SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 15, 1997
PAN AM CORPORATION
9300 N.W. 36TH STREET, MIAMI, FLORIDA 33178
305-873-3000
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Incorporation under the laws of the Commission File Number I.R.S. Employer Identification Number
STATE OF FLORIDA 0-23444 65-0450311
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ITEM 5. OTHER EVENTS
On March 31, 1997, Pan Am Corporation, a Florida corporation (the
"Registrant"), sold 150,000 shares of Series A Convertible Preferred Stock, par
value of $.0001 per share and stated value of $100 per share (the "Series A
Preferred Stock"). The Registrant has authorized 250,000 shares of Series A
Preferred Stock. Each share of Series A Preferred Stock cumulates dividends at
the rate per share (as a percentage of stated value per share) equal to 8% per
annum payable in shares of Series A Preferred Stock. The Series A Preferred
Stock is convertible into shares of the Registrant's common stock, par value
$.0001 per share (the "Common Stock"), for a period of three years at the lesser
of a fixed price of $8.50 per share or a floating price which is set at a
discount to market beginning at 97% and increases at the rate of 1% per month
until it reaches 80%. Certain holders of the Series A Preferred Stock have
agreed to purchase an additional 100,000 shares of Series A Preferred Stock upon
consummation of the acquisition of Carnival Air Lines, Inc. As additional
consideration, the purchasers of the Series A Preferred Stock received in the
aggregate, warrants to purchase 401,070 shares of Common Stock at an exercise
price equal to $9.35 with a term of three years.
On May 15, 1997, the Registrant sold 135,000 shares of Series B
Convertible Preferred Stock, par value $.0001 per share and stated value of $100
per share (the "Series B Preferred Stock"). The Registrant has authorized
250,000 shares of Series B Preferred Stock. Holders of Series B Preferred Stock
are entitled to cumulative dividends at a rate per share (as a percentage of
stated value per share) equal to 7.25% per annum payable in shares of Common
Stock in arrears. For the first nine months following the date that the Series B
Preferred Stock is issued, the Series B Preferred Stock is convertible at the
option of the holders thereof into shares of Common Stock at a fixed price of
$8.39 (the "Series B Fixed Price"); thereafter, the Series B Preferred Stock is
convertible at the lesser of the Series B Fixed Price; or a floating price which
is set at a discount to market beginning at 97% and increasing at the rate of 1%
per month until it reaches 80%. As additional consideration, the purchasers of
the Series B Preferred Stock received in the aggregate, warrants to purchase
278,924 shares of Common Stock at an exercise price equal to $9.23 with a term
of three years.
Assuming for purposes of example only, at a market price of $8.00 and
a discount to market of 20%, an aggregate of 4,453,125 shares of Common Stock
will be issued upon full conversion of the Series A Preferred Stock and the
Series B Preferred Stock which will constitute approximately 28% of the then
outstanding Common Stock as of May 28, 1997, without giving effect to the
issuance of approximately 3,950,000 shares of Common Stock issuable upon
exercise of outstanding options and warrants. The number of shares issuable upon
conversion of the Series A Preferred Stock and the Series B Preferred Stock will
vary depending on the conversion prices of such shares.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
3.1 Registrant's Articles of Incorporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PAN AM CORPORATION
By: /s/ JOHN J. OGILBY, JR.
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John J. Ogilby, Jr.
Chief Financial Officer and
General Counsel
Dated: June 5, 1997
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EXHIBIT
NUMBER DESCRIPTION
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3.1 Registrant's Articles of Incorporation.
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EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PAN AM CORPORATION
ARTICLE I - NAME
The name of the Corporation is Pan Am Corporation (the "Corporation").
ARTICLE II - PURPOSE
The Corporation is organized for the purposes of transacting any or all
lawful business for which corporations may be organized under the laws of the
United States and the laws of the State of Florida.
ARTICLE III - CAPITAL STOCK
The aggregate number of shares which the Corporation shall have the
authority to issue is two hundred million (200,000,000) shares, of which one
hundred million (100,000,000) shares shall be "Common Stock," par value $.0001
per share, and of which one hundred million (100,000,000) shares shall be
"Preferred Stock," par value $.0001 per share. The Board of Directors is
authorized, subject to limitations prescribed by law and the provisions of these
Amended and Restated Articles of Incorporation, to provide for the issuance of
shares of Preferred Stock in one or more series by adoption of amendments to the
articles of incorporation, to establish from time to time the number of shares
to be included in such series and to fix the designation, voting powers,
preferences and relative participating, optional or other special rights of the
shares of each of such series, and the qualifications, limitations or
restrictions thereof. The Board of Directors may authorize the issuance of stock
to such persons upon such terms and for such consideration in cash, property or
services as the Board of Directors may determine and as may be allowed by law.
The just valuation of such property or services shall be fixed by the Board of
Directors. All such stock when issued shall be fully paid and exempt from
assessment.
ARTICLE IV - REGISTERED
OFFICE AND AGENT
The name of the registered agent of the Corporation and the street
address of the registered office of this Corporation is:
John J. Ogilby, Jr., Esq.
Pan American World Airways, Inc.
9300 N.W. 36th Street
Doral Building, 2nd Floor
Miami, Florida 33178
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ARTICLE V - CORPORATE MAILING ADDRESS
The principal office and mailing address of the Corporation is:
9300 N.W. 36th Street
Miami, Florida 33178
ARTICLE VI - INCORPORATOR
The name and address of the incorporator of the Corporation is as
follows:
NAME ADDRESS
Carrie F. Rinehart 1110 Brickell Avenue
Penthouse Suite
Miami, FL 33131
ARTICLE VII - POWERS
The Corporation shall have all of the corporate powers enumerated under
Florida law.
ARTICLE VIII - DIRECTOR-CONFLICTS OF INTEREST
No contract or other transaction between the Corporation and one or
more of its directors, or between the Corporation and any other corporation,
firm, association or other entity in which one or more of the directors are
directors or officers, or are financially interested, shall be either void or
voidable because of such relationship or interest or because such director or
directors are present at the meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction or
because his or her votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or known
to the Board of Directors, or a duly empowered committee thereof, which
authorizes, approves or ratifies the contract or transaction by a vote or
consent sufficient for such purpose without counting the vote or votes of such
interested director or directors; or
(b) The fact of such relationship or interest is disclosed or known
to the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, committee or the
shareholders.
A director of the Corporation may transact business, borrow, lend, or
otherwise deal or contract with the Corporation to the full extent and subject
only to the limitations and provisions of the laws of the State of Florida and
the laws of the United States.
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Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE IX - NO ANTI-TAKEOVER LAW GOVERNANCE
The Corporation shall not be governed by Sections 607.0901 or 607.0902
of the Florida Business Corporation Act or any laws related thereto.
ARTICLE X - INDEMNIFICATION
The Corporation shall indemnify and shall advance expenses on behalf of
its officers and directors to the fullest extent permitted by law in existence
either now or hereafter.
ARTICLE XI - FISCAL YEAR
The fiscal year of this Corporation shall be the calendar year, unless
otherwise established by the Board of Directors.
ARTICLE XII - DURATION
The duration of the Corporation is perpetual, unless sooner liquidated
or dissolved in accordance with law.
ARTICLE XIII
A. CERTAIN DEFINITIONS. For the purposes of this Article XIII:
1. "Alien" means (i) any person who is not a Citizen or any
nominee of such person; (ii) any foreign government or representative thereof;
(iii) any corporation organized under the laws of any foreign government; or
(iv) any corporation, partnership, trust, association or other entity that is an
Affiliate of an Alien or Aliens.
2. "Alien Owned Shares" means any shares of any class of
outstanding voting stock of the Corporation that are then owned of record or
beneficially owned, or otherwise controlled, by any Alien.
3. "Citizen" means any person who is a citizen of the United
States (as defined in 49 U.S.C. 40102(a)(15), as amended, or in any successor
provision).
4. "Excess Shares" at any time means shares of voting stock
then beneficially owned by an Alien the ownership of which, as a result of
paragraph D of this Article XIII, cannot then be registered on the Foreign Stock
Record.
5. "Foreign Ownership Restrictions" means United States
statutory and United States Department of Transportation (DOT) regulatory or
interpretive restrictions on foreign
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ownership or control of the Corporation the breach of which would result in the
loss of any operating certificate or authority of the Corporation or any of its
subsidiaries.
6. "Foreign Stock Record" means a separate stock record for
the registration of Alien Owned Shares maintained by the Corporation in
accordance with the Bylaws of the Corporation.
7. "Independent Director" means a director of the Corporation
who is not employed by or affiliated in any material respect with the
Corporation or any of its subsidiaries other than solely by virtue of acting as
a director.
8. "Permitted Percentage" at any time means the maximum voting
power of the then-outstanding shares of voting stock permitted to be
beneficially owned by Aliens under Foreign Ownership Restrictions.
