EXHIBIT 99.2
PREFERRED STOCK CONVERSION AGREEMENT
BY AND AMONG
AMERICA ONLINE LATIN AMERICA, INC.,
AMERICA ONLINE, INC.,
ASPEN INVESTMENTS LLC
AND
ATLANTIS INVESTMENTS LLC
DATED AS OF OCTOBER 3, 2002
TABLE OF CONTENTS
PAGE
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ARTICLE 1 AGREEMENT TO CONVERT....................................................................................2
Section 1.1 Conversions...................................................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................3
Section 2.1 Organization; Authorization; No Conflict......................................3
Section 2.2 Valid Issuance of the Class A Common Stock....................................4
Section 2.3 SEC Documents; Financial Statements...........................................5
Section 2.4 Governmental Authorizations...................................................5
Section 2.5 No Prohibitions...............................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS............................................6
Section 3.1 Organization; Authorization; No Conflict......................................6
Section 3.2 Consents......................................................................6
Section 3.3 Accredited Investor Representation............................................7
ARTICLE 4 COVENANTS...............................................................................................7
Section 4.1 Actions to Issue the Class A Common Stock.....................................7
Section 4.2 Legends.......................................................................8
Section 4.3 Conversion Notice.............................................................9
Section 4.4 Further Assurances............................................................9
ARTICLE 5 CONDITIONS TO CONVERSIONS..............................................................................10
Section 5.1 Conditions to the Principal Stockholders' Obligations to Convert its
Shares of High Vote Stock....................................................10
ARTICLE 6 BREACH.................................................................................................11
Section 6.1 Failure to Attend or Vote....................................................11
ARTICLE 7 TERMINATION............................................................................................11
Section 7.1 Termination by any Party.....................................................11
Section 7.2 Termination by the Company...................................................12
ARTICLE 8 MISCELLANEOUS..........................................................................................12
Section 8.1 Successors and Assigns; Assignment...........................................12
Section 8.2 Amendments and Waivers.......................................................12
Section 8.3 Notices......................................................................12
Section 8.4 Entire Agreement; Supersedes Prior Agreements................................14
Section 8.5 Delays or Omissions..........................................................14
Section 8.6 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.................14
Section 8.7 Severability.................................................................15
Section 8.8 Titles and Subtitles.........................................................15
Section 8.9 Counterparts; Facsimile Signatures...........................................15
Section 8.10 Survival of Warranties.......................................................15
Section 8.11 Costs and Expenses...........................................................15
Section 8.12 Other Definitions............................................................15
EXHIBITS
Exhibit A Disclosure Schedule
Exhibit B Form of Charter Amendment
PREFERRED STOCK CONVERSION AGREEMENT
THIS PREFERRED STOCK CONVERSION AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") is entered into as of
October 3, 2002 by and among America Online Latin America, Inc., a Delaware
corporation (the "COMPANY"), America Online, Inc., a Delaware corporation
("AOL"), Aspen Investments LLC, a Delaware limited liability company ("ASPEN"),
and Atlantis Investments LLC, a Delaware limited liability company ("ATLANTIS,"
and together with Aspen, "ODC").
RECITALS
WHEREAS, the Company's Class A Common Stock, par value $.01 per share
(the "CLASS A COMMON STOCK"), is currently listed on The NASDAQ SmallCap Market
(the "SMALLCAP MARKET");
WHEREAS, pursuant to NASDAQ Marketplace Rule 4310(c)(2)(B)(ii) (the
"RULE"), the Company's listed securities must have a market value of at least
$35 million;
WHEREAS, on July 29, 2002, the staff of the SmallCap Market (the
"STAFF") informed the Company that its market value of listed securities (i.e.,
the Class A Common Stock) had been below $35 million as required for continued
listing by the Rule;
WHEREAS, in a letter dated August 29, 2002, the Staff informed the
Company that due to the Company's inability to regain compliance with the Rule,
the Class A Common Stock would be delisted from the SmallCap Market at the
opening of business on September 6, 2002;
WHEREAS, pursuant to a letter dated September 4, 2002, the Company
requested an oral hearing to be held before a panel designated by the Board of
Directors of the NASDAQ Stock Market, Inc. (the "LISTING QUALIFICATIONS PANEL")
with respect to the continued listing of the Class A Common Stock on the
SmallCap Market which thereby stayed the delisting of the Class A Common Stock;
WHEREAS, at the hearing, which is scheduled for October 4, 2002, the
Company must submit a plan for achieving compliance with the continued listing
requirements of the SmallCap Market, including the Rule; and
WHEREAS, the Company has requested that AOL, Aspen and Atlantis (each,
a "PRINCIPAL STOCKHOLDER," and collectively, the "PRINCIPAL STOCKHOLDERS")
convert portions of the High Vote Preferred Stock that they hold into shares of
Class A Common Stock on the terms and conditions set forth herein in order to
permit the Company to satisfy the requirements set forth in the Rule, and the
Principal Stockholders have agreed to such conversion on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
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ARTICLE 1
AGREEMENT TO CONVERT
SECTION 1.1 CONVERSIONS.
