EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
ATLANTIC AMERICAN CORPORATION
(AS AMENDED THROUGH DECEMBER 19, 2002)
ARTICLE I.
The name of the corporation is Atlantic American Corporation.
ARTICLE II.
The corporation is organized pursuant to the Business Corporation Code of the
State of Georgia.
ARTICLE III.
The duration of the corporation shall be perpetual.
ARTICLE IV.
The purposes for which the corporation are organized is as follows:
(a) To generally engage in the business of buying, selling or otherwise
dealing in notes, accounts, bonds, debentures, securities, chooses in
action, coupons and other negotiable instruments and evidences of
debt, and any and all other forms of real, personal or mixed property;
to form, promote, subsidize and assist companies, corporations,
syndicates, joint ventures, partnerships and business enterprises of
all kinds; to guarantee, become surety upon or endorse the contracts
or obligations of any other corporation, individual or business
entity, whether purely accommodation or not, and whether the
corporation has any direct interest in the subject matter so
guaranteed or endorsed; to lend the capital of the corporation and
such other funds as it may from time to time lawfully acquire upon
such security as may be agreed; and to generally carry on and
undertake any business undertaking, transaction or operation commonly
carried on in connection with the operation of a general business,
industrial, investment, and lending finance operation.
(b) To purchase, acquire, hold, pledge, exchange and otherwise deal in,
either alone or in conjunction with others, stocks, bonds, debentures,
rights, warrants, and any other kinds or types of securities of any
sort or kind of any corporation, association, partnership, syndicate,
entity, person or authority, domestic or foreign; to create and issue,
whether or not in connection with the issue and sale of any shares of
stock or other securities of the corporation, rights or options,
entitling the holder thereof to purchase shares of stock or any other
security of the corporation on such terms as may be provided, so long
as shares of stock with a par value to be received on the exercise of
such rights or options shall be paid for at a price at least equal to
the par value thereof.
(c) To buy, own, hold, mortgage, lease, encumber, sell, exchange, assign,
transfer, acquire by gift, device or otherwise and otherwise to deal
in generally real, personal and intangible property of whatsoever kind
or sort wherever situated.
(d) Generally to do any and all things necessary, convenient or
appropriate which are incidental or connected with any of the business
activities mentioned above.
ARTICLE V.
The total number of shares of capital stock of the Corporation shall
be 54,000,000, which shall consist of (a) 50,000,000 shares of common stock of
the par value of $1.00 per share ("Common Stock"), and (b) 4,000,000 shares of
Preferred Stock of the par value of $1.00 per share ("Preferred Stock"), of
which Preferred Stock (i) 30,000 shares shall be designated as "Series A
Convertible Preferred Stock" having the powers, preferences and rights
heretofore designated as part of
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these Restated Articles of Incorporation, (ii) 134,000 shares shall be
designated as "Series B Preferred Stock" having the powers, preferences and
rights heretofore designated as part of these Restated Articles of
Incorporation, and (iii) 100,000 shares shall be designated as "Series C
Preferred Stock" having the powers, preferences and rights set forth in the
Statement of Relative Rights and Preferences of the Series C Preferred Stock
attached hereto as Exhibit A and made a part of the Corporation's Restated
Articles of Incorporation.
The following is a statement fixing certain of the designations and
the powers, voting powers, preferences and relative, participating, optional or
other rights of the Preferred Stock and the Common Stock of the corporation,
and the qualifications, limitations or restrictions thereof, and of the
authority with respect thereto expressly granted to the Board of Directors of
the corporation to fix any such provisions not fixed hereby:
A. Preferred Stock
The Board of Directors is hereby expressly vested with the authority
to adopt a resolution or resolutions providing for the issue of authorized but
unissued shares of Preferred Stock, which shares may be issued from time to
time in one or more series and in such amounts as may be determined by the
Board of Directors in such resolution or resolutions. The powers, voting
powers, designations, preferences and relative, participating, optional, or
other special rights, if any, of each series of Preferred Stock and the
qualifications, limitations or restrictions, if any, of such preferences and/or
rights (collectively, the "Series Terms"), shall be such as are stated and
expressed in the resolution or resolutions providing the issue of such series
of Preferred Stock (the "Series Terms Resolution") adopted by the Board of
Directors. The powers of the Board of Directors with respect to the Series
Terms of a particular series (any of which powers may by resolution of the
Board of Directors be specifically delegated to one or more of its committees,
except as prohibited by law) shall be limited to determination of the
following:
1) The number of shares constituting that series and the
distinctive designation of that series;
2) The rate of dividend on the shares of the series, whether
such dividends, if any, shall be cumulative, and, if so, the
date or dates from which dividends payable on such shares
shall accumulate, and the relative rights of priority, if
any, of payment of dividends on shares of that series;
3) Whether that series shall have voting rights, in addition to
any voting rights provided by law, and, if so, the terms of
such voting rights;
4) Whether that series shall have conversion privileges with
respect to shares of any other class or classes of stock or
of any other series of any class of stock, and, if so, the
terms and conditions of such conversion, including provision
for adjustment of the conversion rate upon occurrence of such
events as the Board of Directors shall determine;
5) Whether the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including
their relative rights of priority, if any, of redemption, the
date or dates upon or after which they shall be redeemable,
provisions regarding redemption notices, and the amount per
share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
6) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund; and
7) The rights of the shares of that series in the event of
voluntary or involuntary liquidation of the corporation, and
the relative rights of priority, if any, of payment of shares
of that series.
Any of the Series Terms, including voting rights, of any series may be
dependent upon facts ascertainable outside the Articles of Incorporation and
the Series Terms Resolution, provided that the manner in which such facts shall
operate upon such Series Terms is clearly and expressly set forth in the
Articles of Incorporation or in the Series Terms Resolution.
B. Common Stock
1. Dividends. Subject to the rights of the holders of
shares of any series of Preferred Stock set forth in
any Series Terms Resolution, the Board of Directors
may, in its discretion, out of funds legally
available for the payment of dividends and at such
times and in such manner as determined by the Board
of Directors, declare and pay dividends on the
Common Stock of the corporation.
2. Liquidation. In the event of any liquidation,
dissolution or winding up of the corporation,
whether voluntary or involuntary, after payment or
provision for the payment of the debts
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and other liabilities of the corporation and the
payment or setting aside for payment of any
preferential amount due to the holders of shares of
any series of Preferred Stock, the holders of Common
Stock, subject to the rights of the holders of any
shares of any class of stock or series ranking on a
parity with the Common Stock as to payments or
distributions in such event, shall be entitled to
receive ratably any and all assets of the
corporation remaining to be paid or distributed.
3. Voting Rights. Subject to the rights of the holders
of shares of any series of Preferred Stock set forth
in any Series Terms Resolution, the holders of the
Common Stock of the corporation shall be entitled at
all meetings of stockholders to one vote for each
share of such stock held by them.
C. Retirement of Shares
Unless otherwise provided in a Series Terms Resolution with respect to
a particular series of Preferred Stock, all shares of Preferred Stock redeemed
or acquired by the corporation (as a result of conversion or otherwise) shall
be retired and restored to the status of authorized but unissued shares.
D. No Preemptive Rights
Unless otherwise provided with respect to a particular series of
Preferred Stock in a Series Terms Resolution, no holder of shares of capital
stock of the corporation shall have any preemptive or other right, except as
such rights are expressly provided by contract, to purchase or subscribe for or
receive any shares of any class, or series thereof, of capital stock of the
corporation, whether now or hereafter authorized, or any warrants, options,
bonds, debentures or other securities convertible into, exchangeable for or
carrying any right to purchase any shares of any class, or series thereof, of
capital stock of the corporation.
ARTICLE VI.
The principal office of the corporation shall be located in DeKalb
County, Georgia.
ARTICLE VII.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any appropriation, in
violation of his duties, of any business opportunity of the corporation, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for the types of liability set forth in
Section 14-2-154 of the Georgia Business Corporation Code, as amended, and its
successor provisions, or (iv) for any transaction from which the director
derived an improper personal benefit.
ARTICLE III.
All shares previously reacquired by the corporation pursuant to the
power of the corporation to purchase its own shares conferred generally by law
(and not heretofore cancelled by action of the Board of Directors or resold)
and all shares hereafter so reacquired shall become treasury shares of the
corporation, and shall remain such unless and until resold or cancelled by
action of the Board of Directors.