9. "Redemption Date" means the date fixed by action of a
majority of the Independent Directors for the redemption or exchange of any
shares of voting stock pursuant to paragraph F of this Article XIII.
10. "Redemption Securities" means any debt or equity
securities of the Corporation, any of its subsidiaries or any other corporation
or any combination thereof, having such terms and conditions as shall be
approved by the Independent Directors and which, together with any cash to be
paid as part of the redemption price, in the opinion of any nationally
recognized investment banking firm selected by the Independent Directors (which
may be a firm that provides other investment banking, brokerage or other
services to the Corporation), has a value, at the time notice of redemption is
given pursuant to clause (4) of paragraph F of this Article XIII, at least equal
to the price required to be paid pursuant to clause (1) of paragraph F of this
Article XIII (assuming, in the case of Redemption Securities to be publicly
traded, such Redemption Securities were fully distributed and subject only to
normal trading activity).
B. EFFECTIVENESS. The limitations on the rights of the holders of
shares of voting stock and the other limitations and rights of the Corporation
provided for in this Article XIII shall be effective notwithstanding any other
provision of these Amended and Restated Articles of Incorporation but only for
so long as the Corporation or any of its subsidiaries (a) is subject to any
Foreign Ownership Restriction or (b) if not then subject to any Foreign
Ownership Restriction, intends to reinstate any license, franchise or operating
certificate or authority lost as a result of a Foreign Ownership Restriction
within a reasonable time after ceasing to hold the same.
C. GENERAL. It is the policy of the Corporation that, consistent with
49 U.S.C. Section 41101 et. seq., as amended, and other Foreign Ownership
Restrictions, and to prevent the loss by the Corporation or any subsidiaries, or
to permit the Corporation or any of its subsidiaries to reinstate, any license,
franchise or operating certificate of authority referred to in paragraph B
above, Aliens, in the aggregate, shall not be permitted to beneficially own
shares of voting stock the voting power of which, but for the provisions of this
Article XIII, would exceed the Permitted Percentage.
D. LIMITATION OF VOTING RIGHTS. At no time shall Alien Owned Shares
have voting rights on any matter (except as otherwise expressly required by law)
unless such shares are registered on the Foreign Stock Record. At no time shall
ownership of shares representing more than the Permitted Percentage be
registered on the Foreign Stock Record. Without limitation, at
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no time shall Excess Shares have voting rights on any matter (except as
otherwise expressly required by any federal law of the United States or the
Florida Business Corporation Act).
E. BENEFICIAL OWNERSHIP INQUIRY.
1. The Corporation may by notice in writing (which may be
included in the form of proxy or ballot distributed to shareholders of the
Corporation in connection with any annual meeting (or any special meeting) of
the shareholders of the Corporation, or otherwise) require a person that is a
holder of record of equity securities of the Corporation or that the Corporation
knows to have, or has reasonable cause to believe has, beneficial ownership of
equity securities of the Corporation to certify in such manner as the
Corporation shall deem appropriate (including by way of execution of any form of
proxy or ballot by such person) that, to the knowledge of such person:
(a) All equity securities of the Corporation as to
which such person has record ownership or beneficial ownership
are owned and controlled only by a Citizen; or
(b) The number and class or series of equity
securities of the Corporation owned of record or beneficially
owned by such person that are owned or controlled by Aliens
are as set forth in such certificate.
2. With respect to any equity securities of the Corporation
identified by such person in response to subsection (a) of preceding clause (1)
of this paragraph E the Corporation may require such person to provide such
further information as the Corporation may reasonably require to implement the
provisions of this Article XIII.
3. For purposes of applying the provisions of this Article
XIII with respect to any equity securities of the Corporation, in the event of
the failure of any person to provide the certificate or other information to
which the Corporation is entitled pursuant to this paragraph E, the Corporation
may presume that the equity securities in question are beneficially owned or
controlled by Aliens.
F. REDEMPTION AND EXCHANGE. Notwithstanding any other provision of
these Amended and Restated Articles of Incorporation to the contrary, any Excess
Shares shall always be subject to redemption or exchange by the Corporation by
action of the Board of Directors, pursuant to the Florida Business Corporation
Act, or any other applicable provision of law, to the extent determined by a
majority of the Independent Directors to be necessary to comply with Foreign
Ownership Restrictions. As used in these Amended and Restated Articles of
Incorporation, "redemption" and "exchange" are hereinafter collectively referred
to as "redemption", references to Excess Shares being "redeemed" shall be deemed
to include Excess Shares that are being exchanged, and references to "Redemption
Price" shall be deemed to include the amount and kind of securities for which
any such Excess Shares are exchanged. The terms and conditions of such
redemption shall be as follows:
1. The Redemption Price of the shares to be redeemed pursuant
to this Article XIII shall be equal to the lower of (i) the fair market value of
the shares to be redeemed and (ii) such Alien's purchase price for such shares;
2. The Redemption Price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
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3. If less than all the shares held by Aliens are to be
redeemed, the shares to be redeemed shall be selected in any manner determined
by a majority of the Independent Directors to be fair and equitable;
4. At least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be redeemed
(unless waived in writing by any such holder), provided that the Redemption Date
may be the date on which written notice shall be given to record holders if the
cash or Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock certificates for their
shares to be redeemed; and
5. From and after the Redemption Date, shares to be redeemed
shall cease to be regarded as outstanding and any and all rights attaching to
such shares of whatever nature (including without limitation any rights to vote
or participate in dividends declared on stock of the same class or series as
such shares) shall cease and terminate, and the holders thereof thenceforth
shall be entitled only to receive the cash or Redemption Securities payable upon
redemption.
G. BYLAWS. The Bylaws of the Corporation may make appropriate
provisions to effectuate the requirements of this Article XIII.
H. FACTUAL DETERMINATIONS. The Independent Directors shall have the
power and duty to construe and apply the provisions of this Article XIII and to
make all determinations necessary or desirable to implement such provisions,
including but not limited to whether (a) a person or entity "controls" or is
"controlled by" another person or entity; (b) the number of shares of voting
stock that are beneficially owned by any person; (c) whether a person is an
Affiliate or Associate of another person; (d) whether a person has an agreement,
arrangement or understanding with another person as to matters bearing on
beneficial ownership; (e) whether a person is an Alien; (f) the application of
any other definition of these Amended and Restated Articles of Incorporation to
a given fact; and (g) any other matter relating to the applicability or effect
of this Article XIII.
I. QUORUM. Except as otherwise provided or required by law, the
presence, in person or by proxy, of the holders of record of shares of voting
stock entitling the holders thereof to cast a majority of the voting power of
all shares of voting stock (after giving effect to the reduction of voting
rights prescribed in paragraph D of this Article XIII) shall constitute a quorum
at all meetings of the shareholders of the Corporation, and any quorum
requirement or any requirement for shareholder approval shall be determined
after giving effect to the reduction in voting rights prescribed in paragraph D
of this Article XIII.
J. SEVERABILITY. If any section or lesser provisions of this Article
XIII is determined to be invalid, void, illegal or unenforceable, then the
remaining sections and provisions of this Article XIII shall continue to be void
and enforceable and shall in no way be affected, impaired or invalidated.
The undersigned has executed these Amended and Restated Articles of
Incorporation this 23rd day of September, 1996.
/S/ MARTIN R. SHUGRUE
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Martin R. Shugrue, President
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ACCEPTANCE OF REGISTERED AGENT
Having been named to accept service of process for PAN AM CORPORATION
at the place designated in the Amended and Restated Articles of Incorporation,
JOHN J. OGILBY, JR. agrees to act in this capacity, and agrees to comply with
the provisions of Section 607.0505, Fla. Stat. (1991), relative to keeping open
such office until such time as it shall notify the Corporation of his
resignation.
Dated this 23rd day of September, 1996.
/S/ JOHN J. OGILBY, JR.
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John J. Ogilby, Jr.
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ARTICLES OF AMENDMENT
The undersigned, being the President and Chief Executive Officer of Pan
Am Corporation (the "Company"), does hereby file these Articles of Amendment to
the Company's Amended and Restated Articles of Incorporation pursuant to
Sections 607.1006 and 607.0602 of the Florida Business Corporation Act.
I. The name of the Company is Pan Am Corporation.
II. Article III of the Company's Articles of Incorporation shall be
amended by adding the following after the existing provisions of such articles:
Section 1. Designation, Amount, Par Value, and Rank. A series of
preferred stock shall be designated as Series A Convertible Preferred Stock (the
"Preferred Stock"), and the number of shares so designated shall be 250,000.
Each share of Preferred Stock shall have $0.0001 par value. Each share of
Preferred Stock shall have a stated value of $100.00 per share (the "Stated
Value"). The Preferred Stock should rank prior to all classes or series of
equity securities of the Company, including the Common Stock. The Preferred
Stock is subject to and limited by the Convertible Preferred Stock Purchase
Agreement, the terms contained herein, and the Warrant attached hereto as an
Exhibit.
Section 2. Dividends.