(a) In the event that the Panel Decision Date Closing Bid Price
(as defined in Section 8.12 hereof) is at least $0.19, the Principal
Stockholders shall (on a pro rata basis based on the total number of
outstanding shares of High Vote Preferred Stock and Class A Common Stock held
by the Principal Stockholders and their Permitted Transferees on the date
hereof), subject to the terms and conditions hereof, effective as of the Panel
Decision Time (as defined in Section 1.1(b) hereof), convert into fully paid
and non-assessable shares of High Vote Common Stock on a one-for-one basis,
that number of shares of High Vote Preferred Stock equal to the Threshold
Amount (as defined below), and immediately thereafter shall further convert all
such shares of High Vote Common Stock into fully paid and non-assessable shares
of Class A Common Stock on a one-for-one basis. For the purposes hereof,
"THRESHOLD AMOUNT" shall mean:
(i) if the Panel Decision Date Closing Bid Price is at least
$0.21, the number of additional shares of Class A Common Stock that
must be converted on the Panel Decision Date or, if applicable, the
Deferred Panel Decision Date, if any, to cause (A) the product
obtained by multiplying (y) the total number of issued and outstanding
shares of Class A Common Stock on the Panel Decision Date or, if
applicable, the Deferred Panel Decision Date, by (z) the Panel
Decision Date Closing Bid Price to equal (B) $40 million, or
(ii) if the Panel Decision Date Closing Bid Price is below $0.21
but equal to or above the $0.19, the number of additional shares of
Class A Common Stock that must be converted on the Panel Decision Date
or, if applicable, the Deferred Panel Decision Date, if any, to cause
the total number of issued and outstanding shares of Class A Common
Stock on the Panel Decision Date or, if applicable, the Deferred Panel
Decision Date, to equal 190,476,190;
(iii) provided, that in no event shall (A) AOL be required to
convert more than that number of shares of High Vote Preferred Stock
such that, following such conversion, AOL and its Permitted
Transferees will hold less than 57,360,818 shares of High Vote
Preferred Stock, and (B) ODC be required to convert more than that
number of shares of High Vote Preferred Stock such that, following
such conversion, ODC and its Permitted Transferees will hold less than
52,339,482 shares of High Vote Preferred Stock.
(b) For the purposes hereof, "FAVORABLE PANEL DECISION" shall
mean the written decision of the Listing Qualifications Panel relating to the
hearing currently scheduled for October 4, 2002 permitting the continued
listing, either unconditionally or subject to one or both of the conditions set
forth in the immediately succeeding sentence, of the Class A Common Stock on
the SmallCap Market. A conditional decision by the Listing Qualifications Panel
shall be deemed a Favorable Panel Decision if it is subject to only the
following conditions: (i) that the Conversions by the Principal Stockholders
under this Agreement occur and/or (ii) that the Class A Common Stock meet the
$35 million market capitalization test in accordance with the Rule for ten
consecutive trading days on or before a date specified. In the event that a
decision by the
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Listing Qualifications Panel includes additional conditions, unless each of the
Principal Stockholders provide the Company with a written notice accepting such
additional conditions (the "DECISION ACCEPTANCE NOTICE") by the fifth Business
Day (as defined in Section 8.12 hereof) after the Panel Decision Date, such
decision shall not be deemed a Favorable Panel Decision. "PANEL DECISION DATE"
shall mean the date that the Favorable Panel Decision is delivered to the
Company by the Listing Qualifications Panel; and "PANEL DECISION TIME" shall
mean (i) 4:01 p.m., eastern standard time, on the Panel Decision Date if the
Favorable Panel Decision is received by the Company on or before 4:00 p.m.,
eastern standard time, (ii) the exact time on the Panel Decision Date that the
Company actually receives the Favorable Panel Decision if the Favorable Panel
Decision is received by the Company after 4:00 p.m., eastern standard time, and
(iii) in the event that each Principal Stockholder delivers a Decision
Acceptance Notice to the Company, 4:01 p.m., eastern standard time, on the date
that is five Business Days after the Panel Decision Date (the "DEFERRED PANEL
DECISION DATE").
(c) Immediately prior to any conversion of High Vote Preferred
Stock pursuant to the terms hereof (a "CONVERSION"), each Principal Stockholder
shall deliver the original certificate or certificates representing such shares
of High Vote Preferred Stock to the Company free and clear of any Liens for
exchange hereunder, together with instruments of transfer, in form satisfactory
to the Company, duly executed by such Principal Stockholder or such Principal
Stockholder's duly authorized attorney on the Panel Decision Date or, if
applicable, the Deferred Panel Decision Date. As promptly as practicable
thereafter, the Company will issue and deliver duly authorized, validly issued,
fully paid and non-assessable shares of Class A Common Stock free and clear of
any Liens, except for the Liens described in Section 2.2 hereof, and in such
denominations as the Principal Stockholders may request and registered in the
respective Principal Stockholder's name.
(d) Subject to the satisfaction of the terms and conditions
contained herein, each Principal Stockholder shall be treated for all purposes
as the record holder of the Class A Common Stock ultimately issuable upon any
Conversion as of the Panel Decision Time.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule attached hereto as
Exhibit A (the "DISCLOSURE SCHEDULE"), which Disclosure Schedule shall identify
those sections of this Article 2 that each item included therein is intended to
qualify, the Company hereby represents and warrants to the Principal
Stockholders as of the date hereof and as of the effective date of any
Conversion (unless another date is specifically referenced) as follows:
SECTION 2.1 ORGANIZATION; AUTHORIZATION; NO CONFLICT.
The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to enter into this Agreement. The Company has
taken all corporate and shareholder action necessary to execute and deliver
this Agreement, to perform its obligations under this Agreement and the other
documents and instruments delivered by it pursuant to this Agreement, and to
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consummate the transactions contemplated hereby and thereby, including, without
limitation, obtaining the recommendation of an independent committee of the
Company's Board of Directors (the "BOARD"), obtaining the approval of the Board
and the approval of the Special Committee in each case, of this Agreement, the
amendment to the Company's Fourth Restated Certificate of Incorporation (the
"CHARTER") in the form of Exhibit B attached hereto (the "CHARTER AMENDMENT"),
and each of the transactions contemplated thereby, other than (i) the approval
of the Charter Amendment by (x) the affirmative vote of the holders of a
majority of the Series B Preferred Stock and of the Series C Preferred Stock,
each voting separately as a class, (y) the affirmative vote of the holders of
at least 75% of the outstanding voting power of the Series B Preferred Stock
and Series C Preferred Stock, voting together as a single class, and (z) the
affirmative vote of the holders of at least a majority of the outstanding Class
A Common Stock, voting separately as a class (the "SHAREHOLDER APPROVALS"), and
(ii) upon receipt of the Shareholder Approvals, the filing with the Secretary
of State of the State of Delaware of the Charter Amendment. The Company has
taken all corporate and shareholder action necessary to effect a Conversion
hereunder. The Board and the Special Committee have recommended that the
shareholders of the Company approve the matters to be submitted for approval by
shareholders at the Shareholders' Meeting and give the Shareholder Approvals.