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EXHIBIT A
RELATIVE RIGHTS AND PREFERENCES OF
THE SERIES A CONVERTIBLE PREFERRED STOCK OF
ATLANTIC AMERICAN CORPORATION
Pursuant to authority granted in the Articles of Incorporation, as
amended, of the Corporation, the Board of Directors of the Corporation has been
authorized to issue in series 4,000,000 shares of the Corporation's Preferred
Stock of the par value of $1.00 per share, and to designate by resolution the
relative rights and preferences of each series so established. By resolution of
the Board of Directors, the Corporation has established a series of such
Preferred Stock consisting of 30,000 shares and has designated said series as
the "Series A Convertible Preferred Stock."
For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;
"Board of Directors" shall mean the board of directors of the
Corporation;
"Series A Preferred Stock" shall mean the 30,000 shares of Series A
Convertible Preferred Stock of the par value of $1.00 per share of the
Corporation;
"Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and
"Original Issue Date" shall mean the date on which the first share of
Series A Preferred Stock was originally issued.
The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series A Preferred
Stock are as follows:
(a) Dividend Rights. From and after the issuance of the Series A
Preferred Stock, the holders of outstanding shares of the Series A Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends at the annual rate of Ten Dollars and Fifty Cents ($10.50) per share,
payable in arrears quarterly on March 15, June 15, September 15 and December 15
of each year, commencing March 15, 1988, to stockholders of record on a date
not more than twenty (20) days prior to the date on which such cash dividends
are payable, said dividends to commence accrual on the Original Issue Date.
Such dividends shall be prior and in preference to any declaration of payment
of any dividend on the Common Stock and any other class or series of capital
stock ranking junior to the Series A Preferred Stock in respect of dividends or
distributions upon liquidation. Such dividends shall be cumulative and shall
accrue whether or not declared by the Board of Directors. No cash dividends
shall be paid on the Common Stock or any other junior stock (except stock
dividends of Common Stock or any other junior stock), until all dividends
accrued on any outstanding shares of the Series A Preferred Stock and all other
series of preferred stock ranking on a parity with the Series A Preferred
Stock, whether or not declared, have been set apart and fully paid. No
accumulation of dividends on the Series A Preferred Stock shall bear interest.
In the event cash dividends are not paid in full on all outstanding
shares of the Series A Preferred Stock and any other series of preferred stock
ranking on a parity with the Series A Preferred Stock, shares of the Series A
Preferred Stock and shares of such other series of preferred stock shall be
entitled to proportionate amounts of the funds available for their respective
dividend requirements based upon the payments required to be made on the Series
A Preferred Stock and each such other series of preferred stock then
outstanding.
(b) Liquidation Rights. In the event of liquidation of the
Corporation, whether voluntary or involuntary, the holders of shares of the
Series A Preferred Stock will be entitled to receive, from the assets of the
Corporation available for distribution to stockholders, an amount equal to One
Hundred Dollars ($100.00) per share, plus all accrued but unpaid dividends on
such shares, whether or not declared, before any distribution shall be made or
set apart for holders of Common Stock or any other class or series of capital
stock ranking junior to the Series A Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series A Preferred Stock shall
be entitled to no further participation in any remaining assets of the
Corporation. If, upon any liquidation of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares of
the Series A Preferred Stock and any other class or series of preferred stock
ranking on a parity with the Series A Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among such holders ratably in accordance
with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations, nor the sale or
lease of all or substantially all of the assets of the Corporation, shall
constitute a liquidation as used in this Section (b).
(c) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series A Preferred Stock shall have no voting rights.
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Whenever dividends on the Series A Preferred Stock are in arrears in
an amount equal to or exceeding six (6) quarterly dividends, then during the
period commencing with such time and ending with the time when all arrears in
dividends on the Series A Preferred Stock have been paid and the full dividend
on the Series A Preferred Stock for the current quarterly dividend period has
been paid or declared and set aside for payment, the holders of the Series A
Preferred Stock, voting together as a class, shall be entitled to vote on all
matters put to a vote of the stockholders of the Corporation and shall
otherwise have voting rights and powers equal to the voting rights and powers
of the Common Stock, with each share of Series A Preferred Stock entitling the
holder thereof to one (1) vote.
In addition to any other rights provided by law, so long as any shares
of the Series A Preferred Stock shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than a majority of such outstanding shares of Series A
Preferred Stock, voting together as a class, amend or repeal any provision of,
or add any provision to, the Corporation's Articles of Incorporation or Bylaws,
as amended, or file any certificate of designations, preferences and rights of
any series of preferred stock, if such action would materially and adversely
affect the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series A Preferred Stock. Nothing herein shall
be deemed to restrict the Board of Directors from amending the terms hereof
prior to the issuance of any shares of the Series A Preferred Stock.
(d) Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows:
(1) Right to Convert.
(A) Each share of the Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any
time after the date of issuance of such share at the office
of the Corporation or any transfer agent for the Series A
Preferred Stock, into fully paid and nonassessable shares of
Common Stock at the initial conversion rate of Sixteen and
Six Hundred and Sixty-Seven One Thousandths (16.667) fully
paid and nonassessable shares of Common Stock for each share
of Series A Preferred Stock, subject, however, to the
adjustments described below. The number of shares of Common
Stock into which each share of Series A Preferred Stock may
be converted is hereinafter referred to as the "Conversion
Rate."
(B) No fractional shares of Common Stock shall be
issued upon conversion of Series A Preferred Stock and if any
shares of Series A Preferred Stock surrendered by a holder,
in the aggregate, for conversion would otherwise result in a
fractional share of Common Stock, then such fractional share
shall be redeemed at the then effective Conversion Price (as
hereinafter defined) per share, payable as promptly as
possible when funds are legally available therefor.
(C) The right of conversion with respect to shares
of Series A Preferred Stock called for redemption shall
terminate at the close of business on the fifth business day
preceding the date fixed for redemption, or, if not a
business day, the next succeeding business day.
(2) Mechanics of Conversion. Before any holder of shares of
Series A Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed and accompanied by properly
executed stock powers, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock, shall give written
notice to the Corporation at such office of the name or names in which
such holder wishes the certificate or certificates for shares of
Common Stock to be issued if different from the name in which the
Series A Preferred Stock being surrendered is registered, as shown on
the books and records of the Corporation, and shall pay any applicable
transfer tax. Said conversion notice shall also contain such
representations as may reasonably be required by the Corporation to
the effect that the shares to be received upon conversion are not
being acquired and will not be transferred in any way which might
violate the then applicable securities laws. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to
such holder of shares of the Series A Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of
such date. All certificates issued upon the exercise of the conversion
shall contain a legend governing restrictions upon such shares imposed
by applicable securities laws.
(3) Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date effects a subdivision or combination of
its outstanding Common Stock into a greater or lesser number of shares
without a proportionate and corresponding subdivision or combination
of its outstanding Series A Preferred Stock, then and in each such
event the Conversion Rate shall be increased or decreased
proportionately.
(4) Adjustments for Dividends, Distributions and Common
Stock. In the event the Corporation at any time or from
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time to time after the Original Issue Date shall make or issue, or fix
a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights
convertible into or entitling the holder thereof to receive additional
shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder of
such Common Stock Equivalents for the additional shares of Common
Stock, without a proportionate and corresponding dividend or other
distribution to holders of Series A Preferred Stock, then and in each
such event the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained
therein for subsequent adjustment of such number) of Common Stock
issuable in payment of such dividend or distribution or upon
conversion or exercise of such Common Stock Equivalents shall be
deemed, for purposes of this Subsection (d)(4), to be issued and
outstanding as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such
record date. In each such event, the Conversion Rate shall be
increased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such
record date, by multiplying the Conversion Rate by a fraction,
(A) the numerator of which shall be the total number
of shares of Common Stock (x) issued and outstanding or
deemed pursuant to the terms hereof to be issued and
outstanding (not including any shares described in clause (y)
immediately below), immediately prior to the time of such
issuance or the close of business on such record date, plus
(y) the number of shares of Common Stock issuable in payment
of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents; and
(B) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or
deemed to be issued and outstanding immediately prior to the
time of such issuance or the close of business on such record
date; and
provided, however, (i) if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Rate shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Rate shall be adjusted pursuant to this
Subsection (d)(4) as of the time of actual payment of such dividends
or distributions; or (ii) if such Common Stock Equivalents provide,
with the passage of time or otherwise, for any decrease or increase in
the number of shares of Common Stock issuable upon conversion or
exercise thereof (or upon the occurrence of a record date with respect
thereto), the Conversion Rate computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such
decrease or increase becoming effective, be recomputed to reflect such
decrease or increase insofar as it affects the rights of conversion or
exercise of the Common Stock Equivalents then outstanding; or (iii)
upon the expiration of any rights of conversion or exercise under any
unexercised Common Stock Equivalents, the Conversion Rate computed
upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if the only
additional shares of Common Stock issued were the shares of such
stock, if any, actually issued upon the conversion or exercise of such
Common Stock Equivalents; or (iv) in the event of issuance of Common
Stock Equivalents which expire by their terms not more than sixty (60)
days after the date of issuance thereof, no adjustments of the
Conversion Rate shall be made until the expiration or exercise of all
such Common Stock Equivalents, whereupon such adjustment shall be made
in the manner provided in this Subsection (d)(4).