(a) Holders of Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors out of shares of Common Stock legally
available therefor, and the Company shall pay, cumulative dividends at the rate
per share (as a percentage of the Stated Value per share) equal to 8% per annum,
payable, in shares of Preferred Stock, in arrears on the Conversion Date (as
defined in Section 5(a) hereof) unless adjusted as per the Reset Option
provision contained in Section 5(c)(ii). Dividends on the Preferred Stock shall
accrue daily commencing on the Original Issue Date (as defined in Section 6) and
shall be deemed to accrue whether or not earned or declared and whether or not
there are profits, surplus or other funds of the Company legally available for
the payment of dividends. The party that holds the Preferred Stock on an
applicable record date for any dividend payment will be entitled to receive such
dividend payment and any other accrued and unpaid dividends which accrued prior
to such dividend payment date, without regard to any sale or disposition of such
Preferred Stock subsequent to the applicable record date but prior to the
applicable dividend payment date. Except as otherwise provided herein, if at any
time the Company pays less than the total amount of dividends then accrued to
any class of Preferred Stock, such payment shall be distributed ratably among
the holders of such class based upon the number of shares held by each holder.
Section 3. Voting Rights. Except as otherwise provided herein and
as otherwise provided by law, the Preferred Stock shall have no voting rights.
However, so long as any shares of Preferred Stock are outstanding, the Company
shall not, without the affirmative vote of the holders of a majority of the
shares of the Preferred Stock then outstanding, (i) alter or change adversely
the powers, preferences or rights given to the Preferred Stock or (ii)
authorize, create, issue or increase any class of stock ranking as to dividends
or distribution of assets upon a Liquidation (as defined below) senior to, prior
to or PARI PASSU with the Preferred Stock.
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Section 4. Liquidation. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a "Liquidation"),
the holders of shares of Preferred Stock shall be entitled to receive out of the
assets of the Company, whether such assets are capital or surplus, for each
share of Preferred Stock an amount equal to the Stated Value, plus an amount
equal to accrued but unpaid dividends per share, whether declared or not, but
without interest, before any distribution or payment shall be made to the
holders of any Junior Securities, and if the assets of the Company shall be
insufficient to pay in full such amounts, then the entire assets to be
distributed shall be distributed among the holders of Preferred Stock ratably in
accordance with the respective amounts that would be payable on such shares if
all amounts payable thereon were paid in full. A sale, conveyance or disposition
of all or substantially all of the assets of the Company or the effectuation by
the Company of a transaction or series of related transactions in which more
than 50% of the voting power of the Company is disposed of shall be deemed a
Liquidation; provided that a consolidation or merger of the Company with or into
any other Company or Companies shall not be treated as a Liquidation, but
instead shall be subject to the provisions of Section 5. The Company shall mail
written notice of any such liquidation, not less than 60 days prior to the
payment date stated therein, to each record holder of Preferred Stock as shown
on the record books of the Company.
Section 5. Conversion.
(a) Each share of Preferred Stock shall be convertible into
validly issued, fully paid and non-assessable shares of Common Stock free and
clear of all liens and charges and not subject to any preemptive rights at the
Conversion Ratio at the option of the holder in whole or in part at any time
after the expiration of the later to occur of (i) 90 days after the Original
Issue Date and (ii) the date that the Commission declares effective under the
Securities Act the registration statement contemplated by the Convertible
Preferred Stock Purchase Agreement, dated the Original Issue Date (the "Purchase
Agreement"), by and between the Company and the original holder of Preferred
Stock relating to the Preferred Stock and the shares of Common Stock into which
the Preferred Stock is convertible in accordance with the terms hereof (the
"Conversion Date"). Any conversion under this Section 5(a) shall be of a minimum
amount of at least 1000 shares of Preferred Stock. The holder shall effect
conversions by surrendering to the Company the form of conversion notice
attached hereto as Exhibit A (the "Holder Conversion Notice") in the manner set
forth in Section 5(i) and simultaneously therewith or as soon as practicable
thereafter the certificate or certificates representing the shares of Preferred
Stock to be converted. Each Holder Conversion Notice shall specify the number of
shares of Preferred Stock to be converted and the date on which such conversion
is to be effected, which date may not be prior to the date the Holder delivers
such Notice by facsimile (the "Holder Conversion Date"). Each Holder Conversion
Notice, once given, shall be irrevocable. If the holder is converting less than
all shares of Preferred Stock represented by the certificate or certificates
tendered by the holder with the Holder Conversion Notice, the Company shall
promptly deliver to the holder a certificate for such number of shares as have
not been converted.
On the expiration of three years after the Original Issue Date,
each share of Preferred Stock shall be mandatorily converted into shares of
Common Stock at the Conversion Ratio.
If on the Conversion Date applicable to any conversion under this
Section 5(a), the Conversion Price (as defined in Section 5(c)(i))then in effect
is such that the aggregate number of shares of the Common Stock that would then
be issuable upon conversion of the Preferred
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Stock then outstanding, together with accrued and unpaid interest thereon, when
combined with any shares of Common Stock previously issued upon conversion of
any Preferred Stock, would equal or exceed 20% of the Common Stock outstanding,
excluding options or warrants to acquire shares of Common Stock, but including
all securities, rights or obligations convertible into or exchangeable for
shares of Common Stock (the "Issuable Maximum"), then the Company shall be
obligated to either (a) subject to the immediately following sentence, as
promptly as practicable, but in no event later than 90 days from the date of the
Company's receipt of the Holder Conversion Notice that would, if all Preferred
Stock were converted into shares of Common Stock, result in issuing Common Stock
in excess of the Issuable Maximum, convene a meeting of the holders of the
Common Stock and use its reasonable best efforts to obtain the Stockholder
Approval (as defined below), or (b) effect the conversion of only such portion
of Preferred Stock subject to such conversion as is represented by the
Conversion Percentage (as defined in the next sentence), and the remaining
portion of such Preferred Stock shall be subject to a mandatory repurchase at a
price equal to the Per Share Market Value times the number of shares of Common
Stock applicable under the conversion in Section 5(a). If the Company fails for
any reason to obtain the Stockholder Approval within the time period set forth
in paragraph (a) of the immediately prior sentence, the Company shall be
obligated to convert and repay the Preferred Stock in accordance with paragraph
(b) of the immediately prior sentence. "Stockholder Approval" means the approval
by a majority of the total votes cast on the proposal, in person or by proxy, at
a meeting of the stockholders of the Company held in accordance with the
Company's articles of incorporation and by-laws or other incorporating
documents, of the issuance by the Company of shares equaling or exceeding 20% or
more of the Common Stock outstanding as a consequence of the conversion of
Preferred Stock into Common Stock at a price less than the greater of the book
or market value as and to the extent required under the By-laws of the American
Stock Exchange (or any successor or replacement provision thereof).
The "Conversion Percentage" shall be a fraction, the numerator of
which is the "Allowable Conversion Maximum" (as defined in the next sentence)
and the denominator of which is the amount of Common Stock issuable upon
conversion of Preferred Stock outstanding prior to such conversion. The
Allowable Conversion Maximum at any time shall be the difference between the
Issuable Maximum and the total number of shares of Common Stock previously
issued upon conversion of Preferred Stock. In the event of any stock split,
stock dividend, re-capitalization, reorganization or other similar action or
event, appropriate adjustment shall be made to the Issuable Maximum and the
Allowable Conversion Maximum.
(b) Not later than three Trading Days after the Conversion Date,
the Company will deliver to the holder (i) a certificate or certificates which
shall be free of restrictive legends and trading restrictions, representing the
number of shares of Common Stock being acquired upon the conversion of shares of
Preferred Stock and (ii) one or more certificates representing the number of
shares of Preferred Stock not converted; provided, however that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon conversion of any shares of Preferred Stock until
certificates evidencing such shares of Preferred Stock are either delivered for
conversion to the Company or any transfer agent for the Preferred Stock or
Common Stock, or the holder notifies the Company that such certificates have
been lost, stolen or destroyed and provides a bond (or other adequate security
reasonably acceptable to the Company) satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection therewith. The Company
shall, upon request of the holder, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company under this
Section 5(b) electronically through the Depository Trust
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Corporation or another established clearing corporation performing similar
functions. If such certificate or certificates are not delivered by the date
required under this Section 5(b), the holder shall be entitled by written notice
to the Company at any time on or before such holder's receipt of such
certificate or certificates thereafter, to rescind such conversion, in which
event the Company shall immediately return the certificates representing the
shares of Preferred Stock tendered for conversion.