In addition, the Board and the Special Committee have also determined that
consummating a reverse stock split of Class A Common Stock (the "REVERSE STOCK
SPLIT") is in the best interest of the Company and its shareholders and,
subject to their right to abandon the Reverse Stock Split at any time prior to
the filing of an applicable amendment to the Charter with the Secretary of
State of the State of Delaware, has recommended that the shareholders of the
Company approve the Reverse Stock Split at the Shareholders' Meeting. This
Agreement is a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and the
availability or lack of availability of specific performance and other
equitable remedies. Neither the execution and delivery of this Agreement, nor
the issuance of the Class A Common Stock, nor the consummation of any other
transaction contemplated by this Agreement, has constituted or resulted in or
will constitute or result in a default or violation of any term or provision of
the Company's governing documents or any statutes, rules, regulations,
indentures, agreements or other instruments binding upon the Company, which
default or violation would have a Material Adverse Effect (as defined in
Section 8.12 hereof) on the Company or its ability to consummate the
transactions contemplated hereby.
SECTION 2.2 VALID ISSUANCE OF THE CLASS A COMMON STOCK.
The shares of Class A Common Stock, when issued and delivered in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid, non-assessable, and free of all Liens, except as set forth
in (i) Section 10 of the Amended and Restated Registration Rights and
Stockholders' Agreement entered into as of March 30, 2001 by and among the
Company, Banco Itau, S.A., a Brazilian Sociedade Anonima, Banco Xxxxxx, a
Brazilian Sociedade Anonima, Banco Itau, S.A. - Cayman Branch, a Brazilian
Sociedade Anonima, Itau Bank Limited, a Cayman limited liability company and,
for limited purposes, each of the Principal Stockholders (the "AMENDED AND
RESTATED REGISTRATION RIGHTS AND STOCKHOLDERS' AGREEMENT"), and (ii) Section
3.1, Section 4.2 and Article V of the Second Amended and Restated Stockholders'
Agreement, dated as of March 8, 2002, by and among the Company, each
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of the Principal Stockholders and, for limited purposes, AOL Time Warner Inc.,
a Delaware corporation (the "SECOND AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT").
SECTION 2.3 SEC DOCUMENTS; FINANCIAL STATEMENTS.
(a) The Company has furnished or made available to the Principal
Stockholders, or will furnish and make available, each report, schedule, form,
statement and definitive proxy statement, if any, filed by the Company with the
United States Securities and Exchange Commission ("SEC") since December 31,
2001 up to and including the date of any Conversion, which are all the
documents that the Company was or will be required to file (or otherwise did
file) with the SEC in accordance with Sections 13, 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") prior to the
date of such Conversion (collectively, the "COMPANY SEC DOCUMENTS"). As of
their respective filing dates, none of the Company SEC Documents (including all
exhibits and schedules thereto and documents incorporated by reference therein)
contained or will contain any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company SEC Documents complied or
will comply, or in the case of registration statements, as of their respective
effective times, in all material respects with the then applicable requirements
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), or the
Exchange Act, as the case may be, and the rules and regulations promulgated by
the SEC thereunder. To the actual knowledge of senior management of the
Company, none of the statements made in any such Company SEC Documents is, or
has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior to
the date hereof).
(b) The financial statements (including the notes thereto) of the
Company included in the Company SEC Documents complied or will comply as to
form in all material respects with the then applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, were
or will be prepared in accordance with generally accepted accounting
principles, consistently applied during the periods involved (except as may
have been indicated in the notes thereto and, with respect to any interim
financial statements, except for the absence of footnotes and subject to normal
year-end adjustments) and fairly or will fairly present the financial position
of the Company as of the dates thereof and the results of its operations,
shareholders' equity and cash flows for the period then ended.
SECTION 2.4 GOVERNMENTAL AUTHORIZATIONS.
The Company has obtained all necessary consents of and made all
required filings with any Governmental Authority (as defined in Section 8.12
hereof) or third party required to be obtained by the Company prior to the date
of any Conversion under applicable law and relating to the consummation of the
transactions contemplated hereby, other than (i) the filing of the Charter
Amendment with the Secretary of State of the State of Delaware, and (ii) the
filing with the SEC of preliminary proxy materials (such proxy materials, and
any amendments or supplements thereto, and the definitive form of such proxy
materials, collectively, the "PROXY STATEMENT").
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SECTION 2.5 NO PROHIBITIONS.
No temporary restraining order, preliminary or permanent injunctions
or other order issued against the Company or any Subsidiary of the Company by
any court of competent jurisdiction or other legal or regulatory restraint or
provisions challenging the transactions contemplated hereby are in effect, nor
is any proceeding brought by an administrative agency or commission or other
Governmental Authority or instrumentality seeking any of the foregoing pending
against the Company or any Subsidiary of the Company. In addition, no Federal,
state, local or foreign statute, rule or regulation has been enacted which
prohibits, restricts or delays the consummation of the transactions
contemplated by this Agreement or any of the conditions to the consummation of
such transactions.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
Each Principal Stockholder, severally and not jointly, represents and
warrants to the Company, as to itself only, as of the date hereof and as of the
effective date of any Conversion as follows:
SECTION 3.1 ORGANIZATION; AUTHORIZATION; NO CONFLICT.
Such Principal Stockholder is an organization duly formed and validly
existing under the laws of the jurisdiction of its organization and is in good
standing under such laws. Such Principal Stockholder has full power and
authority to enter into this Agreement and the other agreements to which it is
a party. All corporate and shareholder actions on the part of such Principal
Stockholder necessary for the performance of its obligations under this
Agreement have been taken. This Agreement is a legal, valid and binding
obligation of such Principal Stockholder, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and the availability or lack of
availability of specific performance and other equitable remedies. Neither the
execution and delivery of this Agreement, nor the consummation of any
transaction contemplated by this Agreement, has constituted or resulted in or
will constitute or result in a default or violation under such Principal
Stockholder's governing documents or any material provisions of any material
agreement or instrument to which such Principal Stockholder is bound or any
material statutes, rules, regulations or orders binding upon such Principal
Stockholder.