(5) Adjustment of Conversion Rate for Diluting Issues. The
amount obtained by dividing One Hundred Dollars ($100.00) by the
Conversion Rate shall be called the "Conversion Price." Except as
otherwise provided in this Subsection (d)(5), in the event the
Corporation after the Original Issue Date sells or issues any Common
Stock or Common Stock Equivalents at a per share consideration (as
defined below) less than the Conversion Price then in effect for the
Series A Preferred Stock, then the Conversion Rate and the Conversion
Price then in effect shall be adjusted as provided in paragraphs (A),
(B) and (C) hereof. With respect to the sale or issuance of Common
Stock Equivalents which are convertible into or exchangeable for
Common Stock without further consideration, the per share
consideration shall be determined by dividing the maximum number of
shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for subsequent adjustment of such
number) of Common Stock issuable with respect to such Common Stock
Equivalents into the aggregate consideration received by the
Corporation upon the sale or issuance of such Common Stock
Equivalents. With respect to the issuance of other Common Stock
Equivalents, the per share consideration shall be determined by
dividing the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein
for subsequent adjustment of such number) of Common Stock issuable
with respect to such Common Stock Equivalents into the aggregate
consideration received by the Corporation upon the sale or issuance of
such Common Stock Equivalents plus the total consideration receivable
by the Corporation upon the conversion or exercise of such Common
Stock Equivalents. The issuance of Common Stock or Common Stock
Equivalents for no consideration or for less than $1.00 per share
shall be deemed to be an issuance at a per share consideration of
$1.00. In connection with the sale or issuance of Common Stock and/or
Common Stock Equivalents for noncash consideration, the amount of
consideration shall be determined by the Board of Directors. For the
purposes of the foregoing, the per share consideration with respect to
the sale or issuance of Common Stock or Common Stock Equivalents shall
be the price per share received by the Corporation,
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prior to the payment of any expenses, commissions, discounts and other
applicable costs.
As used in this Subsection (d)(5), "Additional Shares of
Common Stock" shall mean either shares of Common Stock issued
subsequent to the Original Issue Date or, with respect to the issuance
of Common Stock Equivalents subsequent to the Original Issue Date, the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
subsequent adjustment of such number) of Common Stock issuable in
exchange for, upon conversion of, or upon exercise of such Common
Stock Equivalents.
(A) Upon each issuance of Common Stock for a per
share consideration less than the Conversion Price in effect
on the date of such issuance, the Conversion Rate of the
Series A Preferred Stock in effect on such date will be
adjusted by multiplying it by a fraction:
(x) the numerator of which shall be the number
of shares of Common Stock outstanding
immediately prior to the issuance of such
Additional Shares of Common Stock, plus the
number of such Additional Shares of Common
Stock so issued, and
(y) the denominator of which shall be the
number of shares of Common Stock
outstanding immediately prior to the
issuance of such Additional Shares of
Common Stock plus the number of shares of
Common Stock which the aggregate net
consideration received by the Corporation
for the total number of such Additional
Shares of Common Stock so issued would
purchase at the Conversion Price then in
effect.
(B) Upon each issuance of Common Stock Equivalents,
exchangeable without further consideration into Common Stock,
for a per share consideration less than the Conversion Price
in effect on the date of such issuance, the Conversion Rate
of the Series A Preferred Stock in effect on such date will
be adjusted as in paragraph (A) of this Subsection (d)(5) on
the basis that the related Additional Shares of Common Stock
are to be treated as having been issued on the date of
issuance of the Common Stock Equivalents, and the aggregate
consideration received by the Corporation for such Common
Stock Equivalents shall be deemed to have been received for
such Additional Shares of Common Stock.
(C) Upon each issuance of Common Stock Equivalents
other than those described in paragraph (B) of this
Subsection (d)(5), for a per share consideration less than
the Conversion Price in effect on the date of such issuance,
the Conversion Rate of the Series A Preferred Stock in effect
on such date will be adjusted as in paragraph (A) of this
Subsection (d)(5) on the basis that the related Additional
Shares of Common Stock are to be treated as having been
issued on the date of issuance of such Common Stock
Equivalents, and the aggregate consideration received and
receivable by the Corporation on conversion or exercise of
such Common Stock Equivalents shall be deemed to have been
received for such Additional Shares of Common Stock.
(D) Once any Additional Shares of Common Stock have
been treated as having been issued for the purpose of this
Subsection (d)(5), they shall be treated as issued and
outstanding shares of Common Stock whenever any subsequent
calculations must be made pursuant hereto. On the expiration
of any options, warrants or rights to purchase Additional
Shares of Common Stock, the termination of any rights to
convert or exchange for Additional Shares of Common Stock,
the expiration of any options or rights related to such
convertible or exchangeable securities on account of which an
adjustment in the Conversion Rate has been made previously
pursuant to this Subsection (d)(5) or the expiration or
termination of any Common Stock Equivalents, then the
Conversion Rate shall forthwith be readjusted to such
Conversion Rate as would have obtained had the adjustment
made upon the issuance of such options, warrants, rights,
securities or options or rights related to such securities or
Common Stock Equivalents been made upon the basis of the
issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants
or rights, upon the conversion or exchange of such securities
or upon the exercise of the options or rights related to such
securities or upon the exercise of the Common Stock
Equivalents. Any readjustment of the Conversion Rate shall
also cause an appropriate readjustment of the Conversion
Price, calculated by dividing the readjusted Conversion Rate
into the initial Conversion Price.
(E) The foregoing notwithstanding, no adjustment of
the Conversion Rate or Conversion Price shall be made as a
result of the issuance of the following, but such shares of
Common Stock shall be deemed to be outstanding upon issuance
for all other purposes hereof:
(x) shares of Common Stock relating to (i)
outstanding options to purchase 229,125 shares of Common
Stock issuable to officers and employees of the Corporation
pursuant to employee stock option plans or to members of the
Board of Directors, and (ii) 2,742,230 shares of Common Stock
issuable upon conversion of the
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Corporation's 8% Convertible Subordinated Notes Due May 15,
1997 (all such numbers to be appropriately adjusted in the
event of any recapitalization, reorganization, stock
dividend, stock split or similar event affecting the capital
stock of the Corporation);
(y) any shares of Common Stock pursuant to
which the Conversion Rate and Conversion Price have been
adjusted under Subsection (3) or (4) of this Section (d); or
(z) any shares of Common Stock issued pursuant
to the exchange, conversion or exercise of any Common Stock
Equivalents which have previously been incorporated into
computations hereunder on the date when such Common Stock
Equivalents were issued.
(6) Reorganization, Merger, Consolidation or Sale of Assets.
If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Section (d)) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any
other person which is effected so that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common
Stock, then, as a part of such reorganization, merger, consolidation
or sale, provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series A Preferred Stock the number of shares of
stock, securities or assets of the Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to
which a holder of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (d) with respect to the
rights of the holders of the Series A Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the
provisions of this Section (d) (including adjustment of the Conversion
Rate and Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series A Preferred Stock) shall be
applicable after that event as nearly equivalent as may be
practicable.
(7) No Adjustment. No adjustment to the Conversion Rate and
Conversion Price shall be made if such adjustment would result in a
change in the Conversion Price of less than one percent (l%). Any
adjustment of less than one (1%) percent which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of one percent (1%) or more in the Conversion Price.
(8) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate pursuant to
this Section (d), the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Rate at that time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which
at that time would be received upon the conversion of Series A
Preferred Stock.
(9) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities
other than Series A Preferred Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, any Common Stock Equivalents or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Series A Preferred Stock at
least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and
character of such dividend, distribution or rights.
