CERTIFICATE OF INCORPORATION
OF
ASC DELAWARE, INC.
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
FIRST: The name of the corporation is ASC Delaware, Inc.
SECOND: The address of the corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (1) The total number of shares of stock which the corporation
shall have authority to issue is 115,500,000, divided into 100,000,000 shares of
Common Stock, par value of $.01 per share, 15,000,000 shares of Class A Common
Stock, par value of $.01 per share, and 500,000 shares of Serial Preferred
Stock, par value of $.01 per share.
(2) Class A Common Stock.
(a) The Class A Common Stock shall consist of 15,000,000 shares, each
having a par value of $.01.
(b) (i) The holder of any shares of Class A Common Stock shall
have the right to convert such shares, in whole or in part,
at any time and from time to time, into fully paid and
non-assessable shares of Common Stock on a share for share
basis; provided, however, that such conversion rate shall be
subject to adjustment as set forth in paragraph 2(b)(iv)
below.
(ii) Any share of Class A Common Stock shall, automatically
and without further action by the corporation or the holder
thereof, upon the transfer of such share to any person or
entity who is not Leslie B. Otten or an Affiliate of Leslie
B. Otten, be converted on a share for share basis into a
fully paid and non-assessable share of Common Stock;
provided, however, that such conversion rate shall be
subject to adjustment as set forth in paragraph 2(b)(iv)
below. "Affiliate" shall mean, for purposes of this
paragraph 2, (A) the spouse or children or grandchildren (in
each case, natural or adopted) of Leslie B. Otten or any
Affiliate, (B) any trust for the sole benefit of Leslie B.
Otten or any Affiliate, (C) any charitable trust the grantor
of which is Leslie B. Otten or any Affiliate, (D) any
corporation or other entity in which Leslie B. Otten or
Affiliates collectively own at least 80% of the equity
interest, or (E) the heirs, executors, administrators or
personal representatives of Leslie B. Otten or any Affiliate
upon the death of Leslie B. Otten or such Affiliate or upon
the incompetency or disability of Leslie B. Otten or such
Affiliate for purposes of the protection and management of
his or her assets.
(iii) In the event that at any time the number of shares of
Class A Common Stock outstanding is less than 20% of the
aggregate number of all shares of Class A Common Stock and
Common Stock then issued and outstanding, then all shares of
Class A Common Stock shall automatically and without further
action by the corporation or any holder thereof, be
converted on a share for share basis into fully paid and
non-assessable shares of Common Stock; provided, however,
that such conversion rate shall be subject to adjustment as
set forth in paragraph 2(b)(iv) below.
(iv) (A) If the corporation shall (1) subdivide the
outstanding shares of Common Stock into a larger number of
shares, (2) combine the outstanding shares of Common Stock
into a smaller number of shares, or (3) issue by
reclassification of the Common Stock any shares of capital
stock of the corporation, then the conversion rate in effect
immediately prior thereto shall be adjusted so that the
holder of any share of Class A Common Stock surrendered for
conversion or subject to automatic conversion shall be
entitled to receive the number of shares of the corporation
which he would have owned or have been entitled to receive
after the happening of any of the events described above had
such shares of Class A Common Stock been converted
immediately prior to the happening of such event.
(B) In case of any capital reorganization of the
corporation, or in case of the consolidation or merger of
the corporation with or into another corporation, or in case
of the sale, transfer or other disposition of all or
substantially all of the property, assets or business of the
corporation as a result of which sale, transfer or other
disposition property other than cash shall be payable or
distributable to the holders of the Common Stock, each share
of Class A Common Stock shall be convertible into the number
and class of shares or other securities or property of the
corporation, or of the corporation resulting from such
consolidation or merger or to which such sale, transfer or
other disposition shall have been made, to which the Common
Stock otherwise issuable upon conversion of such share of
Class A Common Stock would have been entitled upon such
reorganization, consolidation, merger, or sale, transfer or
other disposition if outstanding at the time thereof; and in
any such case appropriate adjustment, as determined by the
Board of Directors of the corporation, shall be made in the
application of the provisions set forth in this paragraph
2(b) with respect to the conversion rights thereafter of the
holders of the Class A Common Stock, to the end that such
provisions shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares or securities
or other property thereafter issuable or deliverable upon
the conversion of Class A Common Stock. Proper provision
shall be made as a part of the terms of any such
consolidation, merger or sale, transfer or other disposition
whereby the conversion rights of the holders of Class A
Common Stock shall be protected and preserved in accordance
with the provisions of this paragraph 2(b)(iv)(B). The
provisions of this paragraph 2(b)(iv)(B) shall similarly
apply to successive capital reorganizations, consolidations,
mergers, sales, transfers or other dispositions of property
as aforesaid.
(C) Whenever the conversion rate shall be adjusted as
provided in paragraph 2(b)(iv)(A), the corporation, as soon
as practicable and in no event later than ten full business
days thereafter, shall file with the transfer agent for the
Class A Common Stock a statement, signed by the President,
any Vice President or the Treasurer of the corporation,
stating the adjusted conversion rate determined as provided
in said paragraph 2(b)(iv)(A) and setting forth in
reasonable detail the facts requiring such adjustment, and
shall promptly mail a copy of such statement to each holder
of Class A Common Stock at his address then appearing on the
record books of the corporation. The transfer agent shall be
fully protected in relying on such statement and shall be
under no duty to inquire into the truth or accuracy thereof.
If any question shall at any time arise with respect to the
adjusted conversion rate, such question shall be determined
by a firm of independent public accountants selected by the
corporation, who may be the corporation's auditors, and such
determination shall be binding upon the corporation and the
holders of the Common Stock and the Class A Common Stock.
(D) If the corporation shall propose to effect any
reclassification of its Common Stock (other than a
reclassification involving merely the subdivision or
combination of outstanding Common Stock), or to effect any
capital reorganization, or shall propose to consolidate with
or merge into another corporation, or to sell, transfer or
otherwise dispose of all or substantially all of its
property, assets or business, or the corporation shall
propose to liquidate, dissolve or wind up, then, in each
such case, the corporation shall file with the transfer
agent for the Class A Common Stock and shall mail to the
holders of record of the Class A Common Stock at their
respective addresses then appearing on the record books of
the corporation notice of such proposed action, such notice
to be filed and mailed at least 30 days prior to the record
date for the purpose of determining holders of the Common
Stock entitled to vote with respect to such action or, if no
record date is taken for any such purpose, the date of the
taking of such proposed action. Such notice shall specify
the date on which such reclassification, reorganization,
consolidation, merger, liquidation, dissolution or
winding-up shall take place, as the case may be, and the
date of participation therein by the holders of Common Stock
if any such date is to be fixed. Such notice shall set forth
such facts with respect thereto as shall be reasonably
necessary to inform the holders of such shares as to the
effect of such action upon their conversion rights. Failure
to file any certificate or notice or to mail any notice, or
any defect in any certificate or notice, pursuant to this
paragraph 2(b)(iv)(D), shall not affect the legality or
validity of any adjustment, dividend, distribution or right
referred to herein. This paragraph 2(b)(iv)(D) shall not
impair any voting rights the holders of Class A Common Stock
may have with respect to any transaction referred to herein.
(E) (1) Any holder of shares of Class A Common Stock
desiring to convert the same into Common Stock or whose
shares of Class A Common Stock are automatically converted
into shares of Common Stock as provided in this paragraph
2(b) shall surrender the certificate or certificates for
such shares of Class A Common Stock at the office of the
transfer agent therefor or at such other offices or agencies
of the corporation, if any, as the Board of Directors may
determine, which certificate or certificates, if the
corporation shall so request, shall be duly endorsed or
assigned to the corporation or in blank, together (in the
case of a conversion at the option of the holder thereof)
with a written request for conversion, and accompanied by
funds in the amount of any tax or taxes payable in respect
of any transfer involved in the issue and delivery of
certificates for shares of Common Stock in a name other than
that of the record holder of the shares of Class A Common
Stock so surrendered for conversion.
(2) The corporation will as soon as
practicable after such surrender for
conversion of certificates for shares of
Class A Common Stock, accompanied by the
written request therefor if prescribed
above, issue and deliver at the office at
which such certificates for shares of
Class A Common Stock shall have been
surrendered to the person for whose
account such shares of Class A Common
Stock were so surrendered, or to his
nominee or nominees, certificates for the
number of whole shares of Common Stock to
which he shall be entitled as aforesaid,
together with an adjustment in cash for
any fraction of a share as hereinafter
provided, if not evenly convertible. Such
conversion shall be deemed to have been
made as of the date of such surrender of
the certificates for shares of Class A
Common Stock to be converted; and the
person or persons entitled to receive the
shares of Common Stock issuable upon the
conversion of such shares of Class A
Common Stock shall be treated for all
purposes as the record holders of such
Common Stock on such date. However, the
corporation shall not be required to
convert, and no surrender of shares of
Class A Common Stock shall be effective
for that purpose, while the stock transfer
books of the corporation are closed for
any purpose; but the surrender of shares
of Class A Common Stock for conversion
during any period while such books are so
closed shall become effective for
conversion immediately upon the reopening
of such books, at the rate in effect at
the date of such surrender.
(F) The corporation shall not be required to issue
fractional shares of Common Stock or scrip upon conversion
of shares of Class A Common Stock. As to any final fraction
of a share of Common Stock which the same record holder of
one or more shares of Class A Common Stock would otherwise
be entitled to upon conversion of shares of Class A Common
Stock in the same transaction, the corporation shall pay a
cash adjustment in respect of such final fraction in an
amount equal to the same fraction, if the Common Stock is
listed or admitted to trading on a securities exchange or
national quotation system, of the last sales price (or bid
price if there were no sales) per share on such securities
exchange or national quotation system on the business date
which next precedes the date of conversion or, if such
Common Stock is not so listed, of the market price per share
(as determined in a manner prescribed by the Board of
Directors of the corporation) at the close of business on
the business day which next precedes the date of conversion.
(G) The corporation will pay any documentary stamp
taxes attributable to the initial issuance of shares of
Common Stock upon conversion of any shares of Class A Common
Stock pursuant hereto, provided, however, that the
corporation shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in
the issue or delivery of any certificates for shares of
Common Stock in a name other than that of the registered
holder of shares of Class A Common Stock in respect of which
such shares of Common Stock are issued.
(H) The corporation shall at all times reserve and keep
available, out of its treasury stock or authorized and
unissued stock, or both, solely for the purpose of effecting
the conversion of the shares of Class A Common Stock, such
number of shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all shares of
Class A Common Stock from time to time outstanding. The
corporation shall at all times take any corporate action
which may, in the opinion of its counsel, be necessary in
order that the corporation may validly and legally issue
fully paid and nonassessable shares of Common Stock upon
conversion of shares of Class A Common Stock.
(3) Voting Rights.
(a) Subject to paragraph 3(c) below and to the provisions of the
Delaware General Corporation Law (or its successor) requiring a
separate class vote, at each meeting of the stockholders of the
corporation, each holder of Class A Common Stock and each holder
of Common Stock shall be entitled to one vote for each share
held, and such shares shall vote together as a single class.
(b) The holders of Serial Preferred Stock shall have such voting
rights as are set forth elsewhere in this Certificate of
Incorporation (with respect to the 10.5% Repriced Convertible
Exchangeable Preferred Stock and the 8.50% Series B Convertible
Participating Preferred Stock) and, with respect to any
additional series of Serial Preferred Stock, such voting rights
may be fixed and determined by the Board of Directors for the
particular series.
(c) (i) Subject to any rights of holders of Serial Preferred Stock to
elect additional directors, the holders of the Class A Common
Stock shall have the right, voting as a separate class, to elect
the smallest number of directors sufficient to constitute
two-thirds (2/3) in number of such full Board of Directors, and
the directors so elected shall be known as Class A directors.
Notwithstanding the foregoing, if at any time there are fewer
than nine (9) directors, the holders of the Class A Common Stock
shall have the right, voting as a separate class, to elect the
largest number of directors sufficient to constitute not more
than two-thirds (2/3) in number of such full Board of Directors,
and the directors so elected shall be known as the Class A
directors. Subject to any rights of holders of Serial Preferred
Stock to elect additional directors, the holders of the Common
Stock shall have the right, voting as a separate class, to elect
the remaining directors of the corporation. By way of
illustration, if the corporation has ten (10) directors, the
holders of the Class A Common Stock shall have the right to elect
seven (7) directors, and the holders of the Common Stock shall
have the right to elect three (3) directors. If the holders of
Serial Preferred Stock become entitled to elect two (2)
additional directors, the holders of Common Stock and the holders
of Class A Common Stock shall have no voting rights with respect
to the election of such additional directors. Therefore, if the
corporation has ten (10) directors and the size of the board is
increased to twelve (12) to add directors elected by the holders
of Serial Preferred Stock, then the holders of the Class A Common
Stock shall have the right to elect seven (7) directors, the
holders of the Common Stock shall have the right to elect three
(3) directors, and such holders of Serial Preferred Stock shall
have the right to elect two (2) directors. By way of further
illustration, if the corporation has seven (7) directors, the
holders of the Class A Common Stock shall have the right to elect
four (4) directors, and the holders of the Common Stock shall
have the right to elect three (3) directors. Subject to any
rights of holders of Serial Preferred Stock to elect additional
directors, in the event that no shares of Class A Common Stock
remain outstanding, the holders of the Common Stock shall have
the right to elect all of the directors of the corporation.