SECTION 3.2 CONSENTS.
Such Principal Stockholder has obtained all necessary consents of and
made all required filings with any Governmental Authority required to be
obtained or made by such Principal Stockholder in connection with the
execution, delivery, or performance by such Principal Stockholder of this
Agreement.
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SECTION 3.3 ACCREDITED INVESTOR REPRESENTATION.
Such Principal Stockholder is an "accredited investor" as such term is
defined in Regulation D promulgated under the Securities Act.
ARTICLE 4
COVENANTS
SECTION 4.1 ACTIONS TO ISSUE THE CLASS A COMMON STOCK.
(a) In the event that the Principal Stockholders convert shares
of High Vote Preferred Stock into Class A Common Stock pursuant to the terms
and conditions hereof, the Company shall, (i) as promptly as practicable after
the Conversion issue certificates representing the Class A Common Stock, and
(ii) take all actions required or advisable in accordance with any law, rule or
regulation or otherwise to obtain the Shareholder Approvals, and upon receipt
of the Shareholder Approvals, effect the Charter Amendment, including, without
limitation, (x) delivering to the Principal Stockholders certificates
representing the Class A Common Stock issuable hereunder, subject to the
Principal Stockholders first delivering original certificates for such
converted shares of High Vote Preferred Stock as described in Section 1.1(c)
hereof, and (y) making all filings which are required under applicable laws.
Notwithstanding anything contained herein to the contrary, the Company's
obligations under this Article 4 to obtain the Shareholder Approvals, and upon
receipt of the Shareholder Approvals, effect the Charter Amendment, shall
automatically terminate and be of no effect if (A) (i) a quorum of the
shareholders of the Company fails to attend, either in person or by proxy, the
Shareholders' Meeting or any adjournment or adjournments thereof, or (ii) the
requisite Shareholder Approvals are not obtained at the Shareholders' Meeting
or any adjournment or adjournments thereof, or (B) the Company fails to obtain
the Shareholder Approvals or effect the Charter Amendment as a result of any
action, suit, litigation, or any order or injunction issued by a court of
competent jurisdiction; provided that if either of the events in clause (A) of
this sentence occur, other than as a result of the breach of Section 6.1
hereof, then the Company shall take all of the actions provided for in this
Article Fourth with respect to a second meeting (except that the second meeting
will be held after January 31, 2003).
(b) Without limiting the Company's obligations under Section
4.1(a) above, the Company shall present and seek to obtain the Shareholder
Approvals and any other shareholder approvals necessary in connection with this
Agreement, the Charter Amendment and the transactions contemplated hereby and
thereby at a special meeting of its shareholders which shall be held on or
before January 31, 2003 (the "SHAREHOLDERS' MEETING") and take all action
necessary in accordance with the General Corporation Law of the State of
Delaware (the "GCL"), the Charter and the Company's Bylaws to duly call, give
notice of and convene the Shareholders' Meeting. In connection therewith, the
Company shall prepare and file with the SEC the Proxy Statement. The Proxy
Statement shall comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations thereunder. The
Company shall use reasonable best efforts to have the Proxy Statement cleared
by the SEC as promptly as practicable after filing with the SEC. The Company
shall, as promptly as practicable after receipt thereof, provide copies of any
written comments received from the SEC
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with respect to the Proxy Statement to the Principal Stockholders and advise
the Principal Stockholders of any oral comments with respect to the Proxy
Statement received from the SEC. The Company will provide the Principal
Stockholders with a reasonable opportunity to review and comment on the Proxy
Statement and on any amendment or supplement to the Proxy Statement prior to
filing such with the SEC, and will provide the Principal Stockholders with a
copy of all such filings made with the SEC. No amendment or supplement to the
Proxy Statement shall be made without the approval of each Principal
Stockholder, which approval shall not be unreasonably withheld or delayed. The
Company agrees that none of the information set forth in the Proxy Statement
and each amendment or supplement thereto, at the time of mailing thereof and at
the time of the Shareholders' Meeting, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company shall set forth the
recommendations of the Board and the Special Committee in the Proxy Statement
and shall take all lawful action to solicit proxies in favor of the approval of
the Charter Amendment and the transactions contemplated thereby and use its
best efforts to obtain such approvals.
(c) The Proxy Statement to be delivered to the shareholders of
the Company in connection with the Shareholders' Meeting shall include a
recommendation from the Board and the Special Committee to the shareholders of
the Company entitled to vote thereon that the Charter be further amended to
effect the Reverse Stock Split; provided, however, that notwithstanding any
approval by the stockholders of the Company authorizing an amendment to the
Charter to effect the Reverse Stock Split, the Board and the Special Committee
may elect to abandon the Reverse Stock Split at any time prior to the filing of
an applicable amendment to the Charter with the Secretary of State of the State
of Delaware.
SECTION 4.2 LEGENDS.
(a) Each Principal Stockholder understands and agrees that the
certificates representing shares of Class A Common Stock issuable hereunder
will bear the following legends:
1. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN (i) ARTICLE V OF THE SECOND AMENDED AND
RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF MARCH 8, 2002, AND ANY AMENDMENTS
THERETO, BETWEEN AMERICA ONLINE LATIN AMERICA, INC., AMERICA ONLINE, INC., AOL
TIME WARNER INC., ASPEN INVESTMENTS LLC, AND ATLANTIS INVESTMENTS LLC, AND (II)
SECTION 10 OF THE AMENDED AND RESTATED REGISTRATION RIGHTS AND STOCKHOLDERS'
AGREEMENT, DATED AS OF MARCH 30, 2001, BY AND AMONG AMERICA ONLINE LATIN
AMERICA, INC., BANCO ITAU, S.A., BANCO XXXXXX, X.X., BANCO ITAU, S.A. - CAYMAN
BRANCH, ITAU BANK LIMITED AND, FOR LIMITED PURPOSES, AMERICA ONLINE, INC.,
ASPEN INVESTMENTS LLC, AND ATLANTIS INVESTMENTS LLC, COPIES OF WHICH ARE ON
FILE AT THE OFFICE OF THE COMPANY. THE HOLDER AND THE OWNER HEREOF IS SUBJECT
TO THE OBLIGATIONS THEREIN SET FORTH AND CONTAINED.