(10) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Series A Preferred
Stock such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares
of the Series A Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series
A Preferred Stock, the Corporation shall take such corporate action as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(e) Redemption. The Series A Preferred Stock will not be redeemable,
either in whole or in part, prior to March 15, 1991 unless the closing price
per share of the Common Stock has been equal to or in excess of 150% of the
then effective Conversion Price
5
for at least twenty (20) out of thirty (30) consecutive trading days ending on
the fifth day preceding the date notice of redemption is given. Subject to such
restriction, the Series A Preferred Stock may be redeemed for cash at the
option of the Corporation, either in whole or in part, at any time or from time
to time, if redeemed from the Original Issue Date and before March 15, 1988, at
One Hundred and Ten Dollars and Fifty Cents ($110.50) per share, and if
redeemed during the twelve (12) month period beginning on March 15 of the year
specified below, at the following redemption prices:
- ------------------------------------------------------------------------------------------------------------------
1988...........................$110.50 1993...............................................$104.66
1989...........................$109.33 1994...............................................$103.50
1990...........................$108.17 1995...............................................$102.33
1991...........................$107.00 1996...............................................$101.16
1992...........................$105.83 1997 and thereafter................................$100.00
- ------------------------------------------------------------------------------------------------------------------
plus, in each case, an amount equal to the amount of all dividends accrued
but unpaid (whether or not declared) to the date fixed for redemption.
Unless full cumulative dividends on all outstanding shares of the
Series A Preferred Stock shall have been or contemporaneously are declared and
paid or set apart for payment for all past dividend periods, the Series A
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series A Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series A Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.
If less than all of the outstanding shares of Series A Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected by the
Corporation from outstanding shares not previously called for redemption, pro
rata, by lot, or in such other equitable manner as the Board of Directors may
determine.
Notice of any proposed redemption of Series A Preferred Stock shall be
given by the Corporation by mailing a copy of such notice at least thirty (30)
days but not more than sixty (60) days prior to the date fixed for such
redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series A Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series A
Preferred Stock redeemed pursuant to this Section (e) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.
(f) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series A Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed
to each holder of record at his or her address appearing on the books of the
Corporation.
6
STATEMENT OF
RELATIVE RIGHTS AND PREFERENCES OF
THE SERIES B PREFERRED STOCK OF
ATLANTIC AMERICAN CORPORATION
Pursuant to authority granted in the Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors of the
Corporation has been authorized to issue in series 4,000,000 shares of the
Corporation's Preferred Stock of the par value of $1.00 per share, and to
designate by resolution the relative rights and preferences of each series so
established. By resolution of the Board of Directors, the Corporation has
established a series of such Preferred Stock consisting of 134,000 shares and
has designated said series as the "Series B Preferred Stock."
For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;
"Board of Directors" shall mean the board of directors of the
Corporation;
"Series B Preferred Stock" shall mean the 134,000 shares of Series B
Preferred Stock of the par value of $1.00 per share of the Corporation;
"Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and
"Original Issue Date" shall mean the date on which the first share of
Series B Preferred Stock was deemed originally issued.
The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series B Preferred
Stock are as follows:
(a) Series B Stated Value. Each share of the Series B Preferred Stock
shall have a stated value of $100.00 (the "Series B Stated Value").
(b) Dividend Rights. From and after the issuance of the Series B
Preferred Stock, the holders of outstanding shares of the Series B Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends on each share of Series B Preferred Stock at the annual rate of nine
percent (9%) of the Series B Stated Value, payable in arrears quarterly on
March 15, June 15, September 15 and December 15 of each year, said dividends to
commence accrual on January 1, 1996. Such dividends shall be prior and in
preference to any declaration of payment of any dividend on the Common Stock
and any other class or series of capital stock ranking junior to the Series B
Preferred Stock in respect of dividends or distributions upon liquidation. Such
dividends shall be cumulative and shall accrue whether or not declared by the
Board of Directors. No cash dividends shall be paid on the Common Stock or any
other junior stock (except stock dividends of Common Stock or any other junior
stock), until all dividends accrued on any outstanding shares of the Series B
Preferred Stock and all other series of preferred stock ranking on a parity
with the Series B Preferred Stock, whether or not declared, have been set apart
and fully paid. No accumulation of dividends on the Series B Preferred Stock
shall bear interest.
In the event cash dividends are not paid in full on all outstanding
shares of the Series B Preferred Stock and any other series of preferred stock
ranking on a parity with the Series B Preferred Stock, shares of the Series B
Preferred Stock and shares of such other series of preferred stock shall be
entitled to proportionate amounts of the funds available for their respective
dividend requirements based upon the payments required to be made on the Series
B Preferred Stock and each such other series of preferred stock then
outstanding.
No dividends shall be paid on the Series B Preferred Stock, although
such dividends shall still accrue, if the payment of such dividends would cause
the Corporation to violate or constitute an occurrence of default under any
provision of, or result in acceleration of any obligation under any note, loan,
agreement, instrument or other arrangement to which the Corporation is bound.
(c) Liquidation Rights. In the event of liquidation of the
Corporation, whether voluntary or involuntary, the holders of shares of the
Series B Preferred Stock will be entitled to receive, from the assets of the
Corporation available for distribution to stockholders, an amount equal to One
Hundred Dollars ($100.00) per share, plus all accrued but unpaid dividends on
such shares, whether or not declared, before any distribution shall be made or
set apart for holders of Common Stock or any other class or series of capital
stock ranking junior to the Series B Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series B Preferred Stock shall
be entitled to no further participation in any remaining assets of the
Corporation. If, upon any liquidation of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares of
the Series B Preferred Stock and any other class or series of preferred stock
ranking on a parity with the Series B Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among such holders ratably in accordance
with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations, nor the sale or
lease of all or
7
substantially all of the assets of the Corporation, shall constitute a
liquidation as used in this Section (c).
(d) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series B Preferred Stock shall have no voting rights.
In addition to any other rights provided by law, so long as any shares
of the Series B Preferred Stock shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than a majority of such outstanding shares of Series B
Preferred Stock, voting together as a class, amend or repeal any provision of,
or add any provision to, the Corporation's Articles of Incorporation or Bylaws,
as amended, or file any certificate of designations, preferences and rights of
any series of preferred stock, if such action would materially and adversely
affect the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series B Preferred Stock. Nothing herein shall
be deemed to restrict the Board of Directors from amending the terms hereof
prior to the issuance of any shares of the Series B Preferred Stock.
(e) Conversion. Except as set forth in the following paragraph, shares
of the Series B Preferred Stock shall not be convertible into shares of Common
Stock.
In the event that (i) J. Mack Robinson, his spouse, lineal
descendants, any trust created and existing solely for the benefit of any such
person or persons, or any corporation, partnership, limited liability company
or any other entity that controls, is controlled by or under common control
with, or is in any other way an affiliate of any of the foregoing
(collectively, the "Affiliates"), "beneficially own" (as determined in
accordance with the provisions of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) less than 50.1% of the Common Stock or (ii) the
Corporation or the Affiliates enter into a definitive agreement providing for
the sale or transfer of all of the outstanding shares of Common Stock to a
third party that does not control, is not controlled by or is not under common
control with, or is not in any other way an affiliate of, any of the
Affiliates, or the merger of the Corporation with another entity such that
after giving effect to the merger, the Affiliates will no longer "beneficially
own" at least 50.1% of the voting equity of the surviving corporation in the
merger, then in each such event of the holders of the Series B Preferred Stock
shall have conversion rights as follows:
(1) Right to Convert.
(A) Each share of the Series B Preferred Stock shall
be convertible, at the option of the holder thereof, into
fully paid and nonassessable shares of Common Stock at the
initial conversion rate of twenty-five and six one-hundredths
(25.06) fully paid and nonassessable shares of Common Stock
for each share of Series B Preferred Stock, subject, however,
to the adjustments described below. The number of shares of
Common Stock into which each share of Series B Preferred
Stock may be converted is hereinafter referred to as the
"Conversion Rate."
(B) No fractional shares of Common Stock shall be
issued upon conversion of Series B Preferred Stock and if any
shares of Series B Preferred Stock surrendered by a holder,
in the aggregate, for conversion would otherwise result in a
fractional share of Common Stock, then such fractional share
shall be redeemed at the then effective Conversion Price (as
hereinafter defined) per share, payable as promptly as
possible when funds are legally available therefor.
(2) Mechanics of Conversion. Before any holder of shares of
Series B Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed and accompanied by properly
executed stock powers, at the office of the Corporation or of any
transfer agent for the Series B Preferred Stock, shall give written
notice to the Corporation at such office of the name or names in which
such holder wishes the certificate or certificates for shares of
Common Stock to be issued if different from the name in which the
Series B Preferred Stock being surrendered is registered, as shown on
the books and records of the Corporation, and shall pay any applicable
transfer tax. Said conversion notice shall also contain such
representations as may reasonably be required by the Corporation to
the effect that the shares to be received upon conversion are not
being acquired and will not be transferred in any way which might
violate the then applicable securities laws. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to
such holder of shares of the Series B Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such
surrender of the shares of Series B Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of
such date. All certificates issued upon the exercise of the conversion
shall contain a legend governing restrictions upon such shares imposed
by applicable securities laws.
(3) Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date effects a subdivision or combination of
its outstanding Common Stock into a greater or lesser number of shares
without a proportionate and corresponding subdivision or combination
of its outstanding
8
Series B Preferred Stock, then and in each such event the Conversion
Rate shall be increased or decreased proportionately.
(4) Adjustments for Dividends, Distributions and Common
Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares
of Common Stock or other securities or rights convertible into or
entitling the holder thereof to receive additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder of such Common Stock
Equivalents for the additional shares of Common Stock, without a
proportionate and corresponding dividend or other distribution to
holders of Series B Preferred Stock, then and in each such event the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
subsequent adjustment of such number) of Common Stock issuable in
payment of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents shall be deemed, for
purposes of this Subsection (e)(4), to be issued and outstanding as of
the time of such issuance or, in the event such a record date shall
have been fixed, as of the close of business on such record date. In
each such event, the Conversion Rate shall be increased as of the time
of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying
the Conversion Rate by a fraction,
(A) the numerator of which shall be the total number
of shares of Common Stock (x) issued and outstanding or
deemed pursuant to the terms hereof to be issued and
outstanding (not including any shares described in clause (y)
immediately below), immediately prior to the time of such
issuance or the close of business on such record date, plus
(y) the number of shares of Common Stock issuable in payment
of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents; and
(B) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or
deemed to be issued and outstanding immediately prior to the
time of such issuance or the close of business on such record
date; and
provided, however, (i) if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Rate shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Rate shall be adjusted pursuant to this
Subsection (e)(4) as of the time of actual payment of such dividends
or distributions; or (ii) if such Common Stock Equivalents provide,
with the passage of time or otherwise, for any decrease or increase in
the number of shares of Common Stock issuable upon conversion or
exercise thereof (or upon the occurrence of a record date with respect
thereto), the Conversion Rate computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such
decrease or increase becoming effective, be recomputed to reflect such
decrease or increase insofar as it affects the rights of conversion or
exercise of the Common Stock Equivalents then outstanding; or (iii)
upon the expiration of any rights of conversion or exercise under any
unexercised Common Stock Equivalents, the Conversion Rate computed
upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if the only
additional shares of Common Stock issued were the shares of such
stock, if any, actually issued upon the conversion or exercise of such
Common Stock Equivalents; or (iv) in the event of issuance of Common
Stock Equivalents which expire by their terms not more than sixty (60)
days after the date of issuance thereof, no adjustments of the
Conversion Rate shall be made until the expiration or exercise of all
such Common Stock Equivalents, whereupon such adjustment shall be made
in the manner provided in this Subsection (e)(4).
(5) Adjustment of Conversion Rate for Diluting Issues. The
amount obtained by dividing One Hundred Dollars ($100.00) by the
Conversion Rate shall be called the "Conversion Price." Except as
otherwise provided in this Subsection (e)(5), in the event the
Corporation after the Original Issue Date sells or issues any Common
Stock or Common Stock Equivalents at a per share consideration (as
defined below) less than the Conversion Price then in effect for the
Series B Preferred Stock, then the Conversion Rate and the Conversion
Price then in effect shall be adjusted as provided in paragraphs (A),
(B) and (C) hereof. With respect to the sale or issuance of Common
Stock Equivalents which are convertible into or exchangeable for
Common Stock without further consideration, the per share
consideration shall be determined by dividing the maximum number of
shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for subsequent adjustment of such
number) of Common Stock issuable with respect to such Common Stock
Equivalents into the aggregate consideration received by the
Corporation upon the sale or issuance of such Common Stock
Equivalents. With respect to the issuance of other Common Stock
Equivalents, the per share consideration shall be determined by
dividing the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein
for subsequent adjustment of such number) of Common Stock issuable
with respect to such Common Stock Equivalents into the aggregate
consideration received by the Corporation upon the sale or issuance of
such Common Stock Equivalents plus the total consideration receivable
by the Corporation upon the conversion or exercise of such Common
Stock Equivalents. The issuance of Common Stock or Common Stock
Equivalents for no consideration or for less than $1.00 per share
shall be deemed to be an issuance at a per share consideration of
$1.00. In connection with the sale or
9
issuance of Common Stock and/or Common Stock Equivalents for noncash
consideration, the amount of consideration shall be determined by the
Board of Directors. For the purposes of the foregoing, the per share
consideration with respect to the sale or issuance of Common Stock or
Common Stock Equivalents shall be the price per share received by the
Corporation, prior to the payment of any expenses, commissions,
discounts and other applicable costs.
As used in this Subsection (e)(5), "Additional Shares of
Common Stock" shall mean either shares of Common Stock issued
subsequent to the Original Issue Date or, with respect to the issuance
of Common Stock Equivalents subsequent to the Original Issue Date, the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
subsequent adjustment of such number) of Common Stock issuable in
exchange for, upon conversion of, or upon exercise of such Common
Stock Equivalents.
(A) Upon each issuance of Common Stock for a per
share consideration less than the Conversion Price in effect
on the date of such issuance, the Conversion Rate of the
Series B Preferred Stock in effect on such date will be
adjusted by multiplying it by a fraction:
(x) the numerator of which shall be the number
of shares of Common Stock outstanding
immediately prior to the issuance of such
Additional Shares of Common Stock, plus the
number of such Additional Shares of Common
Stock so issued, and
(y) the denominator of which shall be the
number of shares of Common Stock
outstanding immediately prior to the
issuance of such Additional Shares of
Common Stock plus the number of shares of
Common Stock which the aggregate net
consideration received by the Corporation
for the total number of such Additional
Shares of Common Stock so issued would
purchase at the Conversion Price then in
effect.
(B) Upon each issuance of Common Stock Equivalents,
exchangeable without further consideration into Common Stock,
for a per share consideration less than the Conversion Price
in effect on the date of such issuance, the Conversion Rate
of the Series B Preferred Stock in effect on such date will
be adjusted as in paragraph (A) of this Subsection (e)(5) on
the basis that the related Additional Shares of Common Stock
are to be treated as having been issued on the date of
issuance of the Common Stock Equivalents, and the aggregate
consideration received by the Corporation for such Common
Stock Equivalents shall be deemed to have been received for
such Additional Shares of Common Stock.
(C) Upon each issuance of Common Stock Equivalents
other than those described in paragraph (B) of this
Subsection (e)(5), for a per share consideration less than
the Conversion Price in effect on the date of such issuance,
the Conversion Rate of the Series B Preferred Stock in effect
on such date will be adjusted as in paragraph (A) of this
Subsection (e)(5) on the basis that the related Additional
Shares of Common Stock are to be treated as having been
issued on the date of issuance of such Common Stock
Equivalents, and the aggregate consideration received and
receivable by the Corporation on conversion or exercise of
such Common Stock Equivalents shall be deemed to have been
received for such Additional Shares of Common Stock.
(D) Once any Additional Shares of Common Stock have
been treated as having been issued for the purpose of this
Subsection (e)(5), they shall be treated as issued and
outstanding shares of Common Stock whenever any subsequent
calculations must be made pursuant hereto. On the expiration
of any options, warrants or rights to purchase Additional
Shares of Common Stock, the termination of any rights to
convert or exchange for Additional Shares of Common Stock,
the expiration of any options or rights related to such
convertible or exchangeable securities on account of which an
adjustment in the Conversion Rate has been made previously
pursuant to this Subsection (e)(5) or the expiration or
termination of any Common Stock Equivalents, then the
Conversion Rate shall forthwith be readjusted to such
Conversion Rate as would have been obtained had the
adjustment made upon the issuance of such options, warrants,
rights, securities or options or rights related to such
securities or Common Stock Equivalents been made upon the
basis of the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options,
warrants or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights
related to such securities or upon the exercise of the Common
Stock Equivalents. Any readjustment of the Conversion Rate
shall also cause an appropriate readjustment of the
Conversion Price, calculated by dividing the readjusted
Conversion Rate into the initial Conversion Price.