(ii) Subject to any rights of holders of Serial Preferred Stock
to elect additional directors, at any time following the
merger of American Skiing Company, a Maine corporation, with
and into this corporation, the Board of Directors of the
corporation shall consist of not less than seven (7) or more
than fifteen (15) persons. The exact number of directors
within the minimum and maximum limitations specified in the
preceding sentence shall be fixed from time to time by the
Board of Directors pursuant to a resolution adopted by a
majority of the entire Board of Directors, subject to the
other applicable provisions of this Certificate of
Incorporation, but no decrease in the number of directors
constituting the Board of Directors shall shorten the term
of any incumbent director. Except as otherwise provided in
this Certificate of Incorporation with respect to directors
elected by the holders of Serial Preferred Stock, any
vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of
directors, may be filled by the Board of Directors, acting
by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office
until the next annual meeting of shareholders. At such
annual meeting, such directors shall be voted upon by the
holders of Class A Common Stock and the holders of Common
Stock as provided in this paragraph 3(c), or by the holders
of Serial Preferred Stock to the extent provided elsewhere
in this Certificate of Incorporation.
(d) There shall be no cumulative voting rights, and no holders of
stock of the corporation shall have pre-emptive rights to
subscribe for any shares of any class of stock of the corporation
whether now or hereafter authorized.
(4) Advance Notice of Business to be Conducted at Annual Shareholder
Meetings.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c) otherwise properly brought before
the meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the item of business must, under applicable
laws and regulations, be proper for consideration by the shareholders, and the
shareholder must have given timely notice thereof in writing to the Secretary of
the corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation, not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the corporation's books, of the shareholder proposing such
business, (c) the class and number of shares of the corporation which are
beneficially owned by the shareholder, and (d) any material interest of the
shareholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this paragraph 4. The Chairman of
the annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this paragraph 4, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
(5) Dividends.
The holders of Class A Common Stock and Common Stock, without regard to
which class of shares they hold, shall be entitled to such dividends on a pro
rata basis as may be declared from time to time by the Board of Directors,
subject to the other provisions of this Certificate of Incorporation.
(6) Liquidation.
In the event of the liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, the holders of Class A Common
Stock and Common Stock, without regard to which class of shares they hold, shall
be entitled to participate on a pro rata basis in the net assets of the
corporation remaining after distributions to the holders of Serial Preferred
Stock.
(7) Serial Preferred Stock.
The Board of Directors is authorized, subject to limitations prescribed
by law and the other provisions of this Article FOURTH, to provide for the
issuance of the shares of Serial Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(i) The number of shares constituting that series and the distinctive
designation of that series;
(ii) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends
on shares of that series;
(iii)Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such
voting rights;
(iv) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
(v) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(vi) 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;
(vii)The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the corporation, and the relative rights of priority, if any,
of payment of shares of that series;
(viii) Any other relative rights, preferences and limitations of that
series.
Two series of Serial Preferred Stock are hereby designated as (x) the
10.5% Repriced Convertible Exchangeable Preferred Stock (herein the
"Exchangeable Preferred Stock"), having the powers, preferences and rights set
forth in Exhibit A attached hereto and made a part hereof, and (y) the 8.50%
Series B Convertible Participating Preferred Stock (herein the "Convertible
Preferred Stock"), having the powers, preferences and rights set forth in
Exhibit B attached hereto and made a part hereof.
FIFTH: The incorporator of the corporation is Foster A. Stewart, Jr.,
whose mailing address is c/o American Skiing Company, Sunday River Road, Bethel,
Maine 04217.
SIXTH: Unless and except to the extent that the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
SEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors of the corporation
is expressly authorized to make, alter and repeal the by-laws of the
corporation, subject to the power of the stockholders of the corporation to
alter or repeal any by-law whether adopted by them or otherwise.
EIGHTH: The corporation reserves the right at any time, and from time
to time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
article.
The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is his act and deed on this 4th day of October,
1999.
/s/ Foster A. Stewart, Jr.
--------------------------------
Foster A. Stewart, Jr.
Incorporator
EXHIBIT A
Section 1. Designation and Amount. There is hereby created and
authorized a series of Serial Preferred Stock, the designation of which shall be
the 10.5% Repriced Convertible Exchangeable Preferred Stock (herein the
"Exchangeable Preferred Stock"). The number of issuable shares of Exchangeable
Preferred Stock shall be 40,000.
Section 2. Rank. All shares of Exchangeable Preferred Stock,
both as to payment of dividends and to distribution of assets upon liquidation,
dissolution or winding up of the corporation, whether voluntary or involuntary,
shall rank prior to all of the corporation's now or hereafter issued preferred
stock, and senior to all of the corporation's now or hereafter issued Common
Stock or any other common stock of any class of the corporation. The term
"Common Stock" shall mean the Common Stock, par value $.01 per share, and the
Class A Common Stock, par value $.01 per share, of the corporation as the same
exists at the date hereof or as such stock may be constituted from time to time.
Section 3. Dividends and Certain Restrictions. The holders of
the Exchangeable Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors of the corporation out of funds of the
corporation legally available therefor, dividends at a rate per share of 10.5%
per annum, and no more, which shall be fully cumulative, shall accrue (whether
or not declared or paid), shall compound quarterly, and shall be payable in cash
on November 12, 2002, or, at the option of the Company, in whole or in part on
any January 1, April 1, July 1 or October 1 (except that if such date is a
Saturday, Sunday or legal holiday, then such dividend will be payable on the
next day that is not a Saturday, Sunday or legal holiday) to holders of record
as they appear on the stock transfer books of the corporation on such record
date, not more than 60 nor less than 10 days preceding the payment date for such
dividend, as is fixed by the Board of Directors. For purposes hereof, the term
"legal holiday" shall mean any day on which banking institutions are obligated
or authorized to close in New York, New York or in Boston, Massachusetts.
On such dividend payment date all dividends which shall have
accrued on each share of Exchangeable Preferred Stock outstanding on such
dividend payment date shall accumulate and be deemed to become "due". If such
dividends are not fully paid on such dividend payment date, such accrued
dividends shall be added (solely for the purpose of calculating dividends
payable on the Exchangeable Preferred Stock) to the Liquidation Preference of
the Exchangeable Preferred Stock effective at the beginning of the quarterly
dividend compounding period next succeeding the dividend payment date as to
which such dividends were not paid and shall thereafter accrue additional
dividends in respect thereof until such unpaid dividends have been paid in full.
Dividends paid on shares of Exchangeable Preferred Stock in an amount less than
the total amount of such dividends at the time accumulated and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
Unless all accrued and unpaid dividends on the Exchangeable
Preferred Stock have been paid in cash, or declared and sums set aside for the
payment thereof, dividends (other than in Common Stock or any other stock of the
corporation ranking junior to the Exchangeable Preferred Stock as to dividends
and as to liquidation rights) may not be paid, or declared and set aside for
payment, and other distributions may not be made upon the Common Stock or on any
other stock of the corporation ranking junior to the Exchangeable Preferred
Stock as to dividends. So long as any shares of Exchangeable Preferred Stock are
outstanding, the Common Stock (or any rights, options or warrants to purchase
Common Stock), any other stock or other equity interests (or rights, options or
warrants to purchase such other stock or other equity interests) of the
corporation ranking junior to the Exchangeable Preferred Stock as to dividends
or upon liquidation may not be redeemed, purchased or otherwise acquired for any
consideration by the corporation.
The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock (or rights, options or warrants to purchase shares of stock or other
equity interests) of the corporation unless the corporation could, under this
Section 3, purchase or otherwise acquire such shares (or rights, options or
warrants to purchase shares of stock) or units at such time and in such manner.
Any reference to "distribution" contained in this Section 3
shall not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the corporation, whether voluntary or
involuntary.
Section 4. Liquidation Preference. In the event of a
liquidation, dissolution or winding up of the corporation, whether voluntary or
involuntary, the holders of Exchangeable Preferred Stock shall be entitled to
receive out of the assets of the corporation, whether such assets are stated
capital or surplus of any nature, an amount equal to the dividends accrued and
unpaid thereon to the date of final distribution to such holders, whether or not
declared, without interest, and a sum equal to $1,000 per share, and no more
(such sum, the "Liquidation Preference"), before any payment shall be made or
any assets distributed to the holders of Common Stock or any other class or
series of the corporation's capital stock ranking junior as to liquidation
rights to the Exchangeable Preferred Stock; provided, however, that such rights
shall accrue to the holders of Exchangeable Preferred Stock only in the event
that the corporation's payments with respect to the liquidation preferences of
the holders of capital stock of the corporation ranking senior as to liquidation
rights to the Exchangeable Preferred Stock (the "Senior Liquidation Stock") are
fully met. If the assets of the corporation available for distribution after the
liquidation preferences of the Senior Liquidation Stock are fully met are not
sufficient to pay an amount equal to the Liquidation Preference to the holders
of outstanding shares of Exchangeable Preferred Stock and the liquidation
preference to the holders of any other series of the corporation's capital stock
which may hereafter be created in accordance with Section 6(c) hereof having
liquidation rights on a parity with the shares of Exchangeable Preferred Stock
(the "Parity Liquidation Stock"), then the assets of the corporation shall be
distributed ratably among the holders of the Exchangeable Preferred Stock and
the Parity Liquidation Stock in proportion to the respective preferential
amounts to which each is entitled (but only to the extent of such preferential
amounts). Neither a consolidation, merger or other business combination of the
corporation with or into another corporation or other entity nor a sale or
transfer of all or part of the corporation's assets for cash, securities or
other property shall be considered a liquidation, dissolution or winding up of
the corporation for purposes of this Section 4 (unless in connection therewith
the liquidation of the corporation is specifically approved).
The holder of any shares of Exchangeable Preferred Stock shall
not be entitled to receive any payment owed for such shares under this Section 4
until such holder shall cause to be delivered to the corporation (i) the
certificate(s) representing such shares of Exchangeable Preferred Stock and (ii)
transfer instrument(s) satisfactory to the corporation and sufficient to
transfer such shares of Exchangeable Preferred Stock to the corporation free of
any adverse interest. As in the case of the Redemption Price, no interest shall
accrue on any payment upon liquidation after the due date thereof.
Section 5. Redemption. On November 12, 2002 (the "Mandatory
Redemption Date"), the corporation shall redeem, out of funds legally available
therefor, all shares of the Exchangeable Preferred Stock then outstanding at a
redemption price (the "Redemption Price") equal to the Liquidation Preference
per share, together with accrued and unpaid dividends to the redemption date.
If, on the Mandatory Redemption Date, funds are not legally available to the
corporation for redemption of the shares of Exchangeable Preferred Stock, the
corporation shall redeem on such date, at the Redemption Price, that number of
shares of Exchangeable Preferred Stock which it can lawfully redeem, and from
time to time thereafter, as soon as funds are legally available, the corporation
shall redeem at the Redemption Price shares of Exchangeable Preferred Stock
until the corporation has redeemed the shares of Exchangeable Preferred Stock in
full.
The corporation, at its option, may at any time, redeem, out
of funds legally available therefor, in whole or from time to time in part, the
Exchangeable Preferred Stock on any date set by the Board of Directors, for cash
at the Redemption Price, together with accrued and unpaid dividends to the
redemption date (subject to the right of the holder of record of shares of
Exchangeable Preferred Stock on a record date for the payment of a dividend on
the Exchangeable Preferred Stock to receive the dividend due on such shares of
Exchangeable Preferred Stock on the corresponding dividend payment date, if such
dividend payment date is prior to the date set for redemption); provided that
the Exchangeable Preferred Stock may not be so redeemed prior to the Mandatory
Redemption Date unless the closing price of the Common Stock for 45 consecutive
trading days ending no more than 30 calendar days prior to the date notice of
redemption is first mailed is at least 140% of the Adjusted IPO Price then in
effect. The Adjusted IPO Price means $17.10 (as adjusted for the events
specified in Section 11(3)(a) hereof).
In case of the redemption of less than all of the then
outstanding Exchangeable Preferred Stock, the corporation shall select the
shares of Exchangeable Preferred Stock to be redeemed in accordance with any
method permitted by the national securities exchange on which the Exchangeable
Preferred Stock is then listed, or if not so listed, the corporation shall
designate by lot, or in such other manner as the Board of Directors may
determine, the shares to be redeemed, or shall effect such redemption pro rata.
Notwithstanding the foregoing, the corporation shall not redeem less than all of
the Exchangeable Preferred Stock at any time outstanding until all dividends
accrued to such payment date upon all Exchangeable Preferred Stock then
outstanding shall have been paid.
Not more than 120 nor less than 90 days prior to the
redemption date, notice by first class mail, postage prepaid, shall be given to
each holder of record of the Exchangeable Preferred Stock to be redeemed, at
such holder's address as it shall appear upon the stock transfer books of the
corporation. Each such notice of redemption shall specify the date fixed for
redemption, the Redemption Price, the then current Conversion Price, the place
or places of payment and conversion and that payment or conversion will be made
upon presentation and surrender of the certificates) evidencing the shares of
Exchangeable Preferred Stock to be redeemed or converted, and that the
Exchangeable Preferred Stock may be converted at any time before the close of
business on the redemption date.
Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of the
Exchangeable Preferred Stock receives such notice; and failure to give such
notice by mail, or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Exchangeable Preferred Stock. On or after
the date fixed for redemption as stated in such notice, each holder of the
shares called for redemption shall surrender the certificate evidencing such
shares to the corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. If less than
all the shares represented by any such surrendered certificate are redeemed, a
new certificate shall be issued without cost to the holder thereof representing
the unredeemed shares. If such notice of redemption shall have been so mailed
and if, on or prior to the redemption date specified in such notice all funds
necessary for such redemption shall have been set aside by the corporation,
separate and apart from its other funds, in trust for the account of the holders
of the shares so to be redeemed (as to be and continue to be available
therefor), then on and after the redemption date, notwithstanding that any
certificate for shares of the Exchangeable Preferred Stock so called for
redemption shall not have been surrendered for cancellation, all shares of the
Exchangeable Preferred Stock with respect to which such notice shall have been
mailed and such funds shall have been set aside shall be deemed to be no longer
outstanding and all rights with respect to such shares of the Exchangeable
Preferred Stock so called for redemption shall forthwith cease and terminate,
except the right of the holders thereof to receive out of the funds so set aside
in trust the amount payable on redemption thereof (including an amount equal to
accrued and unpaid dividends to the redemption date) without interest thereon.
The holder of any shares of Exchangeable Preferred Stock
redeemed upon any exercise of the corporation's redemption right shall not be
entitled to receive payment of the Redemption Price for such shares until such
holder shall cause to be delivered to the place specified in the notice given
with respect to such redemption (i) the certificate(s) representing such shares
of Exchangeable Preferred Stock redeemed and (ii) transfer instrument(s)
satisfactory to the corporation and sufficient to transfer such shares of
Exchangeable Preferred Stock to the corporation free of any adverse interest, No
interest shall accrue on the Redemption Price of any share of Exchangeable
Preferred Interests after its redemption date.
Section 6. Voting Rights.
(a) General. The holders of the shares of Exchangeable
Preferred Stock shall vote together with the holders of the Common Stock (and
any other class of equity securities which may similarly vote with the holders
of the Common Stock as a single class) upon all matters upon which stockholders
are entitled to vote and shall be entitled to a number of votes per share of
Exchangeable Preferred Stock equal to the number of shares of Common Stock into
which the shares of the Exchangeable Preferred Stock are convertible on the
record date of the determination of stockholders entitled to notice of and to
vote at such meeting; provided, however, that, other than as provided in Section
6(b) below, the holders of Exchangeable Preferred Stock shall have no voting
rights with respect to the election of directors, as to which the holders of the
Common Stock shall (subject to Section 6(b) below) have exclusive voting rights
as provided elsewhere in this Certificate of Incorporation. In addition, the
holders of Exchangeable Preferred Stock will have all voting rights required by
law, and shall also have all special voting rights provided below. Any shares of
Exchangeable Preferred Stock held by the corporation or any entity controlled by
the corporation shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.
(b) Default Voting Rights.
(i) Right To Elect Directors. Whenever dividends on
the Exchangeable Preferred Stock shall be in arrears, or the Redemption
Price (whether mandatory or optional) has not been paid in full when
due, or an Event of Default (as hereinafter defined), has occurred (A)
the number of members of the Board of Directors of the corporation
shall be increased by two, effective as of the time of election of such
directors as hereinafter provided, and (B) the holders of the
Exchangeable Preferred Stock (voting separately as a class) will have
the exclusive right to vote for and elect such two additional directors
of the corporation at any meeting of stockholders of the corporation at
which directors are to be elected held during the period such dividends
remain in arrears or such redemption price has not been paid in full.
The right of the holders of the Exchangeable Preferred Stock to vote
for such two additional directors shall remain vested until (x) payment
in full of all accrued and unpaid dividends on the Exchangeable
Preferred Stock has been made, or (y) payment in full of any Redemption
Price (whether mandatory or optional) which has become due, or (z) the
date on which such conversion is honored or such Event of Default has
ceased to be continuing, at which time such rights shall terminate
(subject in each case to revesting). An "Event of Default" shall occur
if: (i) a default shall occur under any bond, debenture, note or other
evidence of Indebtedness (as defined in the Securities Purchase
Agreement (the "Agreement"), dated July 2, 1997, between American
Skiing Company, a Maine corporation, and Madeleine L.L.C.), for money
borrowed by the corporation or any Restricted Subsidiary (as defined in
the Agreement), which default shall have resulted in such Indebtedness
becoming or being declared payable prior to the date on which it would
otherwise have been due and payable (provided that the aggregate amount
of such Indebtedness subject to acceleration exceeds $5 million),
without such Indebtedness having been discharged, such acceleration
having been rescinded or annulled or there having been deposited in
trust a sum of money sufficient to discharge in full such Indebtedness;
or (ii) the corporation or any of its Subsidiaries (as defined in the
Agreement) fails to pay any principal or interest when due under any
bond, debenture, note or other evidence of Indebtedness for money
borrowed (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument evidencing or governing such Indebtedness, has expired
(provided that the amount of such Indebtedness, and any interest or
premium thereon, exceeds $5 million).
(ii) Special Meeting. Whenever such right shall vest,
it may be exercised initially by the vote of the holders of a majority
of the shares of the Exchangeable Preferred Stock present and voting,
in person or by proxy, at a special meeting of holders of the
Exchangeable Preferred Stock or at the next annual meeting of
stockholders, or by written consent of the holders of record of a
majority of the outstanding shares of the Exchangeable Preferred Stock
without a meeting. Unless such action shall have been taken by written
consent as aforesaid, a special meeting of the holders of the
Exchangeable Preferred Stock for the exercise of such right shall be
called by the Secretary of the corporation as promptly as possible in
compliance with applicable law and regulations, and in any event within
10 days after receipt of a written request signed by the holders of
record of at least 25% of the outstanding shares of the Exchangeable
Preferred Stock, subject to any applicable notice requirements imposed
by law or by any national securities exchange on which any Exchangeable
Preferred Stock is listed. Such meeting shall be held at the earliest
practicable date thereafter.
(iii) Term of Office of Directors. Any director who
shall have been elected by holders of the Exchangeable Preferred Stock
shall hold office for a term expiring (subject to the earlier payment
of all dividends and redemption payments (whether mandatory or
optional) in arrears on the Exchangeable Preferred Stock) at the next
annual meeting of stockholders and during such term may be removed at
any time, either for or without cause, by and only by, the affirmative
vote of the holders of record of a majority of the shares of the
Exchangeable Preferred Stock, voting as a single class, present and
voting, in person or by proxy, at a special meeting of such
stockholders called for such purpose, or by written consent without a
meeting of the holders of record of a majority of the outstanding
shares of the Exchangeable Preferred Stock, voting as a single class,
and any vacancy created by such removal may also be filled at such
meeting or by such written consent. A special meeting of the holders of
the shares of the Exchangeable Preferred Stock for the removal of a
director elected by the holders of the Exchangeable Preferred Stock and
the filling of the vacancy created thereby shall be called by the
Secretary of the corporation as promptly as possible and in any event
within 10 days after receipt of request therefor signed by the holders
of not less than 25% of the outstanding shares of the Exchangeable
Preferred Stock taken as a single class, subject to any applicable
notice requirements imposed by law or any national securities exchange
on which any Exchangeable Preferred Stock is listed. Such meeting shall
be held at the earliest practicable date thereafter.
(iv) Vacancies. Any vacancy caused by the death or
resignation of a director who shall have been elected in accordance
with this subparagraph (b) may be filled by the remaining director so
elected or, if not so filled, by a vote of holders of one-third of the
shares of the Exchangeable Preferred Stock present and voting as a
single class, in person or by proxy, at a meeting of such holders of
Exchangeable Preferred Stock called for such purpose, or by written
consent without a meeting of the holders of record of a majority of the
outstanding shares of the Exchangeable Preferred Stock as a single
class. Unless such vacancy shall have been filled by the remaining
director or by written consent as aforesaid, such meeting shall be
called by the Secretary of the corporation at the earliest practicable
date after such death or resignation, and in any event within 10 days
after receipt of a written request signed by the holders of record of
at least 25% of the outstanding shares of the Exchangeable Preferred
Stock taken as a single class.
(v) Stockholders' Right to Call Meeting. If any
meeting of the holders of the Exchangeable Preferred Stock required by
this subparagraph (b) to be called shall not have been called within 10
days after personal service of a written request therefor upon the
Secretary of the corporation or within 15 days after mailing the same
within the United States of America by registered mail addressed to the
Secretary of the corporation at its principal office, subject to any
applicable notice requirements imposed by law or any national
securities exchange on which any Exchangeable Preferred Stock is
listed, then the holders of record of at least 25% of the outstanding
shares of the Exchangeable Preferred Stock may designate in writing a
holder of a share of the Exchangeable Preferred Stock to call such
meeting at the expense of the corporation, and such meeting may be
called by such Person so designated upon the notice required for annual
meetings of stockholders or such shorter notice (but in no event
shorter than permitted by law or any national securities exchange on
which the Exchangeable Preferred Stock is listed) as may be acceptable
to the holders of a majority of the total number of shares of the
Exchangeable Preferred Stock. Any holder of a share of the Exchangeable
Preferred Stock so designated shall have access to the stock books of
the corporation relating solely to the Exchangeable Preferred Stock for
the purpose of causing such meeting to be called pursuant to these
provisions.
(vi) Quorum. At any meeting of the holders of the
Exchangeable Preferred Stock called in accordance with the provisions
of this subparagraph (b) for the election or removal of directors, the
presence in person or by proxy of the holders of one-third of the total
number of shares of the Exchangeable Preferred Stock as a single class
shall be required to constitute a quorum; in the absence of a quorum, a
majority of the holders present in person or by proxy shall have power
to adjourn the meeting from time to time without notice, other than
announcement at the meeting, until a quorum shall be present.
(c) Class Voting Rights. So long as shares of the Exchangeable
Preferred Stock are outstanding, the corporation shall not, directly or
indirectly or through merger or consolidation with any other person, without the
affirmative vote or consent of the holders of at least a majority of all
outstanding Exchangeable Preferred Stock, voting separately as a class, (i)
amend, alter or repeal (by merger, consolidation or otherwise) any provision of
the Certificate of Incorporation or the By-laws of the corporation, as amended,
or prior to an exchange date, the Indenture (as hereinafter defined) (except for
such amendments which can be made without the consent of the holders of the
debentures pursuant to the terms of the Indenture) so as to affect adversely the
relative rights, preferences, qualifications, limitations or restrictions of the
Exchangeable Preferred Stock or the rights of holders of the debentures (if
issued), (ii) increase the authorized number of shares of the Exchangeable
Preferred Stock, (iii) authorize or issue or increase the authorized amount of
any additional class or series of stock (including any series of Preferred
Stock), or any security convertible into stock of such class or series, ranking
on a parity with or senior to the Exchangeable Preferred Stock as to dividends
or as to rights upon liquidation, dissolution or winding up, or (iv) effect any
reclassification of the Exchangeable Preferred Stock. In connection with any
right to vote pursuant to this Section 6(c), each holder of Exchangeable
Preferred Stock will have one vote for each share held. A class vote on the part
of the Exchangeable Preferred Stock shall, without limitation, specifically not
be deemed to be required (except as otherwise required by law or resolution of
the corporation's Board of Directors) in connection with the authorization,
issuance or increase in the authorized amount of any shares of any other class
or series of stock that ranks junior to the Exchangeable Preferred Stock upon
liquidation, dissolution or winding up of the corporation; provided that so long
as any of the shares of Exchangeable Preferred Stock are outstanding, the
corporation may not create any shares of any other class or series of stock that
ranks junior to the Exchangeable Preferred Stock, unless the terms thereof
provide that (A) dividends on such junior class or series of stock are payable
solely in additional shares of such junior class or series of stock if cash
dividends have not been paid on the Exchangeable Preferred Stock on the
immediately preceding dividend payment date, and (B) such junior class or series
of stock shall not be subject to any mandatory redemption or mandatory offer to
purchase requirements prior to the Mandatory Redemption Date.