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2. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED, ENCUMBERED, TRANSFERRED, GRANTED AN OPTION WITH RESPECT TO
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
3. THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR
SERIES OF STOCK. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR
SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
(b) The first two legends set forth in Section 4.2(a) above shall
be removed by the Company from any certificate evidencing the Class A Common
Stock upon delivery to the Company of any such original certificate and an
opinion of counsel that (i) in the case of the first legend, the sale,
transfer, hypothecation, disposition or encumbrance of such Class A Common
Stock shall not be in violation of the Second Amended and Restated
Stockholders' Agreement or the Amended and Restated Registration Rights and
Stockholders' Agreement, and (ii) in the case of the second legend, the sale or
transfer of such Class A Common Stock is subject to a registration statement
under the Securities Act which is at that time in effect or can be effected
without such a registration statement being in effect. The third legend shall
remain affixed to any such certificate for so long as Section 151(f) of the GCL
or any other applicable law, rule or regulation requires.
SECTION 4.3 CONVERSION NOTICE.
Prior to any Conversion, at or before 10:00 p.m., eastern standard
time, on the Panel Decision Date or the Deferred Panel Decision Date, whichever
the case may be, with respect to a Conversion hereunder, each Principal
Stockholder shall deliver to the Company, subject to only the condition set
forth in Section 5.1(d) of this Agreement, an irrevocable written notice which
satisfies Clauses (c)(v)(C)(1) and (b)(iii)(A) of Article FOURTH of the Charter
and which are otherwise in form reasonably satisfactory to the Company that
such Principal Stockholder will convert its shares of High Vote Stock into
Class A Common Stock on the Panel Decision Date or the Deferred Panel Decision
Date, whichever the case may be (the "CONVERSION NOTICE").
SECTION 4.4 FURTHER ASSURANCES.
At any time and from time to time after the date hereof, each party
hereto shall also execute and deliver such further instruments or documents and
take such further actions as may be reasonably necessary or requested by
another party in order to evidence or effectuate the consummation of the
transactions contemplated by this Agreement and to otherwise carry out the
intent of the parties hereunder, including holding the second meeting specified
in, and in accordance with, the last sentence of Section 4.1 (a).
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ARTICLE 5
CONDITIONS TO CONVERSIONS
SECTION 5.1 CONDITIONS TO THE PRINCIPAL STOCKHOLDERS'
OBLIGATIONS TO CONVERT ITS SHARES OF HIGH VOTE STOCK.
The obligation of each Principal Stockholder to convert its shares of
High Vote Preferred Stock hereunder is subject to the satisfaction or waiver of
the following conditions at or prior to the time of such Conversion (unless
such condition specifies satisfaction on a different date or time, in which
case, such condition shall be satisfied as of such date or time). These
conditions are for each of the Principal Stockholder's sole benefit and may be
waived (in whole or in part), as to itself only, only by such Principal
Stockholder and only in writing.
(a) Each representation and warranty of the Company set forth in
Article 2 hereof shall be true and correct in all material respects except for
those qualified by materiality or Material Adverse Effect, and each
representation and warranty set forth in Article 2 that is qualified by
materiality or Material Adverse Effect shall be true and correct in all
respects.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to such Conversion shall
have been performed or complied with in all material respects.
(c) Immediately prior to, and immediately after giving effect to,
any Conversion, the Company shall have met or shall meet each requirement for
continued listing on the SmallCap Market, except for (i) the $35 million market
value of listed securities requirement as set forth in the Rule, and (ii) the
$1 minimum bid price per share requirement as set forth in NASDAQ Marketplace
Rule 4310(c)(4).
(d) With respect to any Conversion by a Principal Stockholder,
the Company shall have received a Conversion Notice from the other Principal
Stockholders on the Panel Decision Date or, if applicable, the Deferred Panel
Decision Date, which Conversion Notice shall be in compliance with the
requirements of Section 4.3 hereof.
(e) With respect to any Conversion by a Principal Stockholder, in
the event that a Principal Stockholder accepts the terms and conditions
contained in a decision of the Listing Qualifications Panel that is not a
Favorable Panel Decision by timely delivering a Decision Acceptance Notice to
the Company, the Company shall have received a Decision Acceptance Notice from
the other Principal Stockholders by the Deferred Panel Decision Date.
(f) With respect to any Conversion, the Principal Stockholders
shall have received a certificate of the Chief Executive Officer of the
Company, dated as of such Conversion, certifying as to the matters set forth in
Sections 5.1(a) through (e) hereof.
10
(g) With respect to any Conversion, the Principal Stockholders
shall have received a certificate of the Secretary or an Assistant Secretary of
the Company which shall certify the resolutions of the Board (and its
committees) providing for the approval of this Agreement.
(h) With respect to any Conversion on the Deferred Panel Decision
Date, (i) conversion of the Threshold Amount shall cause the Market Value of
Class A Common Stock to be at least $35 million on the Deferred Panel Decision
Date and (ii) the 4:00 p.m. closing bid price of a share of Class A Common
Stock as reported on the SmallCap Market on the Deferred Panel Decision Date
shall be at least $0.19.
(i) With respect to any Conversion, no actions, suits,
investigations or proceedings by or before any arbitrator or Governmental
Authority shall be pending against the Company which would materially adversely
affect (a) the consummation of the transactions contemplated hereby, or (b) the
expected benefits of the Conversions hereunder.
ARTICLE 6
BREACH
SECTION 6.1 FAILURE TO ATTEND OR VOTE.
Notwithstanding anything contained herein to the contrary, a
Principal Stockholder shall be deemed to be in breach of this Agreement if such
Principal Stockholder fails to (i) attend, either in person or by proxy, the
Shareholders' Meeting or any adjournment or adjournments thereof, and cause all
shares of Voting Stock that it then owns to be counted towards obtaining a
quorum of shareholders of the Company, or (ii) vote all shares of Voting Stock
that it then owns in favor of the Charter Amendment at the Shareholders'
Meeting or any adjournment or adjournments thereof; provided that such failure
to attend or vote is not as a result of any action, suit, litigation, or any
order or injunction issued by a court of competent jurisdiction.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION BY ANY PARTY.
Any party hereto, upon delivery of written notice to the other parties
hereto, may immediately terminate its rights and obligations hereunder if:
(a) the 4:00 p.m. closing bid price of a share of Class A Common
Stock on the SmallCap Market is less than $0.19 on the Panel Decision Date or,
if applicable, the Deferred Panel Decision Date,
(b) with respect to any Conversion, prior to such Conversion the
Market Value of Class A Common Stock equals or exceeds $40 million on the Panel
Decision Date or, if applicable, the Deferred Panel Decision Date, or
(c) no Conversion shall have occurred by March 31, 2003.
11
SECTION 7.2 TERMINATION BY THE COMPANY.
This Agreement shall immediately terminate and be of no force and
effect, at the option of the Company, upon delivery of written notice to the
other parties hereto, if the Company receives a Favorable Panel Decision that,
in the reasonable judgment of the Company, would significantly impair the
Company's ability to realize the benefit of the Charter Amendment or maintain
continued listing of the Class A Common Stock on the SmallCap Market.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, permitted
assigns, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by the Company and/or its successors
and permitted assigns. This Agreement and any rights and obligations related
hereto may not be assigned by any of the parties hereto. Any purported
assignment of this Agreement in violation of the provisions of this Section 8.1
is null and void.
SECTION 8.2 AMENDMENTS AND WAIVERS.
No modification, amendment or waiver of any provision of this
Agreement shall be effective unless such modification, amendment or waiver is
in writing and signed by the parties hereto. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
SECTION 8.3 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to
be notified, (ii) upon receipt of confirmation of successful transmission when
sent by facsimile if sent during the normal business hours of the recipient and
otherwise on the next succeeding Business Day, (iii) three Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) one Business Day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the addresses set
forth below (unless and until the party giving such notice has been given
written notice of a change in such address by the other party):
12
If to the Company:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Fax (000) 000-0000
with copies to:
America Online Latin America, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
If to AOL:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000
Attn: President, AOL International
Fax: (000) 000-0000
with copies to:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, XX 00000-0000
Attn: General Counsel
Fax: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
13
If to ODC:
Aspen Investments LLC
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
and
Atlantis Investments LLC
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
SECTION 8.4 ENTIRE AGREEMENT; SUPERSEDES PRIOR AGREEMENTS.
This Agreement, including the exhibits attached hereto, constitutes
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein.
SECTION 8.5 DELAYS OR OMISSIONS.
It is agreed that no delay or omission to exercise any right, power or
remedy accruing to any party, upon any breach, default or noncompliance by
another party under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any party's
part of any breach, default or noncompliance under this Agreement or any waiver
on such party's part of any provisions or conditions of this Agreement, must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies available under this Agreement or applicable law or
otherwise afforded to any party, shall be cumulative and not alternative.
SECTION 8.6 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York. Each party irrevocably consents to the
exclusive jurisdiction of the courts of the State of New York and the United
States located in the City of New York for all disputes arising under or
related to this Agreement, which are subject to litigation hereunder including
actions seeking injunctive relief, and to service of process in any
jurisdiction in any such action by means of notice delivered pursuant to
Section 8.3 hereof; provided, however, to permit a party to enforce a judgment
each party also irrevocably consents to the jurisdiction of the courts in the
place where such judgment enforcement is sought. Each party waives (i) any
objection it
14
otherwise may have to the personal jurisdiction and venue of the courts
designated in this Section 8.6 and (ii) the right to trial by jury.
SECTION 8.7 SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
SECTION 8.8 TITLES AND SUBTITLES.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
SECTION 8.9 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument. Signatures to this Agreement may be transmitted by facsimile.
SECTION 8.10 SURVIVAL OF WARRANTIES.
The representations, warranties and covenants of the Company and the
Principal Stockholders contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall continue until
the occurrence of a Conversion, except that the representation contained in
Section 2.2 hereof shall continue indefinitely.
SECTION 8.11 COSTS AND EXPENSES.
The Company shall pay the fees and expenses of each of AOL and ODC
(including the fees of any attorneys, accountants, appraisers or others engaged
by AOL or ODC, as the case may be) incurred in connection with this Agreement
and the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated, up to an aggregate of $25,000 for each of
AOL and ODC.
SECTION 8.12 OTHER DEFINITIONS.
The following terms as used in this Agreement shall have the following
meanings set forth below. Capitalized terms used in this Agreement and not
otherwise defined in this Agreement shall have the meanings ascribed to such
terms in the Charter.
(a) "BUSINESS DAY" means any day that is not a Saturday, Sunday
or other day on which banks are required or authorized by law to be closed in
the City of New York.
15
(b) "GOVERNMENTAL AUTHORITY" means any governmental, regulatory
or administrative agency, authority, instrumentality or commission or any
court, tribunal or judicial or arbitral body of the United States (federal,
state or local) or otherwise or any other country or the European Community or
any other supranational organization or body.
(c) "LIEN" means (i) any interest in property (whether real,
personal or mixed and whether tangible or intangible), or other restriction
including, without limitation, any lien or security interest which secures an
obligation owed to, or a claim by, a person other than the owner of such
property, whether such interest is based on common law, statute or contract,
including, without limitation, any such interest arising from a lease,
mortgage, charge, pledge, security agreement, conditional sale, trust receipt
or deposit in trust, or arising from a consignment of bailment given for
security purposes, (ii) any encumbrance upon such property which does not
secure such an obligation, or (iii) any exception to or defect in the title to
or ownership interest in such property.
(d) "MARKET VALUE OF CLASS A COMMON STOCK" means, as of any date,
the product obtained by multiplying (y) the total number of issued and
outstanding shares of Class A Common Stock on such date, by (z) the 4:00 p.m.
closing bid price of a share of Class A Common Stock as reported on the
SmallCap Market on such date.