(E) The foregoing notwithstanding, no adjustment of
the Conversion Rate or Conversion Price shall be made as a
result of the issuance of the following, but such shares of
Common Stock shall be deemed to be outstanding upon issuance
for all other purposes hereof:
(w) shares of Common Stock (i) issued
or issuable to employee benefit plans (including,
but
10
not limited to, stock option plans, tax-qualified
employee retirement plans and current cash or stock
bonus awards) of the Corporation, or to employees or
beneficiaries pursuant to said plans whether
currently in existence or hereafter adopted, and
(ii) relating to 514,351 shares of Common Stock
issuable upon conversion of the Corporation's 8%
Convertible Subordinated Notes Due May 15, 1997
(such number to be appropriately adjusted in the
event of any recapitalization, reorganization, stock
dividend, stock split or similar event affecting the
capital stock of the Corporation);
(x) any shares of Common Stock
pursuant to which the Conversion Rate and Conversion
Price have been adjusted under Subsection (3) or (4)
of this Section (e);
(y) any shares of Common Stock issued
pursuant to the exchange, conversion or exercise of
any Common Stock Equivalents which have previously
been incorporated into computations hereunder on the
date when such Common Stock Equivalents were issued;
or
(z) Common Stock issued or issuable
with respect to which the holders of all the
outstanding Series B Preferred Stock have waived in
writing the right to any adjustment hereunder. In
such event, such waiver shall be binding on all
subsequent holders of Series B Preferred Stock.
(6) Reorganization, Merger, Consolidation or Sale of Assets.
If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Section (e)) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any
other person which is effected so that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common
Stock, then, as a part of such reorganization, merger, consolidation
or sale, provision shall be made so that the holders of the Series B
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series B Preferred Stock the number of shares of
stock, securities or assets of the Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to
which a holder of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the
rights of the holders of the Series B Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the
provisions of this Section (e) (including adjustment of the Conversion
Rate and Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series B Preferred Stock) shall be
applicable after that event as nearly equivalent as may be
practicable.
(7) No Adjustment. No adjustment to the Conversion Rate and
Conversion Price shall be made if such adjustment would result in a
change in the Conversion Price of less than one percent (l%). Any
adjustment of less than one (1%) percent which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of one percent (1%) or more in the Conversion Price.
(8) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate pursuant to
this Section (e), the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each
holder of Series B Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series B Preferred
Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Rate at that time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which
at that time would be received upon the conversion of Series B
Preferred Stock.
(9) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities
other than Series B Preferred Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, any Common Stock Equivalents or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Series B Preferred Stock at
least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and
character of such dividend, distribution or rights.
(10) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Series B Preferred
Stock such number of its shares of Common Stock as shall from time to
time be sufficient to effect the
11
conversion of all outstanding shares of the Series B Preferred Stock;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series B Preferred Stock, the
Corporation shall take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(f) Redemption by Corporation. The Series B Preferred Stock may be
redeemed for cash solely at the option of the Corporation, either in whole or
in part, at any time or from time to time, at One Hundred Dollars ($100.00) per
share, plus an amount equal to the amount of all dividends accrued but unpaid
(whether or not declared) to the date fixed for redemption.
Unless full cumulative dividends on all outstanding shares of the
Series B Preferred Stock shall have been or contemporaneously are declared and
paid or set apart for payment for all past dividend periods, the Series B
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series B Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series B Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.
If less than all of the outstanding shares of Series B Preferred Stock
are to be redeemed, the shares to be redeemed shall be selected by the
Corporation from outstanding shares not previously called for redemption, pro
rata, by lot, or in such other equitable manner as the Board of Directors may
determine.
Notice of any proposed redemption of Series B Preferred Stock shall be
given by the Corporation by mailing a copy of such notice at least thirty (30)
days but not more than sixty (60) days prior to the date fixed for such
redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series B Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series B
Preferred Stock redeemed pursuant to this Section (f) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.
(g) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series B Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed
to each holder of record at his or her address appearing on the books of the
Corporation.
12
RELATIVE RIGHTS AND PREFERENCES OF
THE SERIES C PREFERRED STOCK OF
ATLANTIC AMERICAN CORPORATION
Pursuant to authority granted in the Restated Articles of
Incorporation, as amended, of the Corporation, the Board of Directors of the
Corporation has been authorized to issue in series 4,000,000 shares of the
Corporation's Preferred Stock of the par value of $1.00 per share, and to
designate by resolution the relative rights and preferences of each series so
established. By resolution of the Board of Directors, the Corporation has
established a series of such Preferred Stock consisting of 100,000 shares and
has designated said series as the "Series C Preferred Stock."
For the purposes of this statement, "Corporation" shall mean Atlantic
American Corporation, a Georgia corporation;
"Board of Directors" shall mean the board of directors of the
Corporation;
"Series C Preferred Stock" shall mean the 100,000 shares of Series C
Preferred Stock of the par value of $1.00 per share of the Corporation;
"Common Stock" shall mean the common stock of the par value of $1.00
per share of the Corporation; and
"Original Issue Date" shall mean the date on which the first share of
Series C Preferred Stock was deemed originally issued.
The voting powers, preferences, and the relative, participating,
optional and other rights granted to and imposed upon the Series C Preferred
Stock are as follows:
(a) Series C Stated Value. Each share of the Series C Preferred Stock
shall have a stated value of $100.00 (the "Series C Stated Value").
(b) Dividend Rights. From and after the issuance of the Series C
Preferred Stock, the holders of outstanding shares of the Series C Preferred
Stock shall be entitled to receive, and shall be paid, when and as declared by
the Board of Directors, out of funds legally available therefor, cumulative
dividends on each share of Series C Preferred Stock at the annual rate of nine
percent (9%) of the Series C Stated Value, payable in arrears quarterly on
March 15, June 15, September 15 and December 15 of each year, said dividends to
commence on January 1, 2001. Such dividends shall be prior and in preference to
any declaration of payment of any dividend on the Common Stock and any other
class or series of capital stock ranking junior to the Series C Preferred Stock
in respect of dividends or distributions upon liquidation. Such dividends shall
be cumulative and shall accrue whether or not declared by the Board of
Directors. No cash dividends shall be paid on the Common Stock or any other
junior stock (except stock dividends of Common Stock or any other junior
stock), until all dividends accrued on any outstanding shares of the Series C
Preferred Stock and all other series of preferred stock ranking on a parity
with the Series C Preferred Stock, whether or not declared, have been set apart
and fully paid. No unpaid dividends on the Series C Preferred Stock shall bear
interest.
In the event cash dividends are not paid in full on all
outstanding shares of the Series C Preferred Stock and any other series of
preferred stock ranking on a parity with the Series C Preferred Stock, shares
of the Series C Preferred Stock and shares of such other series of preferred
stock shall be entitled to proportionate amounts of the funds available for
their respective dividend requirements based upon the payments required to be
made on the Series C Preferred Stock and each such other series of preferred
stock then outstanding.
No dividends shall be paid on the Series C Preferred Stock,
although such dividends shall still accrue, if the payment of such dividends
would cause the Corporation to violate or constitute an occurrence of default
under any provision of, or result in acceleration of any obligation under any
note, loan, agreement, instrument or other arrangement to which the Corporation
is bound.
(c) Liquidation Rights. In the event of liquidation of the
Corporation, whether voluntary or involuntary, the holders of shares of the
Series C Preferred Stock will be entitled to receive, from the assets of the
Corporation available for distribution to stockholders, an amount equal to One
Hundred Dollars ($100.00) per share, plus all accrued but unpaid dividends on
such shares, whether or not declared, before any distribution shall be made or
set apart for holders of Common Stock or any other class or series of capital
stock ranking junior to the Series C Preferred Stock in respect of dividends or
distributions upon liquidation. The holders of Series C Preferred Stock shall
be entitled to no further participation in any remaining assets of the
Corporation. If, upon any liquidation of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares of
the Series C Preferred Stock and any other class or series of preferred stock
ranking on a parity with the Series C Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among such holders ratably in accordance
with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full. Neither
13
the consolidation or merger of the Corporation with or into any other
corporation or corporations, nor the sale or lease of all or substantially all
of the assets of the Corporation, shall constitute a liquidation as used in
this Section (c).