Section 7. Exchange. The shares of Exchangeable Preferred
Stock are exchangeable at the option only of the corporation, in whole but not
in part, on any January 1, April 1, July 1 or October 1, commencing January 1,
1998, for the 10.5% Repriced Subordinated Debentures due on the Mandatory
Redemption Date (the "Debentures") of the corporation, to be issued under an
indenture (the "Indenture") substantially in the form agreed to by American
Skiing Company, a Maine corporation, and Madeleine L.L.C., between the
corporation and a corporation organized and doing business under the laws of the
United States or any State thereof or of the District of Columbia (or a
corporation or other person permitted to act as a trustee by the Securities and
Exchange Commission) authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 and
subject to supervision or examination by Federal, State or District of Columbia
authority, as trustee under the Indenture (the "Trustee"), as set forth therein
and with such changes as may be required by law or usage. Holders of the
outstanding shares of Exchangeable Preferred Stock will be entitled to receive
$1,000 principal amount of the Debentures in exchange for each share of
Exchangeable Preferred Stock held by them. On the date of the exchange, the
corporation shall pay an amount equal to accrued and unpaid dividends, at the
corporation's option, in cash or in Debentures (at the rate of $1,000 principal
amount for each $1,000 in accrued and unpaid dividends) or in any combination
thereof.
No such exchange of Debentures for shares of Exchangeable
Preferred Stock shall be made unless on or prior to the date on which such
exchange is to be made (i) the Indenture shall have been executed and delivered
by the corporation and the Trustee and (ii) the Trustee shall have received an
opinion of counsel, dated such exchange date, substantially to the following
effect (together with appropriate assumptions or qualifications), with such
changes therein as such Trustee shall approve:
(1) the corporation has duly authorized the exercise of its
right to redeem the Exchangeable Preferred Stock in exchange for the
Debentures and has exercised such option; (2) the corporation has full
corporate power and authority to enter into the Indenture and to
perform its obligations under the Indenture and to issue and deliver
the Debentures and the shares of Common Stock issuable upon conversion
thereof; (3) the Indenture has been duly authorized, executed and
delivered by the corporation and is a legal, valid and binding
agreement of the corporation enforceable against the corporation in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and to general equitable principles); (4) the Debentures will, when
issued in accordance with the terms of the Indenture, constitute legal,
valid and binding obligations of the corporation enforceable against
the corporation in accordance with their terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general equitable
principles) and are entitled to the benefits of the Indenture; (5) the
shares of Common Stock issuable upon conversion of the Debentures have
been reserved for issuance and upon such issuance will be duly issued,
fully paid and non-assessable and free of pre-emptive rights; (6) no
consent, approval, authorization or order of any court or governmental
agency or body is required in connection with the issuance of the
Debentures or the shares issuable upon conversion thereof except such
as may be required under the blue sky laws of any jurisdiction and such
other approvals (specified in such opinion) as have been obtained; and
(7) the issuance of Debentures and the performance by the corporation
of its obligations under the Indenture (including the issuance of
shares of Common Stock upon conversion of Debentures) will not be in
conflict with or constitute a breach of or a default (with the passage
of time or otherwise) under (w) the Certificate of Incorporation or
By-laws of the corporation in effect at the date of such opinion, (x)
the charter or by-laws of any subsidiary of the corporation, which
conflict, breach or default is material to the corporation and its
subsidiaries taken as a whole, in effect at the date of such opinion,
(y) any agreement or instrument, known to such counsel and which is,
individually or in the aggregate, material to the corporation and its
subsidiaries taken as a whole, to which the corporation or any of its
subsidiaries is a party or by which it or any of its subsidiaries is
bound or (z) any statute, law or regulation known to such counsel and
in effect at the date of such opinion to which the corporation or any
of its subsidiaries or any of their respective properties may be
subject or any judgment, decree or order, known to such counsel, of any
court or governmental agency or authority then in effect and applicable
to the corporation or any of its subsidiaries (which conflict, breach
or default is, in the case of this clause (z), individually or in the
aggregate, material to the corporation and its subsidiaries taken as a
whole).
Upon such exchange (unless default shall be made by the
corporation in issuing Debentures in exchange for the outstanding shares of
Exchangeable Preferred Stock on the exchange date), the rights of the holders of
the Exchangeable Preferred Stock as stockholders of the corporation shall cease
(except the right to receive on the date of exchange an amount equal to the
amount of accrued and unpaid dividends on the Exchangeable Preferred Stock to
the date of exchange and the Debentures), and the person or persons entitled to
receive the Debentures issuable upon such redemption and exchange shall be
treated for all purposes as the registered holder or holders of such Debentures.
The corporation will mail to each holder of record of Exchangeable Preferred
Stock, at such holder's last address as it shall appear upon the stock transfer
books of the corporation, written notice of its intention to exchange the
Exchangeable Preferred Stock not less than 20 nor more than 60 days prior to the
exchange date. Such notice shall state: (i) the exchange date; (ii) the place or
places where certificates for such shares are to be surrendered for exchange for
Debentures; and (iii) that dividends on the shares to be exchanged will cease to
accrue on such exchange date. Upon surrender in accordance with said notice of
the certificates for any shares to be exchanged (properly endorsed or assigned
for transfer, if the corporation shall so require and the notice shall so
state), the corporation will cause the Debentures to be authenticated and issued
in exchange for such shares of Exchangeable Preferred Stock and to be mailed to
the holder of the shares of Exchangeable Preferred Stock at such holder's
address of record or such other address as the holder shall specify upon such
surrender of such certificates.
If on the exchange date the corporation shall be in default in
the payment of any dividends (including cumulative dividends, if applicable) on
Exchangeable Preferred Stock, or if there shall not be legally available funds
sufficient therefor, or if such exchange shall on such date be prohibited by
applicable law, then no shares of the Exchangeable Preferred Stock shall be
exchanged.
Section 8. Outstanding Shares. For purposes of this Exhibit A,
all shares of Exchangeable Preferred Stock shall be deemed outstanding except
(i) from the date fixed for redemption pursuant to Section 5, all shares of
Exchangeable Preferred Stock that have been so called for redemption under
Section 5 if funds necessary for payment of the redemption price have been
irrevocably deposited in trust, for the account of the holders of the shares so
to be redeemed (so as to be and continue to be available therefor), with a
corporation organized and doing business under the laws of the United States or
any State or territory thereof or of the District of Columbia (or a corporation
or other person permitted to act as a trustee by the Securities and Exchange
Commission) authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by Federal, State or District of Columbia or
territorial authority; and (ii) from the date of registration of transfer, all
shares of Exchangeable Preferred Stock held of record by the corporation or any
subsidiary of the corporation.
Section 9. Status of Acquired Shares. Shares of Exchangeable
Preferred Stock redeemed by the corporation, received upon exchange pursuant to
Section 7 or converted pursuant to Section 11, or otherwise acquired by the
corporation, will be restored to the status of authorized and unissued shares of
Serial Preferred Stock, without designation as to series, and may thereafter be
issued, but not as shares of Exchangeable Preferred Stock.
Section 10. Preemptive Rights. The holders of Exchangeable
Preferred Stock are not entitled to any preemptive or subscription rights in
respect of any securities of the corporation.
Section 11. Conversion.
(1) Except as provided in the next succeeding sentence, each
share of the Exchangeable Preferred Stock shall be convertible at any time at
the option of the holder thereof into fully paid and non-assessable shares of
Common Stock, par value $.01 per share, of the corporation ("Conversion Stock")
at the conversion price, determined as hereinafter provided, in effect at the
time of conversion. Unless default be made in the payment in full of the
Redemption Price and any accrued and unpaid dividends, shares of Exchangeable
Preferred Stock called for redemption shall cease to be convertible into shares
of Conversion Stock at the close of business on the Redemption Date. The price
at which shares of the Conversion Stock shall be delivered upon conversion of
shares of the Exchangeable Preferred Stock (hereinafter the "Conversion Price")
shall be initially $17.10 per share. The number of shares of Conversion Stock
issuable upon conversion of a share of Exchangeable Preferred Stock is
determined by dividing the Liquidation Preference of a share of Exchangeable
Preferred Stock by the Conversion Price in effect on the Conversion Date (as
hereinafter defined) and round the result to the nearest 1/100th of a share. The
Conversion Price shall be subject to adjustment as provided below. Upon
conversion any accrued and unpaid dividends on the Exchangeable Preferred Stock
shall be paid to the holder thereof, at the option of the corporation, either
(i) in freely tradeable shares of Conversion Stock at the Conversion Price, or
(ii) in cash. If a holder converts more than one share at the same time, the
number of full shares issuable upon the conversion shall be based upon the total
number of shares converted.
(2) In order to convert shares of the Exchangeable Preferred
Stock into shares of Conversion Stock, the holder thereof shall surrender at the
office of any transfer agent for the Exchangeable Preferred Stock (or in the
absence of any transfer agent, the corporation) the certificate or certificates
therefor, duly endorsed to the corporation or in blank, and give written notice
to the corporation at said office that he or she elects to convert such shares.
Shares of the Exchangeable Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the date of surrender of
such shares for conversion in accordance with the foregoing provisions
(hereinafter the "Conversion Date"), and the person or persons entitled to
receive shares of the Conversion Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of the
Conversion Stock at such time. As promptly as practicable after the Conversion
Date, the corporation shall issue and deliver at said office the certificate or
certificates for the number of full shares of the Conversion Stock issuable upon
such conversion, together with a cash payment in lieu of any fraction of a share
of Conversion Stock, as hereinafter provided, to the person or persons entitled
to receive the same or to the nominee or nominees of such person or persons.
(3) The Conversion Price shall be subject to adjustment as
follows:
(a) In case the corporation shall (i) pay a dividend in shares
of either class of Common Stock to all holders of such class, (ii) make a
distribution in shares of either class of Common Stock to all holders of such
class, (iii) subdivide its outstanding Common Stock into a greater number of
shares, or (iv) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any shares of Exchangeable Preferred Stock
thereafter surrendered for conversion shall be entitled to receive that number
of shares of Conversion Stock representing the percentage of all outstanding
Common Stock which he or she would have owned had such Exchangeable Preferred
Stock been converted immediately prior to the happening of such event. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend in shares or
distribution and shall become effective immediately after the effective date in
the case of subdivision or combination.
(b) In case the corporation shall issue rights or warrants to
all or substantially all holders of its either class of Common Stock entitling
them (for a period commencing no earlier than the record date described below
and expiring not more than 60 days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock) at
a price per share less than the current market price per share of Common Stock
(as determined in accordance with subsection (e) below) at the record date for
the determination of shareholders entitled to receive such rights or warrants,
the Conversion Price in effect immediately prior thereto shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to such record date by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on such
record date, plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered (or the aggregate Conversion
Price of the convertible securities so offered) would purchase at such current
market price, and of which the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively whenever
any such rights or warrants are issued, and shall become effective immediately
after such record date. If at the end of the period during which such rights or
warrants are exercisable not all rights or warrants shall have been exercised,
the adjusted Conversion Price shall be immediately readjusted to what it would
have been based upon the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued).
(c) In case the corporation shall distribute to all or
substantially all holders of any class of Common Stock any shares of capital
stock of the corporation (other than Common Stock), evidences of indebtedness or
other non-cash assets (including securities of any company other than the
corporation), or shall distribute to all or substantially all holders of any
class of Common Stock rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in subsection (b) above), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the numerator
shall be the current market price per share (as defined in subsection (e) below)
of the Conversion Stock on the record date mentioned below less the fair market
value on such record date (as determined by the Board of Directors of the
corporation, whose determination shall be conclusive evidence of such fair
market value) of the portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants applicable to one
share of Common Stock (determined on the basis of the number of shares of Common
Stock outstanding on the record date), and of which the denominator shall be the
current market price per share (as defined in subsection (e) below) of the
Conversion Stock on such record date. Such adjustment shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution. Notwithstanding the foregoing, in the event that
the corporation shall distribute rights or warrants (other than those referred
to in subsection (b) above) ("Rights") pro rata to holders of any class of
Common Stock, the corporation may, in lieu of making any adjustment pursuant to
this Section 11, make proper provision so that each holder of Exchangeable
Preferred Stock who converts such Stock (or any portion thereof) after the
record date for such distribution and prior to the expiration or redemption of
the Rights shall be entitled to receive upon such conversion, in addition to the
shares of Conversion Stock issuable upon such conversion (the "Conversion
Shares"), a number of Rights to be determined as follows: (i) if such conversion
occurs on or prior to the date for the distribution to the holders of Rights of
separate certificates evidencing such Rights (the "Distribution Date"), the same
number of Rights to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the Security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(d) In case the corporation shall, by dividend or otherwise,
at any time distribute (a "Triggering Distribution") to all or substantially all
holders of any class of Common Stock cash in an aggregate amount that, together
with the aggregate amount of any other cash distributions to all or
substantially all holders of any class of Common Stock made within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 11 has been made,
exceeds 10% of the product of the current market price per share of Conversion
Stock (as determined in accordance with subsection (e) below) on the Business
Day (the "Determination Date") immediately preceding the day on which such
Triggering Distribution is declared by the corporation multiplied by the number
of shares of Common Stock outstanding on such date (excluding shares held in the
treasury of the corporation), the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying such Conversion Price in
effect immediately prior to the Determination Date by a fraction of which the
numerator shall be the current market price per share of the Conversion Stock
(as determined in accordance with subsection (e) below) on the Determination
Date less the amount of cash so distributed within such 12 months (including,
without limitation, the Triggering Distribution) applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the Determination Date) and the denominator shall be such current
market price per share of the Conversion Stock (as determined in accordance with
subsection (e) below) on the Determination Date, such reduction to become
effective immediately prior to the opening of business on the day following the
date on which the Triggering Distribution is paid.
