
AMTRAN, INC.,
by
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Name:
Title:
