SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
US LEC Corp.
(Name of Issuer)
Class A Common Stock
(Title of Class of Securities)
90331S 10 9
(CUSIP Number)
Richard T. Aab
c/o US LEC Corp.
212 South Tryon Street, Suite 1540
Charlotte, North Carolina 28281
(704) 319-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 1, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are sent.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act.
<PAGE>
<TABLE>
<CAPTION>
CUSIP NO.: 90331S 10 9 Page 2 of 10 Pages
- ------------------ --------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
Richard T. Aab
- ------------------ --------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------ --------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
- ------------------ --------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------ ----------- --------------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
17,256,450
----------- --------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
0
----------- --------------------------------------------------------------------------------------
EACH REPORTING 9 SOLE DISPOSITIVE POWER
8,902,950
----------- --------------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
4,309,500
- ------------------ --------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,256,450
- ------------------ --------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ------------------ --------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
62.9%
- ------------------ --------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------ --------------------------------------------------------------------------------------------------
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CUSIP NO.: 90331S 10 9 Page 3 of 10 Pages
- ------------------ --------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Joyce M. Aab
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------ --------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF
- ------------------ --------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------ --------------------------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
0
----------- --------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
0
----------- --------------------------------------------------------------------------------------
EACH REPORTING 9 SOLE DISPOSITIVE POWER
0
----------- --------------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
4,309,500
- ------------------ --------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,309,500
- ------------------ --------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ------------------ --------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.4%
- ------------------ --------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------ --------------------------------------------------------------------------------------------------
<PAGE>
CUSIP NO.: 90331S 10 9 Page 4 of 10 Pages
- ------------------ --------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Tansukh V. Ganatra
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(b) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
- ------------------ --------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
- ------------------ --------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ------------------ --------------------------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
0
----------- --------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
0
----------- --------------------------------------------------------------------------------------
EACH REPORTING 9 SOLE DISPOSITIVE POWER
4,044,000
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PERSON WITH 10 SHARED DISPOSITIVE POWER
0
- ------------------ --------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,044,000
- ------------------ --------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ------------------ --------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.1
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14 TYPE OF REPORTING PERSON
IN
- ------------------ --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Page 5 of 10 Pages
Explanatory Note:
Richard T. Aab, Melrich (a New York limited partnership controlled by
Mr. Aab and his wife, Joyce M. Aab) ("Melrich"), Tansukh V. Ganatra, and Super
STAR Associates Limited Partnership (a North Carolina limited partnership
controlled by Mr. Ganatra) ("Super STAR") are the sole record holders of all
outstanding shares of Class B Common Stock issued by US LEC Corp. Shares of
Class B Common Stock are convertible on a one-for-one basis into shares of US
LEC Corp. Class A Common Stock, at the option of the holder or automatically in
certain circumstances. Each holder of Class B Common Stock has entered into an
agreement, dated as of January 1, 1998 (the "Class B Stockholders Agreement"),
pursuant to which, among other things, the parties agreed to grant to Mr. Aab an
irrevocable proxy to vote all of their shares of Class B Common Stock. As a
result of the Class B Stockholders Agreement, Mr. Aab may be deemed, for the
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to have formed a "group" with Mrs. Aab and Mr. Ganatra.
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Page 6 of 10 Pages
Item 1. Security and Issuer
This statement relates to the Class A Common Stock of US LEC Corp., a
Delaware corporation (the "Company"). The principal executive offices of the
Company are located at 212 South Tryon Street, Suite 1540, Charlotte, North
Carolina 28281.
Item 2. Identity and Background
(a) - (c) and (f) This statement is being filed on behalf of Richard T.
Aab, Joyce M. Aab, and Tansukh V. Ganatra (the "Reporting Persons") as a result
of recent purchases of Class A Common Stock by Mr. Aab, as more fully described
under Items 3 and 5.
Mr. Aab, a United States citizen, is the Chairman and Chief Executive
Officer of the Company. His address is c/o US LEC Corp., 212 South Tryon Street,
Suite 1540, Charlotte, North Carolina 28281.
Mrs. Aab, a United States citizen, is the wife of Mr. Aab. Her
address is c/o US LEC Corp., 212 South Tryon Street, Suite 1540, Charlotte,
North Carolina 28281.
Mr. Ganatra, a United States citizen, is the President and Chief
Operating Officer of the Company. His address is c/o US LEC Corp., 212 South
Tryon Street, Suite 1540, Charlotte, North Carolina 28281.
(d) and (e) During the last five years, the Reporting Persons have not
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
further violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violations with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration
Except as discussed below, each of the Reporting Persons purchased with
personal funds the securities reported in Item 5 prior to registration of the
Class A Common Stock under Section 12(g) of the Exchange Act.
On May 13, 1998, Mr. Aab purchased 16,180 shares of Class A Common
Stock from two family members (the "Family Shares") for $355,960, or $22.00 per
share, using personal funds in a privately negotiated transaction.
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Page 7 of 10 Pages
On June 1, 1998, Mr. Aab purchased 165,000 shares of restricted Class A
Common Stock (the "Warrant Shares") from a former executive officer of the
Company for $2,970,000, or $18.00 per share in a privately negotiated
transaction. The consideration paid by Mr. Aab consisted of the cancellation of
a promissory note payable to Mr. Aab in the amount of $471,900 and cash in the
amount of $2,498,100. The cash portion of the purchase price was paid by Mr. Aab
with personal funds.
Item 4. Purpose of Transaction
All shares of Class B Common Stock held by the Reporting Persons were
acquired in connection the formation of the Company or its predecessors and in
connection with additional equity contributions prior to the registration of the
Class A Common Stock under Section 12(g) of the Exchange Act. The Family Shares
were acquired by Mr. Aab to facilitate financial planning transactions by
certain of his family members. The Warrant Shares were acquired by Mr. Aab to
facilitate the exercise of a warrant by a former executive officer of the
Company. All shares of Class A Common Stock and Class B Common Stock acquired by
the Reporting Persons have been acquired for general investment purposes.
The Reporting Persons may from time to time seek to increase, reduce or
dispose of their investment in the Company in open market or privately
negotiated transactions or otherwise. The determination to effect any such
transactions will depend on, among other things, the market price of the
Company's securities, availability of funds, borrowing costs, market conditions,
tax considerations, developments affecting the Company and the Reporting
Persons, other opportunities available to the Reporting Persons and other
considerations. As a result of his beneficial ownership of 100% of the Class B
Common Stock and 181,180 shares of Class A Common Stock, Mr. Aab controls the
Company. From time to time, Mr. Aab or one or more of the other Reporting
Persons may hold discussions with third parties or with management of the
Company in which the Reporting Person may suggest or take a position with
respect to potential changes in the operations, management or capital structure
of the Company. Such suggestions or positions may relate to one or more of the
transactions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Except as set forth above, the Reporting Persons do not have any present plans
or proposals that relate to or would result in any of the actions required to be
described in Item 4. Each of the Reporting Persons may, at any time, review or
reconsider his or her position with respect to the Company and formulate plans
or proposals with respect to any of such matters, but has no present intention
of doing so.
<PAGE>
Page 8 of 10 Pages
Item 5. Interest in Securities of the Issuer
(a)-(b) Mr. Aab beneficially owns 17,256,450 shares of Class A Common
Stock. This amount includes (i) 8,721,770 shares of Class A Common Stock
issuable upon conversion of an equal number of shares of Class B Common Stock
and 181,180 shares of Class A Common Stock held of record by Mr. Aab and as to
which he has sole voting and dispositive power; (ii) 4,309,500 shares of Class A
Common Stock issuable upon conversion of an equal number of shares of Class B
Common Stock held of record by Melrich, of which Mr. and Mrs. Aab are the sole
general partners and as to which Mr. and Mrs. Aab share dispositive power and
Mr. Aab has sole voting power pursuant to the Class B Stockholders Agreement;
and (iii) 294,000 shares issuable upon conversion of an equal number of shares
of Class B Common Stock held of record by Mr. Ganatra and 3,750,000 shares
issuable upon conversion of an equal number of shares of Class B Common Stock
held of record by Super STAR, as to which Mr. Aab has sole voting power pursuant
to the Class B Stockholders Agreement. Mr. Aab beneficially owns 62.9% of the
Class A Common Stock, an amount which assumes conversion of the 17,075,270
shares of Class B Common Stock held of record by Mr. Aab, Melrich, Mr. Ganatra,
and Super STAR.