(e) For the purpose of any computation under subsections (b),
(c) and (d) of this Section 11(3), the current market price per share of
Conversion Stock on any date shall be deemed to be the average of the daily
closing prices for the 30 consecutive trading days commencing 45 trading days
before (i) the Determination Date with respect to distributions under subsection
(d) above or (ii) the record date with respect to distributions, issuances or
other events requiring such computation under subsection (b) or (c) above. The
closing price for each day shall be the last reported sales price or, in case no
such reported sale takes place on such date, if the Conversion Stock is not
listed or admitted to trading on the New York Stock Exchange ("NYSE"), on the
principal national securities exchange on which the Conversion Stock is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the closing sales price of the Conversion Stock as quoted
by NASDAQ or, in case no reported sale takes place, the average of the closing
bid and asked prices as quoted by NASDAQ or any comparable system or, if the
Conversion Stock is not quoted on NASDAQ or any comparable system, the closing
sales price or, in case no reported sale takes place, the average of the closing
bid and asked prices, as furnished by any two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
corporation for that purpose. If no such prices are available, the current
market price per share shall be the fair value of a share of Conversion Stock as
determined by the Board of Directors of the corporation.
(f) In any case in which this Section 11 shall require that an
adjustment be made following a record date or a Determination Date, as the case
may be, established for purposes of this Section 11, the corporation may elect
to defer (but only until five Business Days following the mailing by the
corporation to the holders of the Notice of Adjustment described in subsection
(i) below) issuing to the holder of any Exchangeable Preferred Stock converted
after such record date or Determination Date the shares of Conversion Stock and
other capital stock of the corporation issuable upon such conversion over and
above the shares of Conversion Stock and other capital stock of the corporation
issuable upon such conversion only on the basis of the Conversion Price prior to
adjustment; and, in lieu of the shares the issuance of which is so deferred, the
corporation shall issue or cause its transfer agents to issue due bills or other
appropriate evidence prepared by the corporation of the right to receive such
shares. If any distribution in respect of which an adjustment to the Conversion
Price is required to be made as of the record date, effective date or
Determination Date therefor is not thereafter made or paid by the corporation
for any reason, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or such
effective date or Determination Date had not occurred.
(g) No Adjustment. No adjustment in the Conversion Price shall
be required unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this subsection (g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in
(a), (b), (c) or (d) above if all holders of Exchangeable Preferred Stock are
entitled to participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Common Stock participate in the transaction. The
corporation shall give 30 days prior notice to the transfer agent and to the
holders of the Exchangeable Preferred Stock of any such determination.
No adjustment need be made for rights to purchase Common Stock
or issuances of Common Stock pursuant to a corporation plan for reinvestment of
dividends or interest.
No adjustment need be made for a change in the par value or a
change to no par value of the Common Stock.
To the extent that the Exchangeable Preferred Stock becomes
convertible into the right to receive cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
(h) Adjustment for Tax Purposes. The corporation shall be
entitled to make such reductions in the Conversion Price, in addition to those
required under other provisions of this Section 11, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivisions
of shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock hereafter
made by the corporation to its shareholders shall not be taxable; provided that
no such reduction shall give rise to a right of the corporation to optionally
redeem the Exchangeable Preferred Stock pursuant to Section 5.
(i) Notice of Adjustment. Whenever the Conversion Price is
adjusted, the corporation shall promptly mail to holders of the Exchangeable
Preferred Stock and to the transfer agent a notice of the adjustment briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.
(j) Notice of Certain Transactions.
In the event that:
(1) the corporation takes any action which would require an
adjustment in the Conversion Price;
(2) the corporation consolidates or merges with, or transfers
all or substantially all of its assets to, another
corporation and shareholders of the corporation must approve
the transaction; or
(3) there is a dissolution or liquidation of the corporation,
the corporation shall mail to holders of the Exchangeable Preferred Stock and to
the transfer agent a notice stating the proposed record or effective date, as
the case may be. The corporation shall mail the notice at least ten days before
such date. Failure to mail such notice or any defect therein shall not affect
the validity of any transaction referred to in clause (1), (2) or (3) of this
Section 11(3)(j).
(k) Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege.
If any of the following shall occur, namely: (a) any
reclassification or change of shares of Conversion Stock issuable upon
conversion of the Exchangeable Preferred Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination, or any other change for which an
adjustment is provided in (a), (b) or (c) above); (b) any consolidation or
merger to which the corporation is a party other than a merger in which the
corporation is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of Common Stock;
or (c) any sale or conveyance of all or substantially all of the assets of the
corporation as an entirety, then the corporation, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, sale or conveyance, ensure
that effective provision be made in the certificate of incorporation of the
resulting or surviving corporation or otherwise that each holder of Exchangeable
Preferred Stock then outstanding shall have the right to convert such
Exchangeable Preferred Stock into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Conversion Stock deliverable upon conversion of such
Exchangeable Preferred Stock immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and that the Conversion Price shall
continue to be subject to adjustments which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Section 11. If in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of Conversion Stock include shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger, sale
or conveyance, then effective provision shall also be made in the certificate of
incorporation of such other corporation or otherwise of such additional
antidilution provisions as are necessary to protect the interests of the holders
of the Exchangeable Preferred Stock by reason of the foregoing. The provisions
of this Section 11(3)(k) shall similarly apply to successive consolidations,
mergers, sales or conveyances.
Section 12. Reports. So long as the Exchangeable Preferred
Stock remains outstanding, the corporation shall cause its annual reports to
stockholders and any quarterly or other financial reports and information
furnished by it to stockholders pursuant to the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to be mailed to the
holders of the Exchangeable Preferred Stock (contemporaneously with the mailing
of such materials to the corporation's stockholders) at their addresses
appearing on the books of the corporation. If the corporation is not required to
furnish annual or quarterly reports to its stockholders pursuant to the Exchange
Act, it shall cause its financial statements, including any notes thereto (and
with respect to annual reports, an auditors' report by a nationally recognized
firm of independent certified public accountants), a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and such other
information which the corporation would otherwise be required to include in
annual and quarterly reports filed under the Exchange Act, to be mailed to the
holders of the Exchangeable Preferred Stock, within 120 days after the end of
each of the corporation's fiscal years and within 60 days after the end of each
of its first three fiscal quarters.
Section 13. Additional and Supplementary Rights,
Qualifications, Limitations and Restrictions. In addition to the matters
contained herein, the Exchangeable Preferred Stock shall have such additional or
supplementary rights, and be subject to such additional or supplementary
qualifications, limitations and restrictions as are set forth in the Agreement
and made expressly applicable to the Exchangeable Preferred Stock.
Section 14. Severability of Provisions. Whenever possible,
each provision hereof shall be interpreted in a manner as to be effective and
valid under applicable law, but if any provision hereof is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
EXHIBIT B
There is hereby created and authorized a series of Serial
Preferred Stock, the designation of which shall be the 8.50% Series B
Convertible Participating Preferred Stock (herein, the "Convertible Preferred
Stock") having the following rights and preferences, designations, voting powers
and terms.
As used herein, the following terms have the following
meanings (with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise requires:
"Accretion Amounts" shall have the meaning specified in
Section 3.
"Accretion Rate" shall have the meaning specified in Section
3.
"Additional Preferred Directors" shall have the meaning
specified in Section 6(b)(ii).
"Acquisition Transaction" shall mean any transaction or series
of transactions in which at least a majority of the outstanding Common Stock is
acquired by any Person, whether pursuant to a tender offer, merger, acquisition
or otherwise.
"Applicable Base Price" shall mean (a) with respect to an
Acquisition Transaction, the Average Market Price of Company Common Stock and
(b) with respect to a Stock Transaction, (i) the greater of the conversion price
per share and the Average Market Price if convertible preferred stock is issued
in the Stock Transaction, (ii) the Average Market Price if newly issued shares
of Company Common Stock are sold in the Stock Transaction and (iii) the price
per share paid if the outstanding Company Common Stock is sold in the Stock
Transaction.
"Average Market Price" shall mean, with respect to an
Acquisition Transaction or Stock Transaction, the average of the daily closing
prices of the Company Common Stock on the NYSE or, if not then listed or traded
on the NYSE, such other exchange, market or system that the Company Common Stock
is then listed or traded on, for 10 consecutive trading days, commencing on the
fifth business day after the consummation of such Acquisition Transaction or
Stock Transaction.
"Board of Directors" shall mean the board of directors of the
Corporation.
"Business Day" shall mean any day that is not a Saturday,
Sunday or a Legal Holiday.
"Change of Control" shall mean any event that gives any Person
or Group other than the Holders, the Stockholders, Leslie B. Otten or their
Permitted Transferees the ability to "control" the Corporation (a) through the
acquisition of either (i) substantially all of the assets of the Corporation and
its subsidiaries, taken as a whole, or (ii) at least a majority of the aggregate
voting power of the Corporation=s capital stock or (b) by otherwise being able
to elect or designate a majority of the Board of Directors through a management
contract or otherwise.
"Class A Common Stock" shall mean the Class A common stock,
par value $.01 per share, of the Corporation.
"Common Stock" shall mean the Company Common Stock and the
Class A Common Stock as the same exist as of the date hereof or as such stock
may be constituted from time to time.
"Company Common Stock" shall mean the common stock, par value
$.01 per share, of the Corporation.
"Conversion Date" shall have the meaning specified in Section
9(b).
"Conversion Price" shall mean the applicable price at which
Conversion Shares shall be delivered upon conversion of shares of the
Convertible Preferred Stock as specified in Section 9(a).
"Conversion Shares" shall have the meaning specified in
Section 9(a).
"Convertible Preferred Stock" shall mean the Corporation=s
8.50% Series B Convertible Participating Preferred Stock, par value $.01 per
share.
"Corporation" shall mean ASC Delaware, Inc., a Delaware
corporation whose name is to be changed to American Skiing Company in connection
with the Delaware Reincorporation.
"Current Market Price" shall mean the Current Market Price of
the Company Common Stock calculated in accordance with Section 9(c)(iv).
"Default Voting Event" shall have the meaning specified in
Section 6(b)(ii).
"Definitive Agreements" shall mean the Preferred Stock
Subscription Agreement, together with the schedules attached thereto, the
Stockholders= Agreement, and the Voting Agreement.
"Delaware Reincorporation" shall mean the merger of American
Skiing Company ("ASC Maine"), a Maine corporation, with and into the Corporation
and that, after giving effect to such merger, will have the identical
authorized, issued and outstanding capital stock with the same rights and
preferences as ASC Maine and a board to which the directors are elected annually
instead of a staggered board of directors.
"Delaware Reincorporation Vote" shall mean a vote in favor of
the Delaware Reincorporation by a majority of the outstanding voting securities
of ASC Maine.
"Distribution Date" shall have the meaning specified in
Section 9(c)(iii).
"Dividend Rate" shall have the meaning specified in Section 3.
"Equity Equivalents" shall mean Common Stock or rights,
warrants, options or other convertible securities (including the Repriced
Preferred Stock and any other convertible debt or equity) representing the right
to acquire Common Stock, but excluding the exercise of options which were
granted prior to the initial public offering of the Corporation or options that
were or are set at the market price at the time such options were or are granted
by the Corporation or as determined by the Board of Directors or a duly
authorized committee or delegee thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Fully Diluted Basis" shall have the meaning given to such
term in the Stockholders' Agreement.
"Group" shall have the meaning set forth in Rule 13d-5, as in
effect on the date hereof, under the Exchange Act.
"Holders" shall mean the holders of the Convertible Preferred
Stock.
"Issue Date" shall mean August 6, 1999, the original date of
issuance of the 8.50% Series B Convertible Participating Preferred Stock, par
value $.01 per share, of ASC Maine.
"Junior Preferred" shall have the meaning specified in Section
2.
"Junior Stock" shall have the meaning specified in Section 2.
"Legal Holiday" shall mean any day on which banking
institutions are obligated or authorized to close in The City of New York or in
the State of Maine.
"Liquidation Price" shall mean, as of any date, an amount
equal to $1,000 per share, plus (x) where cash dividends are not paid pursuant
to Section 3, the aggregate Accretion Amounts through such date and (y) all
accrued and unpaid dividends to such date, whether or not declared, to the
extent such accrued and unpaid dividends are not taken into account in
determining the Accretion Amounts under clause (x).
"Liquidation Right" shall mean for each share of Convertible
Preferred Stock the greater of (i) the Liquidation Price and (ii) the amount
that would be received in liquidation following conversion of a share of
Convertible Preferred Stock into Common Stock.
"Majority Holders" shall mean the Holders of a majority of the
then outstanding shares of Convertible Preferred Stock.
"Mandatory Redemption" shall mean any mandatory redemption of
the Convertible Preferred Stock as specified in Section 5(a).
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Notice" shall have the meaning specified in Section 5(b).
"NYSE" shall mean the New York Stock Exchange.