(c) (i) The conversion price ("Conversion Price") for each share
of Preferred Stock in effect on any Conversion Date shall be the LESSER of X
("Fixed Price") OR Y ("Floating Price"): where X is the GREATER of (A) [$F] or
(B) [ C ] / [ ( { C / F }+1.40 ) / 2 ] (where C = the average Per Share Market
Value for the twenty (20) Trading Days immediately preceding the Holder
Conversion Date (the "Valuation Period") and F = $8.50, subject to the Reset
Option as defined below in Section 5(c)(ii); and Y = 97% average Per Share
Market Value for the Valuation Period, subject to an additional 1% discount per
month to a minimum of 80% of the average Per Share Market Value for the
Valuation Period (i.e., 96% at 31 days, and an additional 1% for each of the
following 16 months); provided, however, if the registration statement to be
filed by the Company in accordance with the this Agreement is not declared
effective by the Commission for any reason by the Effectiveness Date (as defined
in the Purchase Agreement, then for each of the first two months after such
Effectiveness Date that such registration statement shall not have been so
declared effective, the Floating Price and the Fixed Price as computed above
shall be decreased by 2% (i.e. 2% after one month and 4% after two months) and
for each of the subsequent four months after such Effectiveness Date that such
registration statement shall not have been so declared effective, the Floating
Price and the Fixed Price as computed above shall be further decreased by 1% per
month (i.e. A total reduction of 5% after three months, 6% after four months,
etc.), provided however that the Floating Price shall never be less than 80% of
the average Per Share Market Value for the Valuation Period; and further
provided, that if the registration statement is not declared effective by the
end of six months from the Effectiveness Date, then the Company shall effect a
Company Redemption as defined in Section 5(c)(iii).
(ii) The Holder has a one time right to request a reset
of F ("Reset Option") should the Per Share Market Value for any (5) consecutive
Trading Days trade at less then 50% of F prior to such reset (a "Reset Period").
In order to exercise its Reset Option, Holder shall give notice of such to the
Company within ten days of any such Reset Period. The Company, upon such notice,
shall have the option of a) resetting F as requested or b) to cause the dividend
set forth in Section 2 accruing from and after such reset request to be
increased by an additional three percent (3%).
(iii) The Preferred Stock, in whole or in part, shall be
redeemable, superseding any prior Holder Conversion Notice, at the option of the
Company ("Company Redemption") upon the payment to the Holder of both A) a cash
payment equal to the Per Share Market Value on the date of the Company
Redemption Notice (the "Company Redemption Date") times the greater of a) the
shares of Common Stock that would be provided if such date were a Conversion
Date under a Conversion Price equal to 80% of the Average Per Share Market Value
for the Valuation Period or b) the shares of Common Stock that would be provided
if such date were a Conversion Date under a Conversion Price equal to the Per
Share Market Value on the Company Redemption Date and B) warrants to purchase
Common Stock with an exercise price equal to the Fixed Price in an amount equal
to the value of the Preferred Stock redeemed, with a term expiring on March 18,
2000, in the form of warrant attached hereto as Exhibit D ("Warrant Issuable
Upon Company Redemption"). The Company
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shall effect such redemption by delivering to the Holders of such shares of
Preferred Stock to be redeemed a written notice in the form attached hereto as
Exhibit B ("Company Redemption Notice"), which Company Redemption Notice, once
given, shall be irrevocable. Each Company Redemption Notice shall specify the
number of shares of Preferred Stock to be redeemed and the date on which
redemption is to be effected. Upon the redemption of shares of Preferred Stock
pursuant to the Company Redemption, the holders of the Preferred Stock shall
surrender the certificates representing such shares at the office of the Company
or of any transfer agent for the Preferred Stock or Common Stock. If the Company
is redeeming less than all shares of the Preferred Stock, the Company shall,
upon redeeming of such shares of Preferred Stock subject to such Company
Redemption and receipt of the certificate or certificates representing such
shares of Preferred Stock deliver to the holders a certificate for such number
of shares of Preferred Stock as have not been redeemed.
(iv) If the Company, at any time while any shares of
Preferred Stock are outstanding, (a) shall pay a stock dividend or otherwise
make a distribution or distributions payable in shares of its capital stock
(whether payable in shares of its Common Stock or of capital stock of any
class), (b) subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine outstanding shares of Common Stock into a smaller number of
shares, or (d) issue by reclassification of shares of Common Stock any shares of
capital stock of the Company, the Conversion Price designated in Section 5(c)(i)
as X and, if any of the aforementioned events occurred during a Valuation
Period, the Per Share Market Value with respect to the days within such
Valuation Period occurring prior to the date of such event, shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding before such event and of which the denominator shall be the
number of shares of Common Stock outstanding after such event. Any adjustment
made pursuant to this Section 5(c)(iv) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(v) If the Company, at any time while any shares of
Preferred Stock are outstanding, shall issue rights or warrants to all holders
of Common Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Per Share Market Value of Common Stock
at the record date mentioned below, the Conversion Price designated in Section
5(c)(i) as X and, if any of the aforementioned events occurred during a
Valuation Period, the Per Share Market Value with respect to the days within
such Valuation Period occurring prior to the date of such event, shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding on the date of
issuance of such rights or warrants plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered would purchase at such Per Share Market Value. Such adjustment
shall be made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Price designated in Section
5(c)(i) pursuant to this Section 5(c)(v), if any such right or warrant shall
expire and shall not have been exercised, the Conversion Price designated in
Section 5(c)(i) shall immediately upon such expiration be re-computed and
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effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Conversion Price
made pursuant to the provisions of this Section 5 after the issuance of such
rights or warrants) had the adjustment of the Conversion Price made upon the
issuance of such rights or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually exercised.
(vi) If the Company, at any time while shares of
Preferred Stock are outstanding, shall distribute to all holders of Common Stock
(and not to holders of Preferred Stock) evidences of its indebtedness or assets
or rights or warrants to subscribe for or purchase any security (excluding those
referred to in Section 5(c)(v) above) then in each such case the Conversion
Price, designated as X and if any of the aforementioned events occurred during a
Valuation Period, the Per Share Market Value with respect to the days within
such Valuation Period occurring prior to the date of such event, at which each
share of Preferred Stock shall thereafter be convertible shall be determined by
multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Per Share Market Value of
Common Stock determined as of the record date mentioned above, and of which the
numerator shall be such Per Share Market Value of the Common Stock on such
record date less the then fair market value at such record date of the portion
of such assets or evidence of indebtedness so distributed applicable to one
outstanding share of Common Stock as determined by the Board of Directors in
good faith; provided, however that in the event of a distribution exceeding
fifty percent (50%) of the net assets of the Company, such fair market value
shall be determined by a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Company) (an "Appraiser") selected in good faith by the holders of a
majority in interest of the shares of Preferred Stock; and provided, further
that the Company, after receipt of the determination by such Appraiser shall
have the right to select an additional Appraiser, in which case the fair market
value shall be equal to the average of the determinations by each such
Appraiser. In either case the adjustments shall be described in a statement
provided to all holders of Preferred Stock of the portion of assets or evidences
of indebtedness so distributed or such subscription rights applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.
(vii) All calculations under this Section 5 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be.
(viii) Whenever the Conversion Price is adjusted pursuant
to Section 5(c)(iv),(v)v, or (vi), the Company shall promptly mail to each
holder of Preferred Stock, a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(ix) In case of any reclassification of the Common Stock,
any consolidation or merger of the Company with or into another person, the sale
or transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, the holders of the Preferred Stock then
outstanding shall have the right thereafter to convert such shares only into the
shares of stock and other securities and property receivable upon or deemed to
be held
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by holders of Common Stock following such reclassification, consolidation,
merger, sale, transfer or share exchange, and the holders of the Preferred Stock
shall be entitled upon such event to receive such amount of securities or
property as the shares of the Common Stock of the Company into which such shares
of Preferred Stock could have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share exchange would
have been entitled. The terms of any such consolidation, merger, sale, transfer
or share exchange shall include such terms so as to continue to give to the
holder of Preferred Stock the right to receive the securities or property set
forth in this Section 5(d)(vii) upon any conversion following such
consolidation, merger, sale, transfer or share exchange. This provision shall
similarly apply to successive reclassifications, consolidations, mergers, sales,
transfers or share exchanges.
(x) If:
a. the Company shall declare a dividend
(or any other distribution) on its
Common Stock; or
b. the Company shall declare a special
non-recurring cash dividend on or a
redemption of its Common Stock; or
c. the Company shall authorize the
granting to all holders of the
Common Stock rights or warrants to
subscribe for or purchase any shares
of capital stock of any class or of
any rights; or
d. the approval of any stockholders of
the Company shall be required in
connection with any reclassification
of the Common Stock of the Company
(other than a subdivision or
combination of the outstanding
shares of Common Stock), any
consolidation or merger to which the
Company is a party, any sale or
transfer of all or substantially all
of the assets of the Company, or any
compulsory share exchange whereby
the Common Stock is converted into
other securities, cash or property;
or
e. the Company shall authorize the
voluntary or involuntary
dissolution, liquidation or
winding-up of the affairs of the
Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Preferred Stock, and shall cause to be mailed to
the holders of Preferred Stock at their last addresses as shall appear upon the
stock books of the Company, at least 10 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, 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 dividend,
distributions, redemption, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding-up 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
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other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, share exchange, dissolution, liquidation or winding-up;
provided, however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.