(d) Voting Rights. Except as required by law or indicated below, the
holders of shares of the Series C Preferred Stock shall have no voting rights.
In addition to any other rights provided by law, so long as
any shares of the Series C Preferred Stock shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of such outstanding shares
of Series C Preferred Stock, voting together as a class, amend or repeal any
provision of, or add any provision to, the Corporation's Articles of
Incorporation or Bylaws, as amended, or file any certificate of designations,
preferences and rights of any series of preferred stock, if such action would
materially and adversely affect the preferences, rights, privileges or powers
of, or the restrictions provided for the benefit of, the Series C Preferred
Stock. Nothing herein shall be deemed to restrict the Board of Directors from
amending the terms hereof prior to the issuance of any shares of the Series C
Preferred Stock.
(e) Conversion. Except as set forth in the following paragraph, shares
of the Series C Preferred Stock shall not be convertible into shares of Common
Stock.
In the event that (i) J. Mack Robinson, his spouse, lineal
descendants, any trust created and existing solely for the benefit of any such
person or persons, or any corporation, partnership, limited liability company
or any other entity that controls, is controlled by or under common control
with, or is in any other way an affiliate of any of the foregoing
(collectively, the "Affiliates"), "beneficially own" (as determined in
accordance with the provisions of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) less than 50.1% of the Common Stock or (ii) the
Corporation or the Affiliates enter into a definitive agreement providing for
the sale or transfer of all of the outstanding shares of Common Stock to a
third party that does not control, is not controlled by or is not under common
control with, or is not in any other way an affiliate of, any of the
Affiliates, or the merger of the Corporation with another entity such that
after giving effect to the merger, the Affiliates will no longer "beneficially
own" at least 50.1% of the voting equity of the surviving corporation in the
merger, then in each such event of the holders of the Series C Preferred Stock
shall have conversion rights as follows:
(1) Right to Convert.
(A) Each share of the Series C Preferred Stock shall
be convertible, at the option of the holder thereof, into
fully paid and nonassessable shares of Common Stock at the
initial conversion rate of twenty-five and six one-hundredths
(25.06) fully paid and nonassessable shares of Common Stock
for each share of Series C Preferred Stock, subject, however,
to the adjustments described below. The number of shares of
Common Stock into which each share of Series C Preferred
Stock may be converted is hereinafter referred to as the
"Conversion Rate."
(B) No fractional shares of Common Stock shall be
issued upon conversion of Series C Preferred Stock and if any
shares of Series C Preferred Stock surrendered by a holder,
in the aggregate, for conversion would otherwise result in a
fractional share of Common Stock, then such fractional share
shall be redeemed at the then effective Conversion Price (as
hereinafter defined) per share, payable as promptly as
possible when funds are legally available therefor.
(2) Mechanics of Conversion. Before any holder of shares of
Series C Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed and accompanied by properly
executed stock powers, at the office of the Corporation or of any
transfer agent for the Series C Preferred Stock, shall give written
notice to the Corporation at such office of the name or names in which
such holder wishes the certificate or certificates for shares of
Common Stock to be issued if different from the name in which the
Series C Preferred Stock being surrendered is registered, as shown on
the books and records of the Corporation, and shall pay any applicable
transfer tax. Said conversion notice shall also contain such
representations as may reasonably be required by the Corporation to
the effect that the shares to be received upon conversion are not
being acquired and will not be transferred in any way which might
violate the then applicable securities laws. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to
such holder of shares of the Series C Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such
surrender of the shares of Series C Preferred Stock to be converted,
and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of
such date. All certificates issued upon the exercise of the conversion
shall contain a legend governing restrictions upon such shares imposed
by applicable securities laws.
(3) Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date effects a subdivision or combination of
its outstanding Common Stock into a
14
greater or lesser number of shares without a proportionate and
corresponding subdivision or combination of its outstanding Series C
Preferred Stock, then and in each such event the Conversion Rate shall
be increased or decreased proportionately.
(4) Adjustments for Dividends, Distributions and Common
Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares
of Common Stock or other securities or rights convertible into or
entitling the holder thereof to receive additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder of such Common Stock
Equivalents for the additional shares of Common Stock, without a
proportionate and corresponding dividend or other distribution to
holders of Series C Preferred Stock, then and in each such event the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
subsequent adjustment of such number) of Common Stock issuable in
payment of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents shall be deemed, for
purposes of this Subsection (e)(4), to be issued and outstanding as of
the time of such issuance or, in the event such a record date shall
have been fixed, as of the close of business on such record date. In
each such event, the Conversion Rate shall be increased as of the time
of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying
the Conversion Rate by a fraction,
(A) the numerator of which shall be the total number
of shares of Common Stock (x) issued and outstanding or
deemed pursuant to the terms hereof to be issued and
outstanding (not including any shares described in clause (y)
immediately below), immediately prior to the time of such
issuance or the close of business on such record date, plus
(y) the number of shares of Common Stock issuable in payment
of such dividend or distribution or upon conversion or
exercise of such Common Stock Equivalents; and
(B) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or
deemed to be issued and outstanding immediately prior to the
time of such issuance or the close of business on such record
date; and
provided, however, (i) if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Rate shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Rate shall be adjusted pursuant to this
Subsection (e)(4) as of the time of actual payment of such dividends
or distributions; or (ii) if such Common Stock Equivalents provide,
with the passage of time or otherwise, for any decrease or increase in
the number of shares of Common Stock issuable upon conversion or
exercise thereof (or upon the occurrence of a record date with respect
thereto), the Conversion Rate computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon any such
decrease or increase becoming effective, be recomputed to reflect such
decrease or increase insofar as it affects the rights of conversion or
exercise of the Common Stock Equivalents then outstanding; or (iii)
upon the expiration of any rights of conversion or exercise under any
unexercised Common Stock Equivalents, the Conversion Rate computed
upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if the only
additional shares of Common Stock issued were the shares of such
stock, if any, actually issued upon the conversion or exercise of such
Common Stock Equivalents; or (iv) in the event of issuance of Common
Stock Equivalents which expire by their terms not more than sixty (60)
days after the date of issuance thereof, no adjustments of the
Conversion Rate shall be made until the expiration or exercise of all
such Common Stock Equivalents, whereupon such adjustment shall be made
in the manner provided in this Subsection (e)(4).
(5) Adjustment of Conversion Rate for Diluting Issues. The
amount obtained by dividing One Hundred Dollars ($100.00) by the
Conversion Rate shall be called the "Conversion Price." Except as
otherwise provided in this Subsection (e)(5), in the event the
Corporation after the Original Issue Date sells or issues any Common
Stock or Common Stock Equivalents at a per share consideration (as
defined below) less than the Conversion Price then in effect for the
Series C Preferred Stock, then the Conversion Rate and the Conversion
Price then in effect shall be adjusted as provided in paragraphs (A),
(B) and (C) hereof. With respect to the sale or issuance of Common
Stock Equivalents which are convertible into or exchangeable for
Common Stock without further consideration, the per share
consideration shall be determined by dividing the maximum number of
shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for subsequent adjustment of such
number) of Common Stock issuable with respect to such Common Stock
Equivalents into the aggregate consideration received by the
Corporation upon the sale or issuance of such Common Stock
Equivalents. With respect to the issuance of other Common Stock
Equivalents, the per share consideration shall be determined by
dividing the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein
for subsequent adjustment of such number) of Common Stock issuable
with respect to such Common Stock Equivalents into the aggregate
consideration received by the Corporation upon the sale or issuance of
such Common Stock Equivalents plus the total consideration receivable
by the Corporation upon the conversion or exercise of such Common
Stock Equivalents. The issuance of Common Stock or Common Stock
Equivalents for no consideration or for less
15
than $1.00 per share shall be deemed to be an issuance at a per share
consideration of $1.00. In connection with the sale or issuance of
Common Stock and/or Common Stock Equivalents for noncash
consideration, the amount of consideration shall be determined by the
Board of Directors. For the purposes of the foregoing, the per share
consideration with respect to the sale or issuance of Common Stock or
Common Stock Equivalents shall be the price per share received by the
Corporation, prior to the payment of any expenses, commissions,
discounts and other applicable costs.
As used in this Subsection (e)(5), "Additional Shares of
Common Stock" shall mean either shares of Common Stock issued
subsequent to the Original Issue Date or, with respect to the issuance
of Common Stock Equivalents subsequent to the Original Issue Date, the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
subsequent adjustment of such number) of Common Stock issuable in
exchange for, upon conversion of, or upon exercise of such Common
Stock Equivalents.
(A) Upon each issuance of Common Stock for a per
share consideration less than the Conversion Price in effect
on the date of such issuance, the Conversion Rate of the
Series C Preferred Stock in effect on such date will be
adjusted by multiplying it by a fraction:
(x) the numerator of which shall be the number
of shares of Common Stock outstanding
immediately prior to the issuance of such
Additional Shares of Common Stock, plus the
number of such Additional Shares of Common
Stock so issued, and
(y) the denominator of which shall be the
number of shares of Common Stock
outstanding immediately prior to the
issuance of such Additional Shares of
Common Stock plus the number of shares of
Common Stock which the aggregate net
consideration received by the Corporation
for the total number of such Additional
Shares of Common Stock so issued would
purchase at the Conversion Price then in
effect.
(B) Upon each issuance of Common Stock Equivalents,
exchangeable without further consideration into Common Stock,
for a per share consideration less than the Conversion Price
in effect on the date of such issuance, the Conversion Rate
of the Series C Preferred Stock in effect on such date will
be adjusted as in paragraph (A) of this Subsection (e)(5) on
the basis that the related Additional Shares of Common Stock
are to be treated as having been issued on the date of
issuance of the Common Stock Equivalents, and the aggregate
consideration received by the Corporation for such Common
Stock Equivalents shall be deemed to have been received for
such Additional Shares of Common Stock.
(C) Upon each issuance of Common Stock Equivalents
other than those described in paragraph (B) of this
Subsection (e)(5), for a per share consideration less than
the Conversion Price in effect on the date of such issuance,
the Conversion Rate of the Series C Preferred Stock in effect
on such date will be adjusted as in paragraph (A) of this
Subsection (e)(5) on the basis that the related Additional
Shares of Common Stock are to be treated as having been
issued on the date of issuance of such Common Stock
Equivalents, and the aggregate consideration received and
receivable by the Corporation on conversion or exercise of
such Common Stock Equivalents shall be deemed to have been
received for such Additional Shares of Common Stock.
(D) Once any Additional Shares of Common Stock have
been treated as having been issued for the purpose of this
Subsection (e)(5), they shall be treated as issued and
outstanding shares of Common Stock whenever any subsequent
calculations must be made pursuant hereto. On the expiration
of any options, warrants or rights to purchase Additional
Shares of Common Stock, the termination of any rights to
convert or exchange for Additional Shares of Common Stock,
the expiration of any options or rights related to such
convertible or exchangeable securities on account of which an
adjustment in the Conversion Rate has been made previously
pursuant to this Subsection (e)(5) or the expiration or
termination of any Common Stock Equivalents, then the
Conversion Rate shall forthwith be readjusted to such
Conversion Rate as would have been obtained had the
adjustment made upon the issuance of such options, warrants,
rights, securities or options or rights related to such
securities or Common Stock Equivalents been made upon the
basis of the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options,
warrants or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights
related to such securities or upon the exercise of the Common
Stock Equivalents. Any readjustment of the Conversion Rate
shall also cause an appropriate readjustment of the
Conversion Price, calculated by dividing the readjusted
Conversion Rate into the initial Conversion Price.
(E) The foregoing notwithstanding, no adjustment of
the Conversion Rate or Conversion Price shall be made as a
result of the issuance of the following, but such shares of
Common Stock shall be deemed to be outstanding upon issuance
for all other purposes hereof:
(w) shares of Common Stock (i) issued
or issuable to employee benefit
plans (including, but not
16
limited to, stock option plans, tax-qualified employee
retirement plans and current cash or stock bonus awards) of
the Corporation, or to employees or beneficiaries pursuant to
said plans whether currently in existence or hereafter
adopted, and (ii) issuable upon conversion of shares of the
Corporation's Series B Preferred Stock (such number to be
appropriately adjusted in the event of any recapitalization,
reorganization, stock dividend, stock split or similar event
affecting the capital stock of the Corporation);
(x) any shares of Common Stock pursuant to
which the Conversion Rate and Conversion Price have been
adjusted under Subsection (3) or (4) of this Section (e);
(y) any shares of Common Stock issued pursuant
to the exchange, conversion or exercise of any Common Stock
Equivalents which have previously been incorporated into
computations hereunder on the date when such Common Stock
Equivalents were issued; or
(z) Common Stock issued or issuable with
respect to which the holders of all the outstanding Series C
Preferred Stock have waived in writing the right to any
adjustment hereunder. In such event, such waiver shall be
binding on all subsequent holders of Series C Preferred
Stock.
(6) Reorganization, Merger, Consolidation or Sale of Assets.
If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided for
elsewhere in this Section (e)) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any
other person which is effected so that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common
Stock, then, as a part of such reorganization, merger, consolidation
or sale, provision shall be made so that the holders of the Series C
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series C Preferred Stock the number of shares of
stock, securities or assets of the Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to
which a holder of Common Stock deliverable upon conversion would have
been entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the
rights of the holders of the Series C Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the
provisions of this Section (e) (including adjustment of the Conversion
Rate and Conversion Price then in effect and the number of shares
purchasable upon conversion of the Series C Preferred Stock) shall be
applicable after that event as nearly equivalent as may be
practicable.
(7) No Adjustment. No adjustment to the Conversion Rate and
Conversion Price shall be made if such adjustment would result in a
change in the Conversion Price of less than one percent (l%). Any
adjustment of less than one (1%) percent which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an
adjustment of one percent (1%) or more in the Conversion Price.
(8) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate pursuant to
this Section (e), the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and cause independent public accountants selected by the
Corporation to verify such computation and prepare and furnish to each
holder of Series C Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series C Preferred
Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Rate at that time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which
at that time would be received upon the conversion of Series C
Preferred Stock.
(9) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities
other than Series C Preferred Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, any Common Stock Equivalents or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Series C Preferred Stock at
least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or rights, and the amount and
character of such dividend, distribution or rights.
(10) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Series C Preferred
Stock such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares
of the Series C Preferred Stock; and if at any time the number of
authorized but unissued
17
shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series C Preferred
Stock, the Corporation shall take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
(f) Redemption by Corporation. The Series C Preferred Stock may be
redeemed for cash solely at the option of the Corporation, either in whole or
in part, at any time or from time to time, at One Hundred Dollars ($100.00) per
share, plus an amount equal to the amount of all dividends accrued but unpaid
(whether or not declared) to the date fixed for redemption.
Unless full cumulative dividends on all outstanding shares of
the Series C Preferred Stock shall have been or contemporaneously are declared
and paid or set apart for payment for all past dividend periods, the Series C
Preferred Stock may not be redeemed unless all outstanding preferred stock is
redeemed, and neither the Corporation nor any subsidiary thereof may purchase
any preferred stock, including shares of the Series C Preferred Stock, and
neither the Corporation nor any subsidiary thereof may redeem or purchase any
class or series of capital stock ranking junior to the Series C Preferred Stock
in respect to dividends or distributions upon liquidation; provided, however,
that the Corporation may complete the purchase or redemption of shares of
preferred stock for which a purchase contract was entered into, or notice of
redemption of which was initially given, prior to such default in payment of
dividends.
If less than all of the outstanding shares of Series C
Preferred Stock are to be redeemed, the shares to be redeemed shall be selected
by the Corporation from outstanding shares not previously called for
redemption, pro rata, by lot, or in such other equitable manner as the Board of
Directors may determine.
Notice of any proposed redemption of Series C Preferred Stock
shall be given by the Corporation by mailing a copy of such notice at least
thirty (30) days but not more than sixty (60) days prior to the date fixed for
such redemption to each holder of record of the shares to be redeemed at such
holder's address appearing on the books of the Corporation. On and after the
date fixed for redemption dividends shall cease to accrue on the shares of
Series C Preferred Stock called for redemption, whether or not the certificates
for such shares are actually surrendered for redemption. All shares of Series C
Preferred Stock redeemed pursuant to this Section (f) shall be restored to the
status of authorized and unissued shares of preferred stock, undesignated as to
series.
(g) Notices. Any notice required by the provisions hereof to be given
to the holders of shares of Series C Preferred Stock shall be deemed given if
deposited in the United States Postal Service, postage prepaid, and addressed
to each holder of record at his or her address appearing on the books of the
Corporation.
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