"Permitted Transferees" shall have the meaning given to such
term in the Stockholders' Agreement.
"Person" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3), as in effect on the
date hereof, of the Exchange Act.
"Preferred Directors" shall have the meaning specified in
Section 6(b)(i).
"Preferred Stock" shall mean the Serial Preferred Stock, par
value $.01 per share, of the Corporation.
"Preferred Stock Subscription Agreement" shall mean the
Preferred Stock Subscription Agreement dated July 9, 1999 among ASC Maine, Oak
Hill Capital Partners, L.P., and the other entities identified on Annex A
attached thereto.
"Redemption Price" shall have the meaning specified in Section
5(b).
"Repriced Preferred Stock" shall mean the 10.5% Repriced
Convertible Exchangeable Preferred Stock, $.01 par value per share, of the
Corporation.
"Requisite NYSE Shareholder Approval" shall mean the approval
by ASC Maine=s shareholders to the extent required by the NYSE in connection
with the issuance of Conversion Shares.
"Rights" shall have the meaning specified in Section
9(c)(iii).
"Senior Liquidation Stock" shall have the meaning specified in
Section 4.
"Stock Transaction" shall mean any transaction or series of
transactions pursuant to which the Corporation issues or sells shares of common
stock representing, or convertible preferred stock convertible into, 40% or more
of the outstanding shares of Common Stock on a Fully Diluted Basis.
"Stockholder Director" shall mean a director designated by the
Stockholders pursuant to the Stockholders= Agreement.
"Stockholders" shall mean Oak Hill Capital Partners, L.P. and
the other entities identified in Annex A to the Preferred Stock Subscription
Agreement.
"Stockholders= Agreement" shall mean the Stockholders= Agreement
dated August 6, 1999 among ASC Maine, the Holders, Leslie B. Otten and
ING (U.S.) Capital Corporation.
"Third Party Redemption Date" shall have the meaning specified
in Section 5(a).
"Third Party Transaction" shall mean any Acquisition
Transaction or Stock Transaction in which the financial terms, in the judgment
of the Board of Directors, are superior to those set forth in the Definitive
Agreements.
Section 1. DESIGNATION AND AMOUNT. The designation of such series of
Serial Preferred Stock shall be the Convertible Preferred Stock. The number of
issuable shares of Convertible Preferred Stock shall be 150,000.
Section 2. RANK. All shares of Convertible Preferred Stock, both as to
payment of dividends and to distribution of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, shall rank
(i) senior to all of the Corporation=s now or hereafter issued preferred stock
(the "Junior Preferred") except for the Repriced Preferred Stock, as to which it
shall rank junior, and (ii) senior to all of the Corporation=s now or hereafter
issued Common Stock or any other common stock of any class of the Corporation
(collectively with the Junior Preferred, the "Junior Stock").
Section 3. DIVIDENDS AND CERTAIN RESTRICTIONS. The Holders shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds of the Corporation legally available therefor, dividends at a rate per
share of 8.50% per annum (as may be adjusted from time to time as provided in
this Section 3) of the Liquidation Price (the "Dividend Rate"), which shall be
fully cumulative, shall accrue, and shall be compounded and payable quarterly on
October 31, January 31, April 30 and July 31 of each year, commencing on October
31, 1999 (except that if such date is a Saturday, Sunday or Legal Holiday, then
such dividend will be payable on the next Business Day) to Holders of record as
they appear on the stock transfer books of the Corporation on the record date
for the payment of such dividend, which shall be not more than 60 nor less than
30 days preceding the payment date for such dividend, as is fixed by the Board
of Directors. Dividends may, at the option of the Corporation, be paid (i) in
cash at the Dividend Rate or (ii) until the five-year anniversary of the Issue
Date, by way of an increase in the Liquidation Price in effect immediately prior
to the relevant quarterly dividend payment date in an amount calculated based on
the following rates per annum, compounded quarterly (such rate being the
"Accretion Rate" and each such amount being an "Accretion Amount") (a) 8.50% of
the Liquidation Price until January 31, 2001, (b) 9.50% of the Liquidation Price
until January 31, 2002 and (c) 10.5% of the Liquidation Price thereafter until
July 31, 2004, in the case of clauses (i) and (ii), payable quarterly in arrears
on October 31, January 31, April 30 and July 31 of each year. Notwithstanding
the foregoing, dividends shall be payable solely in accordance with clause (ii)
if cash dividends have not been paid on the Repriced Preferred Stock on the
immediately preceding dividend payment date with respect to such Repriced
Preferred Stock. The Dividend Rate and the Accretion Rate on the Convertible
Preferred Stock shall also be subject to adjustment as provided below.
In addition to the dividends described in the preceding paragraph, the
Holders shall be entitled to receive an amount equal to the amount that the
Holders would be entitled to receive if the Convertible Preferred Stock were
fully converted into Company Common Stock on the record date for the payment of
any such dividends.
The Dividend Rate and the Accretion Rate shall increase to 12.5% per
annum, compounded quarterly, of the Liquidation Price in the event that either
(a) the Delaware Reincorporation Vote or (b) the Requisite NYSE Shareholder
Approval is not obtained on or before December 31, 1999. Once the Delaware
Reincorporation Vote and the Requisite NYSE Shareholder Approval are obtained,
such increased rate will revert back to the applicable rate set forth in the
first paragraph of Section 3. In addition, the Dividend Rate and the Accretion
Rate on the Convertible Preferred Stock shall be increased by 2% per annum upon
a declaration of Default Voting Event as set forth in Section 6(b)(ii) for so
long as such Dividend Default remains uncured.
On any such dividend payment date all dividends which shall have
accrued on each share of Convertible Preferred Stock outstanding on such
dividend payment date shall accumulate and be deemed to become "due" but shall
nonetheless be payable as set forth in the first paragraph of this Section 3. If
such dividends are not fully paid on such dividend payment date, such accrued
dividends shall also be added to the Liquidation Price of the Convertible
Preferred Stock effective as of such dividend payment date and shall thereafter
accrue additional dividends in respect thereof until such unpaid dividends have
been paid in full. Dividends paid on shares of Convertible Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Any reference to "distribution" contained in this Section 3 shall not
be deemed to include any distribution made in connection with any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
that is effected in accordance with the preferences and priorities set forth in
this Certificate of Incorporation and all certificates of designation setting
forth the rights of the holders of the Corporation=s Preferred Stock.
Section 4. LIQUIDATION RIGHT. In the event of a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the Holders shall be entitled to receive out of the assets of the Corporation,
whether such assets are stated capital or surplus of any nature, the Liquidation
Right, before any payment shall be made or any assets distributed to the holders
of Common Stock or any other class or series of the Corporation=s capital stock
ranking junior as to liquidation rights to the Convertible Preferred Stock;
provided, however, that such rights shall accrue to the Holders only in the
event that the Corporation=s payments with respect to the liquidation
preferences of the holders of capital stock of the Corporation ranking senior as
to liquidation rights to the Convertible Preferred Stock (the "Senior
Liquidation Stock") are fully met. If the assets of the Corporation available
for distribution after the liquidation preferences of the Senior Liquidation
Stock are fully met are not sufficient to pay an amount equal to the Liquidation
Right to the holders of outstanding shares of Convertible Preferred Stock, then
the assets of the Corporation shall be distributed ratably among the Holders.
Neither a consolidation, merger or other business combination of the Corporation
with or into another corporation or other entity nor a sale or offer of all or
part of the Corporation=s assets for cash, securities or other property shall be
considered a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 4 (unless in connection therewith the liquidation of
the Corporation is specifically approved).
Section 5. REDEMPTION.
(a) MANDATORY REDEMPTION. The Corporation shall mandatorily redeem all
of the outstanding shares of Convertible Preferred Stock (each of the following
being a "Mandatory Redemption") (i) on August 6, 2009, at a redemption price
equal to the Liquidation Price per share (plus an amount equal to all accrued
and unpaid dividends to such date of redemption) or (ii) if (A) either the
Delaware Reincorporation Vote or the Requisite NYSE Shareholder Approval is not
obtained by December 31, 1999 and (B) if within twelve months following the date
of the Preferred Stock Subscription Agreement, the Corporation announces or
consummates a Third Party Transaction, at the Liquidation Price plus the excess,
if any, of (x) the Applicable Base Price over (y) $5.25, as such number may be
adjusted from time to time as provided in Section 9, multiplied by the number of
Conversion Shares into which the Convertible Preferred Stock being redeemed is
convertible on the date immediately preceding such announcement or consummation
of the Third Party Transaction (a "Third Party Redemption Date"). In addition,
if the Company Common Stock continues to be publicly traded following the
consummation of any Third Party Transaction, the Holders whose Convertible
Preferred Stock has been redeemed pursuant to clause (ii) of this Section 5(a)
shall be entitled to receive within ten days after the first anniversary of the
Third Party Redemption Date an amount equal to the excess, if any, of (i) the
highest average consecutive 30-day trading price of the Company Common Stock
during the 12 months following the Third Party Redemption Date over (ii) the
Applicable Base Price, multiplied by the number of Conversion Shares into which
the Convertible Preferred Stock could have been converted on the Third Party
Redemption Date.
No Mandatory Redemption pursuant to this Section 5(a) shall be made
unless and until all outstanding Repriced Preferred Stock has been converted,
repurchased, redeemed or otherwise retired. If, upon any Mandatory Redemption,
funds are not legally available to the Corporation for redemption of all the
shares of Convertible Preferred Stock, the Corporation shall redeem on such
date, at the applicable redemption price, that number of shares of Convertible
Preferred Stock which it can lawfully redeem, and from time to time thereafter,
as soon as funds are legally available, the Corporation shall redeem at the
applicable redemption price shares of Convertible Preferred Stock until the
Corporation has redeemed the shares of Convertible Preferred Stock in full.
In the event that the Corporation is in arrears in the redemption of
its Convertible Preferred Stock pursuant to a Mandatory Redemption, the
Corporation may not (i) purchase, redeem or pay dividends on any Junior Stock or
(ii) make any mandatory purchase or redemption of any Convertible Preferred
Stock or stock on a parity therewith except pro rata according to all such
obligations then due or in arrears among all such outstanding stock.
(b) OPTIONAL REDEMPTION. Other than pursuant to a Mandatory Redemption
in accordance with Section 5(a) or a redemption upon a Change of Control in
accordance with Section 5(c), the shares of Convertible Preferred Stock shall
not be redeemable at the option of the Company by the Corporation until
following the four-year anniversary of the Issue Date. Following such date, the
Corporation shall have the right, at its option, upon not less than 60 days=
prior written notice ("Notice"), but subject to the right of the Holders to
convert their shares of Convertible Preferred Stock into shares of Common Stock
pursuant to Section 9, to redeem, out of funds legally available therefor, all
or a portion of the shares of Convertible Preferred Stock during the 12-month
period beginning on July 31 of the years indicated below (subject to the right
of the Holder of record on a record date for the payment of a dividend on the
Convertible Preferred Stock to receive the dividend due on such shares of
Convertible Preferred Stock on the corresponding dividend payment date, if such
dividend payment date is prior to the date set for redemption) at the redemption
prices (expressed as a percentage of the Liquidation Price) set forth below
(each a "Redemption Price"):
Year Redemption Price
---- ----------------
2003 105%
2004 104%
2005 103%
2006 102%
2007 101%
2008 and thereafter 100%
provided that the Corporation shall not be entitled to redeem Convertible
Preferred Stock in accordance with this subparagraph (b) unless the closing
sales price for shares of Common Stock on the NYSE for the 30 consecutive
trading days immediately preceding the date of the Notice shall be at least 350%
of the current Conversion Price on or prior to June 30, 2004 and at least 150%
of the current Conversion Price thereafter.
In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the Corporation shall select the shares of
Convertible Preferred Stock to be redeemed in accordance with any method
permitted by the national securities exchange on which the Convertible Preferred
Stock is then listed, or if not so listed, the Corporation shall designate by
lot, or in such other manner as the Board of Directors may determine, the shares
to be redeemed, or shall effect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the Convertible
Preferred Stock at any time outstanding until all dividends accrued to such
payment date upon all Convertible Preferred Stock then outstanding shall have
been paid.
The Notice shall be given by first class mail, postage prepaid, to each
Holder of record of the Convertible Preferred Stock to be redeemed, at such
Holder=s address as it shall appear upon the stock transfer books of the
Corporation. Each such notice of redemption shall specify the date fixed for
redemption, the Redemption Price, the then current Conversion Price, the place
or places of payment and conversion and that payment or conversion will be made
upon presentation of and surrender of the certificates evidencing the shares of
Convertible Preferred Stock to be redeemed or converted, and that the
Convertible Preferred Stock may be converted at any time before the close of
business on such date fixed for redemption.
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder of the Convertible
Preferred Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to a Holder of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any shares of Convertible Preferred Stock owned by other Holders to whom such
notice was duly given. On or after the date fixed for redemption as stated in
such Notice, each Holder of the shares called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated in
such notice and shall thereupon be entitled to receive payment of the Redemption
Price. If less than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued without cost to the
Holder thereof representing the unredeemed shares. If such Notice shall have
been so mailed and if, on or prior to the redemption date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the account
of the holders of the shares so to be redeemed (as to be and continue to be
available therefor), then on and after the redemption date, notwithstanding that
any certificate for shares of the Convertible Preferred Stock so called for
redemption shall not have been surrendered for cancellation, all shares of the
Convertible Preferred Stock with respect to which such notice shall have been
mailed and such funds shall have been set aside shall be deemed to be no longer
outstanding and all rights with respect to such shares of the Convertible
Preferred Stock so called for redemption shall forthwith cease and terminate,
except the right of the Holders to receive out of the funds so set aside in
trust the amount payable on the redemption thereof (including an amount equal to
accrued and unpaid dividends to the redemption date) without interest thereon.
The Holder of any shares of Convertible Preferred Stock redeemed upon
any exercise of the Corporation=s redemption right under this Section 5(b) shall
not be entitled to receive payment of the Redemption Price for such shares until
such Holder shall cause to be delivered to the place specified in the Notice (i)
the certificate(s) representing such shares of Convertible Preferred Stock
redeemed and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of Convertible Preferred Stock to the
Corporation free of any adverse interests; provided that the foregoing is
subject to the other provisions of the Certificate of Incorporation or Bylaws
governing lost certificates generally.
(c) CHANGE OF CONTROL. Upon the occurrence of a Change of Control, each
Holder may require the Corporation to redeem such requesting Holder=s
Convertible Preferred Stock at a purchase price in cash in an amount equal to
101.0% of the applicable Liquidation Price per share (plus an amount equal to
all accrued and unpaid dividends to such date of redemption) (the "Change of
Control Price").
Within 45 days following any Change of Control, the Corporation shall
give to each Holder a written notice (a "Change of Control Notice") stating:
(i) that a Change of Control has occurred and that such Holder has the
right to require the Corporation to redeem such Holder=s Convertible Preferred
Stock at the Change of Control Price as set forth above;
(ii) the circumstances and relevant facts regarding such Change of Control;
(iii) the redemption date, which date shall be no earlier than 45 days nor
later than 60 days from the date such notice is mailed; and
(iv) the instructions a Holder must follow in order to have its
Convertible Preferred Stock redeemed pursuant to this Section 5(c).
Change of Control Notices shall otherwise be governed by the provisions
set forth above in paragraph (b) relating to Notices.
Holders electing to have Convertible Preferred Stock redeemed under
this Section 5(c) will be required to surrender such Convertible Preferred Stock
to the Corporation at the address specified in the Change of Control Notice at
least five Business Days prior to the specified redemption date. Any Holder will
be entitled to withdraw its election if the Corporation receives, not later than
three Business Days prior to the redemption date, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the amount of the
Convertible Preferred Stock delivered for redemption by such Holder as to which
its election is to be withdrawn and a statement that such Holder is withdrawing
its election to have such Convertible Preferred Stock redeemed.
No Change of Control Notice shall be issued pursuant to this Section
5(c) unless and until all outstanding Repriced Preferred Stock has been, or
shall have been as part of the Change of Control, converted, repurchased,
redeemed or otherwise retired. If, upon any Change of Control, funds are not
legally available to the Corporation for redemption of the shares of Convertible
Preferred Stock that the Holders have requested to be redeemed, the Corporation
shall redeem on such date, at the Change of Control Price, that number of shares
of Convertible Preferred Stock which it can lawfully redeem, and from time to
time thereafter, as soon as funds are legally available, the Corporation shall
redeem at the Change of Control Price shares of Convertible Preferred Stock
until the Corporation has redeemed all the shares of Convertible Preferred Stock
that the Holders have requested be redeemed.
Section 6. VOTING RIGHTS.
(a) GENERAL. The Holders shall vote together with the holders of the
Common Stock (and any other class of equity securities which may similarly vote
with the holders of the Common Stock as a single class with respect to any
matter) upon all matters upon which stockholders are entitled to vote, except
for the election of directors (on which the Holders shall be entitled to vote as
a separate class pursuant to paragraph (b) below) and except for the Requisite
NYSE Shareholder Approval or the Delaware Reincorporation, and shall be entitled
to a number of votes per share of Convertible Preferred Stock equal to the
number of shares of Common Stock into which the shares of the Convertible
Preferred Stock are convertible on the record date of the determination of
stockholders entitled to notice of and to vote on such matter; provided, that,
nothing in this Section 6(a) shall prevent Oak Hill from exercising or enforcing
its rights under the Voting Agreement, dated as of August 6, 1999, among the ASC
Maine, Oak Hill, and certain of ASC Maine=s stockholders. In addition, the
Holders will have all voting rights required by law, and shall also have all
special voting rights provided below. Any shares of Convertible Preferred Stock
held by the Corporation or any entity controlled by the Corporation shall not
have voting rights hereunder and shall not be counted in determining the
presence of a quorum.
(b) CLASS VOTING RIGHTS.
(i) RIGHT TO ELECT DIRECTORS. So long as any shares of
Convertible Preferred Stock are outstanding, the minimum number of directors on
the Board of Directors shall be eleven. The Holders shall be entitled to vote
together as a class to elect four directors of the Corporation (the "Preferred
Directors"); provided at least 112,000 shares of the Convertible Preferred Stock
remain outstanding. In the event that (i) fewer than 112,000 shares and 75,000
or more shares of Convertible Preferred Stock are outstanding, the Holders shall
be entitled to elect three Preferred Directors, (ii) fewer than 75,000 shares
and 37,500 or more shares of Convertible Preferred Stock are outstanding, the
Holders shall be entitled to elect two Preferred Directors, (iii) fewer than
37,500 shares and 7,500 or more shares of Convertible Preferred Stock are
outstanding, the Holders shall be entitled to elect one Preferred Director and
(iv) fewer than 7,500 shares of Convertible Preferred Stock are outstanding, the
Holders shall not be entitled to elect any Preferred Directors.
(ii) DEFAULT VOTING RIGHTS. If, without either the consent of
Majority Holders or the consent of at least one Preferred Director or
Stockholder Director, the Corporation (a) fails to make any quarterly dividend
payment (in accordance with Section 3) on the Convertible Preferred Stock or (b)
breaches a material covenant contained in the Definitive Agreements or the
provisions of Section 6(b)(iii) hereof (any event described in clause (a) or (b)
being a "Default Voting Event"), the Holders, following in the case of clause
(b), a declaration of default by the Majority Holders, will have the right to
elect two additional Preferred Directors ("Additional Preferred Directors"). In
addition, the Dividend Rate and the Accretion Rate on the Convertible Preferred
Stock shall be increased by 2% per annum for so long as any Default Voting Event
remains uncured by the Corporation. At such time as a Default Voting Event no
longer exists, any Additional Preferred Directors elected pursuant to this
Section 6(b)(ii) shall be deemed to have automatically resigned from the Board
of Directors and they shall cease to be directors of the Corporation. The
Holders (voting separately as a class) will have the exclusive right to vote for
and elect such Additional Preferred Directors pursuant to a written consent or
at a meeting of stockholders without any further action on the part of the
Corporation or the Holders as provided below.
(iii) ACTIONS REQUIRING AFFIRMATIVE VOTE. So long as shares of
Convertible Preferred Stock are outstanding, the Corporation shall not, directly
or indirectly, or through merger or consolidation with any other person, without
the affirmative vote or consent of the Majority Holders, with the Holders voting
separately as a class, (a) amend, alter or repeal (by merger, consolidation or
otherwise) any provision of this Certificate of Incorporation or the By-laws of
the Corporation, as amended, so as to affect adversely the relative rights,
preferences, powers (including, without limitation, voting powers) and
privileges of the Convertible Preferred Stock, (b) authorize or issue any new
class of shares or Equity Equivalents having a preference with respect to
dividends, redemption and/or liquidation over, or on parity with, the
Convertible Preferred Stock, (c) reclassify any of its capital stock into shares
having a preference with respect to dividends, redemption and/or liquidation
over, or on parity with, the Convertible Preferred Stock or (d) issue any
additional shares of Convertible Preferred Stock. In connection with any right
to vote pursuant to this Section 6(b)(iii), each Holder will have one vote for
each share of Convertible Preferred Stock held.
(iv) SPECIAL MEETING. Whenever the rights described above
shall vest, they may be exercised initially by the vote of the Majority Holders
present and voting, in person or by proxy, at a special meeting of Holders or at
the next annual meeting of stockholders, or by written consent of the Majority
Holders without a meeting. Unless such action shall have been taken by written
consent as aforesaid, a special meeting of the Holders for the exercise of any
such right shall be called by the Secretary of the Corporation as promptly as
possible in compliance with applicable law and regulations, and in any event
within 10 days after receipt of a written request signed by the Holders of
record of at least 25% of the then outstanding shares of the Convertible
Preferred Stock, subject to any applicable notice requirements imposed by law or
by any national securities exchange on which any Convertible Preferred Stock is
listed. Such meeting shall be held at the earliest practicable date thereafter.
(v) TERM OF OFFICE OF DIRECTORS. Any Preferred Director shall
hold office for a term expiring at the next annual meeting of stockholders and
during such term may be removed at any time, either for or without cause, by and
only by, the affirmative vote of the Majority Holders of record, with the
Convertible Preferred Stock voting as a single class, present and voting, in
person or by proxy, at a special meeting of such stockholders called for such
purpose, or by written consent without a meeting of the Majority Holders of
record, with the Convertible Preferred Stock voting as a single class. A special
meeting of the Holders for the removal of a director elected by the Holders in
accordance with this subparagraph (b) and the filling of the vacancy created
thereby shall be called by the Secretary of the Corporation as promptly as
possible and in any event within 10 days after receipt of request therefor
signed by the holders of not less than 25% of the outstanding shares of the
Convertible Preferred Stock taken as a single class, subject to any applicable
notice requirements imposed by law or any national securities exchange on which
any Convertible Preferred Stock is listed. Such meeting shall be held at the
earliest practicable date thereafter.
(vi) VACANCIES. Any vacancy caused by the death, resignation
or removal of any Preferred Director may be filled by the remaining Preferred
Directors or, if not so filled, or if there are no Preferred Directors on the
Board of Directors, by and only by a vote of the Majority Holders present and
voting as a single class, in person or by proxy, at a meeting of such Holders
called for such purpose, or by written consent without a meeting of the Majority
Holders. Unless such vacancy shall have been filled by the remaining Preferred
Directors or by written consent as aforesaid, such meeting shall be called by
the Secretary of the Corporation at the earliest practicable date after such
death, resignation or removal, and in any event within 10 days after the receipt
of a written request signed by the Holders of record of at least 25% of the
outstanding shares of the Convertible Preferred Stock taken as a single class.
(vii) STOCKHOLDERS= RIGHT TO CALL MEETING. If any meeting of
the Holders required by this subparagraph (b) to be called shall not have been
called within 10 days after personal service of a written request therefor upon
the Secretary of the Corporation or within 15 days after mailing the same within
the United States of America by registered mail addressed to the Secretary of
the Corporation at its principal office, subject to any applicable notice
requirements imposed by law or any national securities exchange on which any
Convertible Preferred Stock is then listed, then the Holders of record of at
least 25% of the then outstanding shares of the Convertible Preferred Stock may
designate in writing a Holder of the Convertible Preferred Stock to call such
meeting at the reasonable expense of the Corporation, and such meeting may be
called by such Person so designated upon the notice required for annual meetings
of stockholders or such shorter notice (but in no event shorter than permitted
by law or any national securities exchange on which the Convertible Preferred
Stock is then listed) as may be acceptable to the Majority Holders. Any Holder
of Convertible Preferred Stock so designated shall have reasonable access to the
stock books of the Corporation relating solely to the Convertible Preferred
Stock for the purpose of causing such meeting to be called pursuant to these
provisions.
(viii) QUORUM. At any meeting of the Holders called in
accordance with the provisions of this subparagraph (b) for the election or
removal of directors, the presence in person or by proxy of the Majority Holders
with the Holders of Convertible Preferred Stock voting as a single class shall
be required to constitute a quorum; in the absence of a quorum, a majority of
the Holders present in person or by proxy shall have power to adjourn the
meeting from time to time without notice, other than announcement at the
meeting, until a quorum shall be present.
Section 7. OUTSTANDING SHARES. For purposes of this Resolution, all
shares of Convertible Preferred Stock shall be deemed outstanding except (i)
from the date fixed for redemption pursuant to Section 5, all shares of
Convertible Preferred Stock that have been so called for redemption under
Section 5 if funds necessary for payment of the Redemption Price have been
irrevocably deposited in trust, for the account of the Holders of the shares so
to be redeemed (so as to be and continue to be available therefor), with a
corporation organized and doing business under the laws of the United States or
any State or territory thereof or of the District of Columbia (or a corporation
or other person permitted to act as a trustee by the Securities and Exchange
Commission), authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by Federal, State or District of Columbia or
territorial authority; and (ii) from the date of registration of transfer, all
shares of Convertible Preferred Stock held of record by the Corporation or any
subsidiary of the Corporation.