(d) If at any time conditions shall arise by reason of action
taken by the Company which in the opinion of the Board of Directors are not
adequately covered by the other provisions hereof and which might materially and
adversely affect the rights of the holders of Preferred Stock (different than or
distinguished from the effect generally on rights of holders of any class of the
Company's capital stock) or if at any time any such conditions are expected to
arise by reason of any action contemplated by the Company, the Company shall
mail a written notice briefly describing the action contemplated and the
material adverse effects of such action on the rights of the holders of
Preferred Stock at least 10 calendar days prior to the effective date of such
action, and an Appraiser selected by the holders of majority in interest of the
Preferred Stock shall give its opinion as to the adjustment, if any (not
inconsistent with the standards established in this Section 5), of the
Conversion Price (including, if necessary, any adjustment as to the securities
into which shares of Preferred Stock may thereafter be convertible) and any
distribution which is or would be required to preserve without diluting the
rights of the holders of shares of Preferred Stock; provided, however, that the
Company, after receipt of the determination by such Appraiser, shall have the
right to select an additional Appraiser, in which case the adjustment shall be
equal to the average of the adjustments recommended by each such Appraiser. The
Board of Directors shall make the adjustment recommended forthwith upon the
receipt of such opinion or opinions or the taking of any such action
contemplated, as the case may be; provided, however, that no such adjustment of
the Conversion Price shall be made which in the opinion of the Appraiser(s)
giving the aforesaid opinion or opinions would result in an increase of the
Conversion Price to more than the Conversion Price then in effect.
(e) The Company covenants that it will at all times reserve
and keep available out of its authorized and unissued Common Stock solely for
the purpose of issuance upon conversion of Preferred Stock as herein provided,
free from preemptive rights or any other actual contingent purchase rights of
persons other than the holders of Preferred Stock, such number of shares of
Common Stock as shall be issuable (taking into account the adjustments and
restrictions of Section 5(c) and Section 5(d) hereof) upon the conversion of all
outstanding shares of Preferred Stock. The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid and non-assessable.
(f) Upon a conversion or redemption of any shares of Preferred
Stock hereunder the Company shall not be required to issue stock certificates
representing fractions of shares of Common Stock, but may if otherwise
permitted, make a cash payment in respect of any final fraction of a share based
on the Per Share Market Value at such time. If the Company elects not, or is
unable, to make such a cash payment, the holder of a share of Preferred Stock
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.
(g) The issuance of certificates for shares of Common Stock on
conversion of Preferred Stock shall be made without charge to the holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable
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<PAGE>
in respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the holder of such
shares of Preferred Stock so converted and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
(h) Shares of Preferred Stock converted into Common Stock
shall be canceled and shall have the status of authorized but unissued shares of
preferred stock.
(i) Each Holder Conversion Notice shall be given by facsimile
and by mail, postage prepaid, addressed to the attention of the Chief Financial
Officer of the Company at the facsimile telephone number and address of the
principal place of business of the Company. Each Company Redemption Notice shall
be given by mail, postage prepaid, addressed to the attention of [ ] of the
Holder at the facsimile telephone number and address on the records of the
Company. Any such notice shall be deemed given and effective and the person in
whose name the certificates for shares of Common Stock shall be issued upon
conversion shall be deemed to have become the holder of record of such shares of
Common Stock upon the earliest to occur of (i)(a) if such Conversion Notice is
delivered via facsimile at the facsimile telephone number specified in this
Section 5(i) prior to 4:30 p.m. (Eastern Standard Time) on any date, such date
(or, in the case of a Company Conversion Notice, the next Trading Day) or such
later date as is specified in the Conversion Notice, and (b) if such Conversion
Notice is delivered via facsimile at the facsimile telephone number specified in
this Section 5(i) after 4:30 p.m. (Eastern Standard Time) on any date, the next
date (or, in the case of a Company Conversion Notice, the next Trading Day after
such next day) or such later date as is specified in the Conversion Notice, (ii)
five days after deposit in the United States mails or (iii) upon actual receipt
by the party to whom such notice is required to be given.
Section 6. Definitions. For the purposes hereof, the following
terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission
"Common Stock" means shares now or hereafter authorized of the
class of Common Stock, $0.0001 par value, of the Company and stock of any other
class into which such shares may hereafter have been reclassified or changed.
"Conversion Ratio" means, at any time, a fraction, of which
the numerator is Stated Value plus accrued but unpaid dividends, and of which
the denominator is the Conversion Price at such time.
"Junior Securities" means the Common Stock and any other
equity securities of the Company ranking junior to the Company's Series A
Cumulative Convertible Preferred Stock, either as to dividends or as upon
liquidation, dissolution or winding up.
"Original Issue Date" shall mean the date of the first
issuance of any shares of the Preferred Stock regardless of the number of
transfers of any particular shares of Preferred Stock and regardless of the
number of certificates which may be issued to evidence such Preferred Stock.
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"NASD" shall mean the National Association of Securities
Dealers.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on The American
Stock Exchange or other stock exchange on which the Common Stock has been listed
or if there is no such price on such date, then the closing bid price on such
exchange on the date nearest preceding such date, or (b) if the Common Stock is
not listed on The American Stock Exchange or any stock exchange, the closing bid
for a share of Common Stock in the over-the-counter market, as reported by the
NASD at the close of business on such date, or (c) if the Common Stock is not
quoted on the NASD, the closing bid price for a share of Common Stock in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), or (d) if the Common Stock is no longer publicly traded, the
fair market value of a share of Common Stock as determined by an Appraiser (as
defined in Section 5(c)(vi) above) selected in good faith by the holders of a
majority in interest of the shares of the Preferred Stock; provided, however,
that the Company, after receipt of the determination by such Appraiser, shall
have the right to select an additional Appraiser, in which case, the fair market
value shall be equal to the average of the determinations by each such
Appraiser.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Purchase Agreement" means the Convertible Preferred Stock
Purchase Agreement, dated as of the Original Issue Date, between the Company and
the original holders of the Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means (a) a day on which the Common Stock is
traded on The American Stock Exchange or principal stock exchange on which the
Common Stock has been listed, or (b) if the Common Stock is not listed on The
American Stock Exchange or any stock exchange, a day on which the Common Stock
is traded in the over-the-counter market, as reported by the NASD, or (c) if the
Common Stock is not quoted by the NASD, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices).
III. The foregoing amendment was adopted by the Board of Directors on
March 28, 1997. A vote of shareholders was not needed for the adoption of the
Articles of Amendment.
IN WITNESS WHEREOF, the undersigned President and Chief Executive
Office of the Company has executed these Articles of Amendment on March 31,
1997.
Pan Am Corporation
By:/S/ MARTIN R. SHUGRUE
------------------------
Martin R. Shugrue
President
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EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of
shares of Series A Convertible Preferred Stock indicated below, into shares of
Common Stock, no par value per share (the "Common Stock"), of Pan Am Corporation
(the "Company") according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
Holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
-----------------------------
Date to Effect Conversion
-----------------------------
Number of shares of Preferred
-----------------------------
Stock to be Converted
-----------------------------
Applicable Conversion Price
-----------------------------
Signature
-----------------------------
Name:
-----------------------------
Address:
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EXHIBIT B
COMPANY REDEMPTION NOTICE
(To be Executed by the Company in order to redeem shares of
Preferred Stock)
The undersigned hereby in the name and on behalf of Pan Am Corporation
(the "Company") hereby notifies the addressee hereof that the Company hereby
elects to exercise its rights to redeem [ ] shares of Series A Convertible
Preferred Stock indicated below, into shares of Common Stock, $0.0001 par value
per share (the "Common Stock"), of (the Company) according to the conditions
hereof, as of the date written below. If shares are to be issued in the name of
a person other than the addressee, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the addressee in accordance therewith. No
fee will be charged to the Holder for any redemption. The addressee should
surrender the shares of Preferred Stock to [ ].
Redemption calculations:
-----------------------------
Date to Effect Redemption
-----------------------------
Number of shares of Preferred
-----------------------------
Stock to be Redeemed
-----------------------------
Applicable Conversion Price
-----------------------------
Signature
-----------------------------
Name:
-----------------------------
Address:
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ARTICLES OF AMENDMENT
I. The undersigned, being the President and Chief Executive Officer of
Pan Am Corporation, a Florida corporation (the "Company"), does hereby file
these Articles of Amendment to the Company's Amended and Restated Articles of
Incorporation pursuant to Sections 607.1006 and 607.0602 of the Florida Business
Corporation Act.