Mrs. Aab beneficially owns 4,309,500 shares of Class A Common Stock
issuable upon conversion of an equal number of shares of Class B Common Stock
held of record by Melrich and as to which Mr. and Mrs. Aab share dispositive
power. Mrs. Aab beneficially owns 29.4% of the Class A Common Stock, an amount
which assumes conversion of the 4,309,500 shares of Class B Common Stock held of
record by Melrich.
Mr. Ganatra beneficially owns 4,044,000 shares of Class A Common Stock.
This amount includes 294,000 shares issuable upon conversion of an equal number
of shares of Class B Common Stock held of record by Mr. Ganatra directly and
3,750,000 shares issuable upon conversion of an equal number of shares of Class
B Common Stock held of record by Super STAR. Mr. Ganatra holds sole dispositive
power with respect to these shares. Mr. Ganatra beneficially owns 28.1% of the
Class A Common Stock, an amount which assumes conversion of the 4,044,000 shares
of Class B Common Stock held of record by Mr. Ganatra and Super STAR.
(c) See Item 3 for a description of transactions effected by Mr. Aab in
the Class A Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
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Page 9 of 10 Pages
Item 6. Contracts, Arrangements, Understandings or Relationship With Respect to
Securities of the Issuer
The Reporting Persons own all issued and outstanding shares of Class B
Common Stock and are parties to the Class B Stockholders Agreement, dated as of
January 1, 1998, pursuant to which, among other things, the parties agreed to
grant to Mr. Aab an irrevocable proxy to vote all of their shares of Class B
Common Stock. The agreement also provides that if a party proposes to sell or
otherwise transfer shares of Class B Common Stock to anyone other than a
Permitted Transferee (as defined in the Company's Restated Certificate of
Incorporation) or to convert such shares into Class A Common Stock, the other
holders of Class B Common Stock would have a right to acquire the shares of
Class B Common Stock that are proposed to be sold, transferred, or converted.
Item 7. Material to Be Filed as Exhibits
Exhibit 1: Joint Filing Agreement of Richard T. Aab, Joyce M.
Aab, and Tansukh V. Ganatra pursuant to Rule 13d-1(k)
Exhibit 2: Amended and Restated Class B Stockholders Agreement,
dated as of June 1, 1998*
-----------
* Incorporated by reference to Exhibit 10.10 to the Company's
Registration Statement on S-1 (File No. 333-463341).
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Page 10 of 10 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 10, 1998
/s/ Richard T. Aab
____________________________
Richard T. Aab
/s/ Joyce M. Aab
____________________________
Joyce M. Aab
/s/ Tansukh V. Ganatra
____________________________
Tansukh V. Ganatra
EXHIBIT 1
Joint Filing Agreement
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the persons named below agree to the joint filing on behalf of
each of them of a statement on Schedule 13D (including any amendments thereto)
with respect to the Class A Common Stock, par value $.01 per share, of US LEC
Corp., a Delaware corporation, and further agree that this Joint Filing
Agreement be included as exhibit to such joint filings. In evidence thereof, the
undersigned parties, each being duly authorized, hereby execute this Agreement
on the 8th day of June, 1997.
/s/ RICHARD T. AAB
---------------------
Richard T. Aab
/s/ JOYCE M. AAB
---------------------
Joyce M. Aab
/s/ TANSUKH V. GANATRA
---------------------
Tansukh V. Ganatra