Section 8. STATUS OF ACQUIRED SHARES. The Corporation shall take all
such actions as are necessary to cause any shares of Convertible Preferred Stock
redeemed by the Corporation, received upon conversion pursuant to Section 9, or
otherwise acquired by the Corporation, to be restored to the status of
authorized and unissued shares of Preferred Stock, without designation as to
series, and such shares may thereafter be issued, but not as shares of
Convertible Preferred Stock unless the other provisions of this Resolution have
been complied with.
Section 9. CONVERSION.
(a) Except as provided in the next succeeding sentence, each share of
the Convertible Preferred Stock shall be convertible at any time, after the
Requisite NYSE Shareholder Approval is obtained, at the option of the Holder
thereof, into validly issued, fully paid and non-assessable shares of the
Company Common Stock ("Conversion Shares") at the Conversion Price, determined
as hereinafter provided, in effect at the time of conversion. Unless default be
made in the payment in full of the Redemption Price and any accrued and unpaid
dividends, shares of Convertible Preferred Stock called for redemption in
accordance with the terms herein shall cease to be convertible into Conversion
Shares at the close of business on the redemption date. The Conversion Price
shall be initially $5.25 per share. The number of Conversion Shares issuable
upon conversion of a share of Convertible Preferred Stock is determined by
dividing the Liquidation Price (inclusive of any accrued and unpaid dividends)
of a share of Convertible Preferred Stock by the Conversion Price in effect on
the Conversion Date (as hereinafter defined) and rounding the result to the
nearest 1/100th of a share. The Conversion Price shall be subject to adjustment
as provided below. Upon conversion, any accrued and unpaid dividends on the
Convertible Preferred Stock shall be paid to the Holder thereof in accordance
with the provisions of Section 3. If a holder converts more than one share at
the same time, the number of full shares issuable upon the conversion shall be
based upon the total number of shares converted.
(b) In order to convert shares of the Convertible Preferred Stock into
Conversion Shares, the Holder thereof shall surrender at the office of any
transfer agent for the Convertible Preferred Stock (or in the absence of any
transfer agent, the Corporation) the certificate or certificates therefor, duly
endorsed to the Corporation or in blank, and give written notice to the
Corporation at said office that he or she elects to convert such shares. Shares
of the Convertible Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the date of surrender of such
shares for conversion in accordance with the foregoing provisions (hereinafter
the "Conversion Date"), and the person or persons entitled to receive Conversion
Shares issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Conversion Shares at such time. As promptly as
practicable after the Conversion Date, the Corporation shall issue and deliver
at said office the certificate or certificates for the number of full Conversion
Shares issuable upon such conversion, together with a cash payment in lieu of
any fraction of a Conversion Share, as hereinafter provided, to the person or
persons entitled to receive the same or to the nominee or nominees of such
person or persons.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Corporation shall (i) pay a dividend in shares
of any class of its Common Stock to all holders of such class, (ii) make a
distribution in shares of any class of its Common Stock to all holders of such
class, (iii) subdivide any of its outstanding Common Stock into a greater number
of shares, or (iv) combine any of its outstanding Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior thereto shall
be adjusted so that the holder of any shares of Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive that number
of Conversion Shares representing the percentage of all outstanding shares of
Common Stock which the Holder would have owned had such Convertible Preferred
Stock been converted immediately prior to the happening of such event and the
Conversion Price shall be adjusted accordingly. An adjustment made pursuant to
this subsection (i) shall become effective immediately after the record date in
the case of a dividend in shares or distribution and shall become effective
immediately after the effective date in the case of subdivision or combination.
(ii) In case the Corporation shall issue Equity Equivalents to
all or substantially all holders of any class of its Common Stock or to any
other person (other than the Holders) entitling such person or persons to
subscribe for, purchase or otherwise acquire shares of Common Stock (or
securities in any manner representing the right to acquire Common Stock) at a
price per share that is less than the then Current Market Price per share of
Common Stock (as determined in accordance with subsection (v) below) at the
record date for the determination of shareholders entitled to receive such
Equity Equivalents on the date of issuance thereof or, with respect to issuances
to persons other than Holders, on the issue date, as applicable, the Conversion
Price in effect immediately prior thereto shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date or issue date, as applicable, by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on such record date or issue date, as applicable, plus the number of
shares which the aggregate offering price of the total number of shares of
Common Stock so offered, (or the aggregate conversion price of the convertible
securities so offered) would purchase at such Current Market Price (as defined
in subsection (iv) below), and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date or issue date, as
applicable, plus the number of additional shares of Common Stock offered (or
into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any Equity Equivalents are
issued, and shall become effective immediately after such record date or such
sale date, as applicable. If at the end of the period during which such Equity
Equivalents are exercisable not all such Equity Equivalents shall have been
exercised, the adjusted Conversion Price shall be readjusted to what it would
have been based upon the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued).
(iii) In case the Corporation shall distribute to all or
substantially all holders of any class of Common Stock any shares of capital
stock of the Corporation (other than Common Stock), evidences of indebtedness or
other non-cash assets (including securities of any company other than the
Corporation), or shall distribute to all or substantially all holders of any
class of Common Stock rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in subsection (ii) above), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the date of such distribution by a fraction of which the numerator
shall be the Current Market Price per share (as defined in subsection (iv)
below) of the Conversion Shares on the record date mentioned below less the fair
market value on such record date (as reasonably determined by the Board of
Directors, whose determination shall be conclusive evidence of such fair market
value) of the portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants applicable to one
share of Common Stock (determined on the basis of the number of shares of Common
Stock outstanding on the record date), and of which the denominator shall be the
Current Market Price per share (as defined in subsection (iv) below) of the
Conversion Shares on such record date. Such adjustment shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
Notwithstanding the foregoing, in the event that the
Corporation shall distribute rights or warrants (other than those referred to in
subsection (ii) above) ("Rights") pro rata to holders of any class of Common
Stock, the Corporation may, at its option, in lieu of making any adjustment
pursuant to this Section 9, make proper provision so that each holder of
Convertible Preferred Stock who converts such stock (or any portion thereof)
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such conversion, in
addition to the shares of Conversion Stock issuable upon such conversion, a
number of Rights to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"), the same number
of Rights to which a holder of a number of shares of Common Stock equal to the
number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights and
(ii) if such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into which the
principal amount of the security so converted was convertible immediately prior
to the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 9(c), the current market price (the "Current Market
Price") per Conversion Share on any date shall be deemed to be equal to the
average of the daily closing prices of the Common Stock on the NYSE or, if not
then listed or traded on the NYSE, such other exchange, market or system that
the Common Stock is then listed or traded on for the 10 trading days immediately
prior to the record date or date of issuance with respect to distributions,
issuances or other events requiring such computation under subsection (ii) or
(iii) above; provided that in the case of an underwritten public offering of
Equity Equivalents which are currently traded, the Current Market Price shall be
the closing price of the Common Stock on the issuance date, less an allowance
for a customary discount to the current market trading price which is reasonably
required to effect such offering. The closing price for each day shall be the
closing price on the NYSE or the last reported sales price or, if the Conversion
Shares are not listed or admitted to trading on the NYSE, on the principal
national securities exchange on which the Conversion Shares are listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the closing sales price of the Conversion Shares as quoted
by NASDAQ or, in case no reported sale takes place, the average of the closing
bid and asked prices as quoted by NASDAQ or any comparable system or, if the
Conversion Shares are not quoted on NASDAQ or any comparable system, the closing
sales price or, in case no reported sale takes place, the average of the closing
bid and asked prices, as furnished by any two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose. If no such prices are available, the Current
Market Price per share shall be the fair value of a Conversion Share as
reasonably determined by the Board of Directors.
(v) In any case in which this Section 9 shall require that an
adjustment be made following a record date the Corporation may elect to defer
(but only until five Business Days following the mailing by the Corporation to
the holders of the notice of adjustment described in subsection (ix) below)
issuing to the Holder of any Convertible Preferred Stock converted after such
record date the Conversion Shares and other capital stock of the Corporation
issuable upon such conversion over and above the Conversion Shares and other
capital stock of the Corporation issuable upon such conversion only on the basis
of the Conversion Price prior to adjustment; and, in lieu of the shares the
issuance of which is so deferred, the Corporation shall issue or cause its
transfer agents to issue due bills or other appropriate evidence prepared by the
Corporation of the right to receive such shares. If any distribution in respect
of which an adjustment to the Conversion Price is required to be made as of the
record date therefor is not thereafter made or paid by the Corporation for any
reason, the Conversion Price shall be readjusted to the Conversion Price which
would then be in effect if such record date had not been fixed or such effective
date had not occurred.
(vi) NO ADJUSTMENT. No adjustment in the Conversion Price
shall be required unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Price as last adjusted; provided, however, that
any adjustments which by reason of this subsection (vi) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 9 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for a transaction referred to in
paragraph (c)(i), (ii) or (iii) above if all Holders of Convertible Preferred
Stock are entitled to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Common Stock participate in the
transaction. The Corporation shall give 30 days prior notice to any transfer
agent and to the Holders of the Convertible Preferred Stock of any such
determination.
No adjustment need be made for (a) issuances of Common Stock
pursuant to a Corporation plan for reinvestment of dividends or interest, (b) a
change in the par value or a change to no par value of the Common Stock and (c)
the issuance of Common Stock to directors, officers and employees of the
Corporation and its subsidiaries pursuant to any stock-based incentive plan duly
approved by the Board of Directors or any duly authorized committee or delegee
thereof.
To the extent that the Convertible Preferred Stock becomes
convertible into the right to receive cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
(vii) ADJUSTMENT FOR TAX PURPOSES. The Corporation shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by other provisions of this Section 9, as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivisions of
shares, distributions of rights to purchase stock or securities or distributions
of securities convertible into or exchangeable for stock hereafter made by the
Corporation to its shareholders shall not be taxable.
(viii) NOTICE OF ADJUSTMENT. Whenever the Conversion Price is
adjusted, the Corporation shall promptly mail to holders of the Convertible
Preferred Stock and to the transfer agent a notice of the adjustment briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.
(ix) NOTICE OF CERTAIN TRANSACTIONS.
In the event that:
(A) the Corporation takes any action which would require an adjustment in
the Conversion Price;
(B) the Corporation consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation and shareholders of the
Corporation must approve the transaction (excluding the Delaware
Reincorporation); or
(C) there is a dissolution or liquidation of the Corporation,
the Corporation shall mail to holders of the Convertible Preferred Stock and to
any transfer agent a notice stating the proposed record or effective date, as
the case may be. The Corporation shall mail the notice at least 10 days before
such date. Failure to mail such notice or any defect therein shall not affect
the validity of any transaction referred to in clause (A), (B) or (C) of this
Section 9(c)(ix).
(x) EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
ON CONVERSION PRIVILEGE. If any of the following (which shall not include the
Delaware Reincorporation) shall occur, namely: (a) any reclassification or
change of Conversion Shares issuable upon conversion of the Convertible
Preferred Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in (c)(i),
(ii) or (iii) above); (b) any consolidation or merger to which the Corporation
is a party other than a merger in which the Corporation is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock; or (c) any sale or
conveyance of all or substantially all of the assets of the Corporation as an
entirety, then the Corporation, or such successor or purchasing corporation, as
the case may be, shall, as a condition precedent to such reclassification,
change, consolidation, merger, sale or conveyance, ensure that effective
provision be made in the certificate of incorporation of the resulting or
surviving corporation or otherwise that each holder of Convertible Preferred
Stock then outstanding shall have the right to convert such Convertible
Preferred Stock into the kind and amount of shares of stock and other securities
and property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Conversion Stock deliverable upon conversion of such Convertible Preferred Stock
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance, and that the Conversion Price shall continue to be subject to
adjustment which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in this Section 9. If in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Conversion Stock include shares of stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then effective provision
shall also be made in the certificate of incorporation of such other corporation
or otherwise of such additional antidilution provisions as are necessary to
protect the interests of the holders of the Convertible Preferred Stock by
reason of the foregoing. The provisions of this Section 9(c)(x) shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Section 10. REPORTS. So long as the Convertible Preferred Stock remains
outstanding, the Corporation shall cause its annual reports to stockholders and
any quarterly or other financial reports and information furnished by it to
stockholders pursuant to the requirements of the Exchange Act, to be mailed to
the holders of the Convertible Preferred Stock (contemporaneously with the
mailing of such materials to the Corporation=s stockholders) at their addresses
appearing on the books of the Corporation. If the Corporation is not required to
furnish annual or quarterly reports to its stockholders pursuant to the Exchange
Act, it shall cause its financial statements, including any notes thereto (and
with respect to annual reports, an auditors= report by a nationally recognized
firm of independent certified public accounts), a "Management=s Discussion and
Analysis of Financial Condition and Results of Operations" and such other
information which the Corporation would otherwise by required to include in
annual and quarterly reports filed under the Exchange Act, to be mailed to the
holders of the Convertible Preferred Stock, within 120 days after the end of
each of the Corporation=s fiscal years and within 60 days after the end of each
of its first three fiscal quarters.
Section 11. SEVERABILITY OF PROVISIONS. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.