(e) "MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, assets (including intangible assets), operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole.
(f) "PANEL DECISION DATE CLOSING BID PRICE" means the 4:00 p.m.
closing bid price of a share of Class A Common Stock as reported on the
SmallCap Market on the Panel Decision Date (as defined in Section 1.1(b)
hereof).
(g) "PERSON" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivisions thereof.
(h) "SUBSIDIARY" of any Person means any corporation,
association, partnership, joint venture, limited liability company or other
business entity of which more than 50% of the total voting power of shares of
capital stock or other interests (including partnership and joint venture
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by, or the managing member,
general partner or other solely controlling affiliate of such corporation,
association, partnership, joint venture, limited liability company or other
business entity is, (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of the Company.
16
IN WITNESS WHEREOF, the parties hereto have executed this PREFERRED
STOCK CONVERSION AGREEMENT as of the date set forth in the first paragraph
hereof.
AMERICA ONLINE LATIN AMERICA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
AMERICA ONLINE, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President, International Finance
ASPEN INVESTMENTS LLC
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President
ATLANTIS INVESTMENTS LLC
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President
17
EXHIBIT A
DISCLOSURE SCHEDULE
NONE.
EXHIBIT B
FORM OF CHARTER AMENDMENT
CERTIFICATE OF AMENDMENT OF
FOURTH RESTATED CERTIFICATE OF INCORPORATION
OF
AMERICA ONLINE LATIN AMERICA, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is America Online Latin America, Inc.
2. The Fourth Restated Certificate of Incorporation of the
Corporation filed on August 8, 2002 is hereby amended by:
(A) inserting the following definition in Clause (b) of Article
THIRD in its proper alphabetical order:
"Preferred Stock Conversion Agreement" shall mean the Preferred Stock
Conversion Agreement, dated October 3, 2002, by and among the Corporation, AOL,
Aspen and Atlantis, as the same may be amended, supplemented or restated from
time to time.
(B) striking out Clause (b)(iii)(C) of Article FOURTH thereof and
by substituting in lieu of said Clause (b)(iii)(C) of said Article the
following new Clause:
"(C) If at any time AOL, its Wholly Owned Affiliates and its
Employees own less than 50,929,167 (the "Class B Trigger Amount")
shares of Class B Common Stock in the aggregate (including shares of
Class B Common Stock issuable directly or indirectly upon conversion,
exercise or exchange of (i) then outstanding shares of any Series B
Preferred Stock, (ii) then outstanding 11% Senior Convertible Notes
(the "Initial Notes") issued under the Note Purchase Agreement dated
as of March 8, 2002 between the Corporation and AOLTW (as amended,
supplemented, or modified or restated from time to time (the "Note
Purchase Agreement")) or 11% Senior Convertible Notes issued as
interest on the Initial Notes or any other 11% Senior Convertible
Notes (collectively, the "PIK Notes"; together with the Initial Notes,
the "Notes"), or (iii) any other securities convertible into or
exchangeable or exercisable for, directly or indirectly, Class B
Common Stock (other than the warrant issued to AOL dated August 7,
2000 to purchase 16,541,250 shares of Series B Preferred Stock, but
including any shares, directly or indirectly issued upon the exercise
thereof), and as adjusted to negate any reduction in
the number of shares of Class B Common Stock and/or Series B Preferred
Stock owned by AOL resulting from the admission of a Strategic Partner
approved by the Special Committee pursuant to Article FIFTH, Clause
(d) and equitably adjusted for any stock split, stock dividend,
reverse stock split, reclassification or similar transaction) (a
"Class B Triggering Event"), then each share of Class B Common Stock
then issued and outstanding, including shares issuable upon the
conversion of Series B Preferred Stock in connection with the
occurrence of the Class B Triggering Event, shall thereupon be
converted automatically as of such date into one (1) fully paid and
non-assessable share of Class A Common Stock. Notwithstanding the
foregoing, the Class B Trigger Amount shall be reduced by the number
equal to (X) the number of shares of Class A Common Stock converted
from Series B Preferred Stock (i) pursuant to the terms and conditions
of the Preferred Stock Conversion Agreement, and (ii) after, and in
accordance with, written notice from the Corporation to AOL, in order
to meet any initial listing or continued listing requirements of the
NASDAQ SmallCap Market or the NASDAQ National Market, minus (Y) the
positive number, if any, equal to (I) the number of shares of Class A
Common Stock transferred by AOL (or any Wholly Owned Affiliate of AOL)
to any Person other than AOL or a Wholly Owned Affiliate of AOL (not
including any pledge, hypothecation or other similar financing
transaction of Class A Common Stock by AOL or any Wholly Owned
Affiliate of AOL so long as AOL or such Wholly Owned Affiliate
continues to have the sole and exclusive authority and right to vote
the shares subject to such pledge, hypothecation or other financing
transaction) minus (II) the aggregate number of shares of Class A
Common Stock acquired by AOL at any time (including such shares owned
on [EFFECTIVE DATE OF AMENDMENT]) other than through the conversion of
Series B Preferred Stock; provided, however, that at no time shall the
Class B Trigger Amount exceed 50,929,167 (equitably adjusted for any
stock split, stock dividend, reverse stock split, reclassification or
similar transaction); provided, however, that any shares of Class A
Common Stock owned by a Wholly Owned Affiliate of AOL that ceases to
be a Permitted Transferee of AOL shall also be included in the
calculation of the number established by such clause (Y)(I).