II. Article III of the Company's Articles of Incorporation shall be
amended by adding the following after the existing provisions of such Article as
heretofore amended:
SERIES B JUNIOR CONVERTIBLE PREFERRED STOCK
Section 1. DESIGNATION, AMOUNT, PAR VALUE AND RANK. A series of
preferred stock shall be designated as Series B Junior Convertible
Preferred Stock (the "Series B Preferred Stock"), and the number of
shares so designated shall be 250,000. Each share of Series B
Preferred Stock shall have a par value of $.0001. Each share of
Preferred Stock shall have a stated value of $100 per share (the
"Series B Stated Value"). The Series B Preferred Stock shall rank
prior to all classes or series of equity securities (including the
Common Stock), except for the Series A Convertible Preferred Stock.
The Series B Preferred Stock is subject to and limited by the
Purchase Agreement (as defined in Section 6 below) and the terms
contained herein.
Section 2. DIVIDENDS. The Holders of shares of Series B
Preferred Stock (the "Series B Holders") shall be entitled to
receive, and the Company shall pay, cumulative dividends at a rate
per share (as a percentage of the Series B Stated Value per share)
equal to 7.25% per annum payable (in arrears) in shares of Common
Stock, the number of which shall be determined by dividing the
aggregate cash value of such dividends payable (other than such
dividends previously paid) by the Per Share Market Value on the day
immediately prior to the Series B Holder Conversion Date (as
defined in Section 5(a) hereunder). Dividends on the Series B
Preferred Stock shall accrue daily commencing on the Series B
Original Issue Date (as defined in Section 6 below) and shall be
deemed to accrue whether or not earned or declared and whether or
not there are profits, surplus or other funds of the Company
legally available for the payment of dividends. The party that
holds the Series B Preferred Stock on an applicable record date for
any dividend payment will be entitled to receive such dividend
payment and any other accrued and unpaid dividends which accrued
prior to such dividend payment date, without regard to any sale or
disposition of such Series B Preferred Stock subsequent to the
applicable record date but prior to the applicable dividend payment
date.
Section 3. VOTING RIGHTS. Except as otherwise provided herein
and as otherwise provided by law, the Series B Preferred Stock
shall have no voting rights. However, so long as any shares of
Series B Preferred Stock are outstanding, the Company shall
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not, without the affirmative vote of the holders of a majority of
the shares of the Series B Preferred Stock then outstanding, (i)
alter or change adversely the powers, preferences or rights given
to the Series B Preferred Stock or (ii) authorize, create, issue or
increase any class of stock ranking as to dividends or distribution
of assets upon a Series B Liquidation (as defined below) PARI PASSU
with the Series B Preferred Stock.
Section 4. LIQUIDATION. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a
"Series B Liquidation"), the Series B Holders shall be entitled to
receive out of the assets of the Company, whether such assets are
capital or surplus, for each share of Series B Preferred Stock an
amount equal to the Series B Stated Value, plus an amount equal to
accrued but unpaid dividends per share, whether declared or not,
but without interest, before any distribution or payment shall be
made to the holders of any Series B Junior Securities, and if the
assets of the Company shall be insufficient to pay in full such
amounts, then the entire remaining assets to be distributed after
distribution of payment to senior securities shall be distributed
among the Series B Holders and the holders of any class of the
Company's equity securities ranking on a parity with the Series B
Preferred Stock as to liquidation, dissolution and winding-up
ratably in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid in
full. A sale, conveyance or disposition of all or substantially all
of the assets of the Company shall be deemed a Series B
Liquidation; PROVIDED that a consolidation or merger of the Company
with or into any other company or companies shall not be treated as
a Series B Liquidation, but instead shall be subject to the
provisions of Section 5 below. The Company shall mail written
notice of any such liquidation, not less than 60 days prior to the
payment date stated therein, to each record Series B Holder as
shown on the record books of the Company.
Section 5. CONVERSION.
(a) Subject to the provisions of Section 5(c)(ii) and 5(c)(iii),
each share of Series B Preferred Stock shall be convertible into
validly issued, fully paid and nonassessable shares of Common Stock
free and clear of all liens and charges and not subject to any
preemptive rights at the Series B Conversion Ratio at the option of
the Series B Holder in whole or in part at any time after the
expiration of the later to occur of (i) 90 days after the Series B
Original Issue Date or (ii) the date that the Commission declares
effective the registration statement under the Securities Act (as
defined in Section 6 below) contemplated by the Purchase Agreement
relating to the Series B Preferred Stock and the shares of Common
Stock into which the Series B Preferred Stock is convertible in
accordance with the terms hereof (the "Series B Conversion Date").
Any conversion herewith shall be of a minimum number of at least
1,000 shares of Series B Preferred Stock, except in the event there
are less than 1,000 shares of Series B Preferred Stock remaining,
then, in that case, all such remaining shares may be converted. The
Series B Holder shall effect conversions by surrendering to the
Company the form of conversion notice attached as EXHIBIT C(1) to
the Purchase
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Agreement (the "Series B Holder Conversion Notice") in the manner
set forth in Section 5(i) below and simultaneously therewith or as
soon as practicable thereafter the certificate or certificates
representing the shares of Series B Preferred Stock to be
converted. Each Series B Holder Conversion Notice shall specify the
number of shares of Series B Preferred Stock to be converted and
the date on which such conversion is to be effected, which date may
not be prior to the date the Series B Holder delivers such notice
by facsimile (the "Series B Holder Conversion Date"). Each Series B
Holder Conversion Notice, once given, shall be irrevocable. If the
Series B Holder is converting less than all shares of Series B
Preferred Stock represented by the certificate or certificates
tendered by the Series B Holder with the Series B Holder Conversion
Notice, the Company shall promptly deliver to such Holder a
certificate for such number of shares as have not been converted.
On the expiration of three years after the Series B Original
Issue Date, each share of Series B Preferred Stock shall be
mandatorily converted into shares of Common Stock at the Series B
Conversion Ratio.
If, on the Series B Conversion Date applicable to any
conversion under this Section 5(a), the Series B Conversion Price
(as defined in Section 5(c)(i)) then in effect is such that the
aggregate number of shares of the Common Stock that would then be
issuable upon conversion of the Series B Preferred Stock then
outstanding, together with accrued and unpaid interest thereon,
when combined with any shares of Common Stock previously issued
upon conversion of any Series B Preferred Stock, would equal or
exceed 20% of the Common Stock then outstanding on the Series B
Original Issue Date, excluding options or warrants to acquire
shares of Common Stock, but including all securities, rights or
obligations convertible into or exchangeable for shares of Common
Stock (the "Series B Issuable Maximum"), then the Company shall be
obligated to either (a) subject to the immediately following
sentence, as promptly as practicable, but in no event later than 90
days from the date of the Company's receipt of the Series B Holder
Conversion Notice that would, if all Series B Preferred Stock were
converted into shares of Common Stock, result in issuing Common
Stock in excess of the Series B Issuable Maximum, convene a meeting
of the holders of the Common Stock and use its reasonable best
efforts to obtain the Series B Stockholder Approval (as defined
below), or (b) effect the conversion of only such portion of Series
B Preferred Stock subject to such conversion as is represented by
the Series B Conversion Percentage (as defined in the next
sentence), and the remaining portion of such Series B Preferred
Stock shall be subject to a mandatory repurchase by the Company at
a price equal to the Per Share Market Value times the number of
shares of Common Stock which would have been received had there
been a conversion pursuant to Section 5(a). If the Company fails
for any reason to obtain the Series B Stockholder Approval within
the time period set forth in paragraph (a) of the immediately prior
sentence, the Company shall be obligated to convert and repay the
Series B Preferred Stock in accordance with paragraph (b) of the
immediately prior sentence. "Series B Stockholder Approval" means
the approval by a majority of the total votes cast on the proposal,
in person or by proxy, at a meeting of the stockholders of the
Company held
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in accordance with the Company's Articles of Incorporation and
Bylaws or other incorporating documents, of the issuance by the
Company of shares equaling or exceeding 20% or more of the Common
Stock outstanding as a consequence of the conversion of Series B
Preferred Stock into Common Stock at a price less than the greater
of book or market value as and to the extent required under the
current Bylaws of the AMEX (as defined in Section 6 below) (or any
successor or replacement provision thereof).
The "Series B Conversion Percentage" shall be a fraction, the
numerator of which is the "Series B Allowable Conversion Maximum"
(as defined in the next sentence) and the denominator of which is
the amount of Common Stock issuable upon conversion of Series B
Preferred Stock outstanding prior to such conversion. The Series B
Allowable Conversion Maximum at any time shall be the difference
between the Series B Issuable Maximum and the total number of
shares of Common Stock previously issued upon conversion of Series
B Preferred Stock. In the event of any stock split, stock dividend,
recapitalization, reorganization or other similar action or event,
appropriate adjustment shall be made to the Series B Issuable
Maximum and the Series B Allowable Conversion Maximum.
(b) Not later than three Trading Days (as defined in Section 6
below) after the Series B Holder Conversion Date (the third day of
which shall hereinafter be referred to as the "Last Series B
Conversion Trading Day"), the Company will deliver to the Series B
Holder (i) a certificate or certificates which shall be free of
restrictive legends and trading restrictions, representing the
number of shares of Common Stock being acquired upon the conversion
of shares of Series B Preferred Stock and (ii) one or more
certificates representing the number of shares of Series B
Preferred Stock not converted; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon conversion of any shares of Series B
Preferred Stock until certificates evidencing such shares of Series
B Preferred Stock are either delivered for conversion to the
Company or any transfer agent for the Series B Preferred Stock or
Common Stock (the "Transfer Agent"), or the Series B Holder
notifies the Company that such certificates have been lost, stolen
or destroyed and provides a bond (or other adequate security
reasonably acceptable to the Company) satisfactory to the Company
to indemnify the Company from any loss incurred by it in connection
therewith (collectively, the "Lost Certificate Notification and
Bond"). The Company shall, upon request of the Series B Holder, use
its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section 5(b)
electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions. In
the event that the certificate(s) representing the number of shares
of Common Stock issuable upon conversion of any shares of Series B
Preferred Stock is not delivered to the Series B Holder on the
later to occur of the Last Series B Conversion Trading Day, or the
day on which the Company or any Transfer Agent receives the
certificates evidencing the shares of Series B Preferred Stock to
be converted or the Series B Holder provides the Company with the
Lost Certificate Notification and Bond, then (a) the Series B
Holder
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shall be entitled by written notice to the Company at any time on
or before such Holder's receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company
shall immediately return the certificates representing the shares
of Series B Preferred Stock tendered for conversion and (b) the
Company shall pay to the Series B Holder, in immediately available
funds, upon demand, as liquidated damages for such failure and not
as a penalty, for each $100,000 of Series B Stated Value for the
Series B Preferred Stock desired to be converted by the Series B
Holder, $100 for each of the first ten (10) days following receipt
by the Company of written notice from the Series B Holder that the
Company has not timely delivered the shares of Common Stock
issuable upon conversion in accordance with the provisions hereof
and $200 per day thereafter until such shares are delivered.
(c) (i) The conversion price ("Series B Conversion Price") for
each share of Series B Preferred Stock in effect on any Series B
Holder Conversion Date shall be the LESSER of X (the "Series B
Fixed Price") or (subject to the last sentence of this Section 5
(c)(i)) Y (the "Series B Floating Price"): where X is equal to 110%
of the Per Share Market Value (as defined in Section 6 below) on
the Series B Original Issue Date, provided that in no event will
the Series B Fixed Price exceed $11 per share, and Y is equal to
97% of the Per Share Market Value during the ten (10) Trading Days
immediately preceding the Series B Holder Conversion Date (the
"Series B Valuation Period"); provided, however, that for each 30
day period subsequent to the Series B Original Issue Date, Y shall
be reduced by an additional 1.5% of the Per Share Market Value
during the Series B Valuation Period and provided, further, that in
no event shall Y be reduced below 80% of the Per Share Market
Value. If the registration statement to be filed by the Company is
not declared effective by the Commission for any reason within 120
days after the Series B Original Issue Date (the date on which the
120-day period expires being hereinafter referred to as the "Series
B Filing Date"), then for each month after such Series B Filing
Date that such registration statement shall not have been so
declared effective, the Series B Floating Price and the Series B
Fixed Price as computed above, shall be decreased by an additional
1%, but in no event shall the discount to the Series B Floating
Price exceed 20%, and further provided, that if the registration
statement is not declared effective by the end of six months from
the Series B Filing Date, then the Company shall effect a Series B
Company Redemption as set forth in Section 5(c)(ii) herein. Any
such decrease in discount shall not be subject to elimination or
alteration by any subsequent delay in the declaration of
effectiveness of a registration statement. Notwithstanding anything
contained herein to the contrary, no Series B Preferred Stock may
be converted until after the registration statement referred to
herein has been declared effective by the Commission and such
Series B Preferred Stock may only be converted under this Section
5(c)(i) at the Series B Fixed Price from the date the registration
statement is declared effective until the date that is nine months
from the Series B Original Issue Date.
(ii) The Series B Preferred Stock shall be redeemable, in whole
or in part, and superseding any prior Series B Holder Conversion
Notice ("Series B Company Redemption") at any time upon the payment
to the Series B Holder of both A) a cash
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<PAGE>
payment equal to the Per Share Market Value on the date of the
Series B Company Redemption (the "Series B Company Redemption
Date"), multiplied by the number of shares of Common Stock that
would be provided if such date were a Series B Conversion Date at a
Series B Conversion Price equal to 80% of the Per Share Market
Value on the Series B Company Redemption Date, B) a cash payment
equal to all accrued dividends payable with respect to such Series
B Preferred Stock and C) a number of warrants to purchase Common
Stock with an Exercise Price equal to the Series B Fixed Price
determined by dividing the aggregate Series B Stated Value of the
Preferred Stock redeemed by the Series B Fixed Price, with a term
expiring on May 15, 2000, in the form of warrant attached as
EXHIBIT E to the Purchase Agreement. The Company shall effect such
redemption by delivering to the Series B Holders of such shares of
Series B Preferred Stock to be redeemed a written notice in the
form attached as EXHIBIT C(2) to the Purchase Agreement (the
"Series B Company Redemption Notice"). In the event that the
Company receives a Series B Holder Conversion Notice, then it may
effect a Series B Company Redemption thereafter only if it provides
a Series B Company Redemption Notice no later than one (1) Trading
Day after the Company has actually received such Series B Holder
Conversion Notice. Each Series B Company Redemption Notice shall
specify the number of shares of Series B Preferred Stock to be
redeemed and the date on which redemption is to be effected. Upon
the receipt of the Series B Company Redemption Notice, the Series B
Holders shall, as promptly as practicable, surrender the
certificates representing the shares of Series B Preferred Stock
which have been redeemed at the office of the Company or of any
Transfer Agent. The failure of a Series B Holder to deliver such
certificates shall have no impact on the effectiveness of the
redemption. The Company shall make payment to any Series B Holder
for all of its shares of Series B Preferred Stock redeemed by the
Company hereby within thirty (30) days from delivery of the Series
B Company Redemption Notice. If the Company is redeeming less than
all shares of the Series B Preferred Stock, the Company shall, upon
redemption of such shares subject to such Series B Company
Redemption and receipt of the certificate or certificates
representing such shares of Series B Preferred Stock, deliver to
the Series B Holders a certificate for such number of shares of
Series B Preferred Stock as have not been redeemed.
(iii) The Series B Preferred Stock shall be convertible at the
option of the Company, in whole or in part and superseding any
prior Series B Holder Conversion Notice (the "Series B Company
Conversion"), into Common Stock at a conversion price for each such
share of Series B Preferred Stock equal to the lesser of the Series
B Fixed Price or 80% of the Per Share Market Value during the ten
(10) Trading Days immediately preceding the delivery of the Series
B Company Conversion Notice (as defined below). The Company shall
effect such conversion by delivering to the Series B Holders of
such shares of Series B Preferred Stock to be converted, a written
notice in the form attached as EXHIBIT C(3) to the Purchase
Agreement (the "Series B Company Conversion Notice"). Each Series B
Company Conversion Notice shall specify the number of shares of
Series B Preferred Stock to be converted and the date on which the
conversion is effected. In the event that the Company receives a
Series B Holder Conversion Notice, then it may effect a Series B
Company Conversion Notice
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<PAGE>
thereafter only if it provides a Series B Company Conversion Notice
no later than one (1) Trading Day after the Company has actually
received such Series B Holder Conversion Notice. Upon the receipt
of the Series B Company Conversion Notice, the Series B Holders
shall as promptly as practicable surrender the certificates
representing the shares of the Series B Preferred Stock which have
been converted at the office of the Company or any Transfer Agent.
The failure of a Series B Holder to deliver such certificates shall
have no impact on the effectiveness of the conversion. The Company
shall deliver certificates of Common Stock evidencing the shares of
Series B Preferred Stock converted no later than three (3) Trading
Days after the Company has actually received the Series B Company
Conversion Notice. If the Company is converting less than all
shares of the Series B Preferred Stock, the Company shall, upon
conversion of such shares subject to the Series B Company
Conversion and receipt of the certificates representing such shares
of Series B Preferred Stock, deliver to the Series B Holders a
certificate for such number of shares of Series B Preferred Stock
as have not been converted. In no event will a Series B Company
Conversion Notice require a conversion of Series B Preferred Stock
pursuant to this Section which will, in and of itself, cause any
single Series B Holder to beneficially own the greater of (a) 4.9%
of the Company's Common Stock, after such conversion, or (b) such
larger number of shares which would require such Series B Holder to
file a Schedule 13D or 13G under the Securities Exchange Act of
1934, as amended.
(iv) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another Person,
the sale or transfer of all or substantially all of the assets of
the Company or any compulsory share exchange pursuant to which the
Common Stock is converted into other securities, cash or property,
the holders of the Series B Preferred Stock then outstanding shall
have the right thereafter to convert such shares only into the
shares of stock and other securities and property receivable upon
or deemed to be held by the holders of Common Stock following such
reclassification, consolidation, merger, sale, transfer or share
exchange, and the Series B Holders shall be entitled upon such
event to receive such amount of securities or property as the
holders of the Common Stock of the Company into which such shares
of Series B Preferred Stock could have been converted immediately
prior to such reclassification, consolidation, merger, sale,
transfer or share exchange would have been entitled. The terms of
any such consolidation, merger, sale, transfer or share exchange
shall include such terms so as to continue to give to the Series B
Holder the right to receive the securities or property set forth in
this Section 5(c)(iv) upon any conversion following such
consolidation, merger, sale, transfer or share exchange. This
provision shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(v) If:
a. the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
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<PAGE>
b. the Company shall declare a special
nonrecurring cash dividend on or a redemption
of its Common Stock; or
c. the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
d. the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company (other than a subdivision or
combination of the outstanding shares of Common
Stock), any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into
other securities, cash or property; or
e. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or
winding-up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of converting the Series B Preferred
Stock, and shall cause to be mailed to the Series B Holders at
their last addresses as shall appear upon the stock books of the
Company, at least 10 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purposes of declaring
such dividend, distribution, redemption, rights or warrants, 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 dividend,
distribution, redemption, rights or warrants are to be determined,
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or
winding-up is expected to become effective, and the date as of
which it is expected that the holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding-up; provided,
however, that the failure to mail such notice or any defect therein
or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
(vi) All calculations under this Section 5 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may
be.
(d) If at any time conditions shall arise by reason of action
taken by the Company which in the opinion of the Board of Directors
are not adequately covered by the other provisions hereof and which
might materially and adversely affect the rights of the Series B
Holders (different than or distinguished from the effect generally
on rights of holders of any class of the Company's capital stock)
or if at any time any such conditions are
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<PAGE>
expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly describing
the action contemplated and the material adverse effects of such
action on the rights of the Series B Holders at least 10 calendar
days prior to the effective date of such action, and an appraiser
(the "Appraiser") selected by the holders of majority in interest
of the Series B Preferred Stock shall give its opinion as to the
adjustment, if any (not inconsistent with the standards established
in this Section 5), of the Series B Conversion Price (including, if
necessary, any adjustment as to the securities into which shares of
Series B Preferred Stock may thereafter be convertible) and any
distribution which is or would be required to be made without
diluting the rights of the Series B Holders; PROVIDED, however,
that the Company after receipt of the determination by such
Appraiser, shall have the right to select an additional Appraiser,
in which case the adjustment shall be equal to the average of the
adjustments recommended by each such Appraiser. The Board of
Directors shall make the adjustment recommended forthwith upon the
receipt of such opinion or opinions or taking of any such action
contemplated, as the case may be; provided, however, that no such
adjustment of the Series B Conversion Price shall be made which in
the opinion of the Appraiser(s) giving the aforesaid opinion or
opinions would result in an increase of the Series B Conversion
Price to more than the Series B Conversion Price then in effect.
The Board of Directors shall act in a reasonable manner and make
any reasonable adjustment recommended forthwith.
(e) The Company will at all times reserve and keep available out
of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Series B Preferred Stock as herein
provided, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Series B
Holders, such number of shares of Common Stock as shall be issuable
(taking into account the adjustments and restrictions of Section
5(c) hereof) upon the conversion of all outstanding shares of
Series B Preferred Stock. The Company covenants that all shares of
Series B Preferred Stock that shall be so issuable shall, upon
issue, be duly and validly authorized, issued and fully paid and
nonassessable.
(f) Upon a conversion or redemption of any shares of Series B
Preferred Stock hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in
respect of any final fraction of a share based on the Per Share
Market Value at such time. If the Company elects not, or is unable,
to make such a cash payment, the holder of a share of Series B
Preferred Stock shall be entitled to receive, in lieu of the final
fraction of a share, one whole share of Common Stock.
(g) The issuance of certificates for shares of Common Stock on
conversion of Series B Preferred Stock shall be made without charge
to the holders thereof for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay
any tax that may be payable in respect of any transfer involved in
the issuance and delivery of any such certificate upon conversion
in a name other than that of the holder of such shares of Series B
Preferred Stock so converted and the Company shall not be required
to issue or deliver
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such certificates unless or until the Person(s) requesting the
issuance thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company
that such tax has been paid.
(h) Shares of Series B Preferred Stock converted into Common
Stock shall thereafter be canceled and shall have the status of
authorized but unissued shares of Series B Preferred Stock.
(i) Each Series B Holder Conversion Notice shall be given by facsimile
and by mail, postage prepaid, addressed to the attention of the Chief
Financial Officer of the Company at the facsimile telephone number and
address of the principal place of business of the Company. Each Series
B Company Conversion Notice and Series B Company Redemption Notice
shall be given by facsimile and mail, postage prepaid, addressed, to
the attention of the Series B Holder at such shareholder's facsimile
telephone number and place of business. Any such notice shall be deemed
given and effective and the Person in whose name the certificates for
shares of Common Stock shall be issued upon conversion shall be deemed
to have become the holder of record of such shares of Common Stock upon
the earliest to occur of (i) (a) if such notice is delivered via
facsimile at the facsimile telephone number specified in this Section
5(i) prior to 5:30 p.m. (Eastern Standard Time) on any date, such date
(or, in the case of a Series B Company Conversion Notice, the next
Trading Day) or such later date as is specified in the notice, and (b)
if such notice is delivered via facsimile at the facsimile telephone
number specified in this Section 5(i) after 5:30 p.m. (Eastern Standard
Time) on any date, the next date (or, in the case of a Series B Company
Conversion Notice, the next Trading Day after such next day) or such
later date as is specified in the Notice, (ii) five days after deposit
in the United States mails or (iii) upon actual receipt by the party to
whom such notice is required to be given.
Section 6. DEFINITIONS. For the purposes hereof, the
following terms shall have the following meanings:
"AMEX" means the American Stock Exchange.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means shares now or hereafter authorized of the
class of Common Stock, par value $.0001 per share, of the
Company and stock of any other class into which such shares
may hereafter have been reclassified or changed.
"NASD" shall mean the National Association of Securities
Dealers.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date
on the AMEX or other stock exchange in which the Common Stock
has been listed or if there is no such price exchange on such
date, then the closing bid price on such exchange on the date
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nearest preceding such date, or (b) if the Common Stock is not
listed on the AMEX or any stock exchange, the closing bid for
a share of Common Stock in the over-the-counter market as
reported by NASD at the close of business on such date, or (c)
if the Common Stock is not quoted on the NASD, the closing bid
price for a share of Common Stock in the over-the-counter
market as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to
its functions or reporting prices), or (d) if the Common Stock
is no longer publicly traded, the fair market value of a share
of Common Stock as determined by an Appraiser (as defined in
Section 5(d) above) selected in good faith by the holders of a
majority in interest of the shares of the Series B Preferred
Stock; PROVIDED, however, that the Company, after receipt of
the determination by such Appraiser, shall have the right to
select an additional Appraiser, in which case, the fair market
value shall be equal to the average of the determination by
each such Appraiser.
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or
political subdivision thereof or a government agency.
"Purchase Agreement" means the Series B Convertible Preferred
Stock Purchase Agreement, dated as of the Series B Original
Issue Date, between the Company and the original holders of
the Series B Preferred Stock.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Conversion Ratio" means, at any time, a fraction, of
which the numerator is Series B Stated Value plus accrued but
unpaid dividends, and of which the denominator is the Series B
Conversion Price at such time.
"Series B Junior Securities" means the Common Stock and any
other equity securities of the Company ranking junior to the
Company's Series B Junior Convertible Preferred Stock either
as to dividends or upon liquidation, dissolution or winding
up.
"Series B Original Issue Date" shall mean the date of the
first issuance of any shares of the Series B Preferred Stock
regardless of the number of transfers of any particular shares
of Series B Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Series B
Preferred Stock.
"Trading Day" means (a) a day on which the Common Stock is
traded on the AMEX or principal stock exchange on which the
Common Stock has been listed, or (b) if the Common Stock is
not listed on the AMEX or any stock exchange, a day on which
the Common Stock is traded in the over-the-counter market, as
reported by the NASD, or (c) if the Common Stock is not quoted
by the NASD, a day on which the Common Stock is quoted in the
over-the-counter market as
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reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of
reporting prices).
The foregoing amendment was adopted by the Board of Directors
on May 14, 1997. A vote of shareholders was not needed for the adoption of the
Articles of Amendment.
IN WITNESS WHEREOF, the undersigned President and Chief Executive
Officer of the Company has executed these Articles of Amendment on May 16, 1997.
PAN AM CORPORATION
By:/S/ MARTIN R. SHUGRUE, JR.
-------------------------------------
Martin R. Shugrue, Jr.
President and Chief Executive Officer
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