Notwithstanding the foregoing, if any Person files a Certificate of
Ownership and Merger pursuant to Section 253 of the GCL causing such
Person to merge with or into the Corporation, then immediately prior
to the effectiveness of such merger, the adjustment to the Class B
Trigger Amount provided for in the foregoing sentence shall be of no
force or effect; provided further, that the adjustment to the Class B
Trigger Amount made pursuant to the foregoing sentence shall be
equitably adjusted for any stock split, stock dividend, reverse stock
split, reclassification or similar transaction. Upon the determination
by the Corporation that such automatic conversion has occurred, notice
of such automatic conversion shall be given by the Corporation as soon
as practicable thereafter by means of a press release and written
notice to all holders of Class B Common Stock, and the Secretary of
the Corporation shall be instructed to, and shall promptly, request
from each holder of Class B Common Stock that each such holder
promptly deliver, and each such holder shall promptly deliver, the
certificate representing each such share of Class B Common Stock to
the Corporation for exchange hereunder, together with instruments of
transfer, in form satisfactory to the Corporation and the Transfer
Agent, duly executed by such holder or such holder's duly authorized
attorney, and together with transfer tax stamps or funds therefor, if
required pursuant to Article FOURTH, Clause (b)(iii)(H) below. The
Corporation, shall, upon the written request at any time by AOL or any
Wholly Owned Affiliate of AOL, furnish or cause to be furnished to AOL
or such Wholly Owned Affiliate a certificate setting forth the Class B
Trigger Amount at such time and the calculation required by this
Article FOURTH Clause (b)(iii)(C) upon which the then current Class B
Trigger Amount was determined. Effective upon a Class B Triggering
Event, the term of any then serving Class B Directors shall terminate,
and the size of the Board and any committee of the Board on which any
such director serves shall be decreased by the number of Class B
Directors then serving thereon."
(C) striking out Clause (b)(iii)(D) of Article FOURTH thereof and
by substituting in lieu of said Clause (b)(iii)(D) of said Article the
following new Clause:
"(D) If at any time ODC, its Wholly Owned Affiliates, members
of the Xxxxxxxx Family and ODC Employees own less than 49,930,955 (the
"Class C Trigger Amount") shares of Class C Common Stock in the
aggregate (including shares of Class C Common Stock issuable directly
or indirectly upon conversion, exercise or exchange of (i) then
outstanding shares of Series C Preferred Stock, or (ii) any other
securities convertible into or exchangeable or exercisable for,
directly or indirectly, Class C Common Stock, and as adjusted to
negate any reduction in the number of shares of Class C Common Stock
and/or Series C Preferred Stock owned by ODC resulting from the
admission of a Strategic Partner approved by the Special Committee
pursuant to Article FIFTH, Clause (d) and equitably adjusted for any
stock split, stock dividend, reverse stock split, reclassification or
similar transaction) (a "Class C Triggering Event"), then each share
of Class C Common Stock then issued and outstanding, including shares
issuable upon the conversion of Series C Preferred Stock in connection
with the occurrence of the Class C Triggering Event, shall thereupon
be converted automatically as of such date into one (1) fully paid and
non-assessable share of Class A Common Stock. Notwithstanding the
foregoing, the Class C Trigger Amount shall be reduced by the number
equal to (X) the number of shares of Class A Common Stock converted
from Series C Preferred Stock (i) pursuant to the terms and conditions
of the Preferred Stock Conversion Agreement, and (ii) after, and in
accordance with, written notice from the Corporation to ODC, in order
to meet any initial listing or continued listing requirements of the
NASDAQ SmallCap Market or the NASDAQ National Market, minus (Y) the
positive number, if any, equal to (I) the number of shares of Class A
Common Stock transferred by ODC (or any Wholly Owned Affiliate of ODC)
to any Person other than ODC or a Wholly Owned Affiliate of ODC (not
including any pledge, hypothecation or other similar financing
transaction of Class A Common Stock by ODC or any Wholly Owned
Affiliate of ODC so long as ODC or such Wholly Owned Affiliate of ODC
continues to have the sole and exclusive authority and right to vote
the shares subject to such pledge, hypothecation or other financing
transaction) minus (II) the aggregate number of shares of Class A
Common Stock acquired by ODC at any time (including shares owned on
[EFFECTIVE DATE OF AMENDMENT]) other than through the conversion of
Series C Preferred Stock; provided, however, that at no time shall the
Class C Trigger Amount exceed 49,930,955
(equitably adjusted for any stock split, stock dividend, reverse stock
split, reclassification or similar transaction); provided, however,
that any shares of Class A Common Stock owned by a Wholly Owned
Affiliate of ODC that ceases to be a Permitted Transferee of ODC shall
also be included in the calculation of the number established by such
clause (Y)(I). Notwithstanding the foregoing, if any Person files a
Certificate of Ownership and Merger pursuant to Section 253 of the GCL
causing such Person to merge with or into the Corporation, then
immediately prior to the effectiveness of such merger, the adjustment
to the Class C Trigger Amount provided for in the foregoing sentence
shall be of no force or effect; provided, further, that the adjustment
to the Class C Trigger Amount made pursuant to the foregoing sentence
shall be equitably adjusted for any stock split, stock dividend,
reverse stock split, reclassification or similar transaction. Upon the
determination by the Corporation that such automatic conversion has
occurred, notice of such automatic conversion shall be given by the
Corporation as soon as practicable thereafter by means of a press
release and written notice to all holders of Class C Common Stock, and
the Secretary of the Corporation shall be instructed to, and shall
promptly, request from each holder of Class C Common Stock that each
such holder promptly deliver, and each such holder shall promptly
deliver, the certificate representing each such share of Class C
Common Stock to the Corporation for exchange hereunder, together with
instruments of transfer, in form satisfactory to the Corporation and
the Transfer Agent, duly executed by such holder or such holder's duly
authorized attorney, and together with transfer tax stamps or funds
therefor, if required pursuant to Article FOURTH, Clause (b)(iii)(H)
below. The Corporation, shall, upon the written request at any time by
ODC or any Wholly Owned Affiliate of ODC, furnish or cause to be
furnished to ODC or such Wholly Owned Affiliate a certificate setting
forth the Class C Trigger Amount at such time and the calculation
required by this Article FOURTH Clause (b)(iii)(D) upon which the then
current Class C Trigger Amount was determined. Effective upon a Class
C Triggering Event, the term of any then serving Class C Directors
shall terminate, and the size of the Board and any committee of the
Board on which any such director serves shall be decreased by the
number of Class C Directors then serving thereon."
3. The amendment of the restated certificate of incorporation
herein certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Signed this __ day of _______, 2003.
By:
-------------------------------
Name:
Title:
