FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14567
ACC CORP.
(exact name of registrant as specified in its charter)
Delaware 16-1175232
State of other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
400 West Avenue, Rochester, New York 14611
(Address of principal executive offices)
(716) 987-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of November 8, 1995, the Registrant had issued and outstanding,
7,855,062 shares of its $.015 par value Class A Common Stock, and
10,000 shares of its Series A Preferred Stock.
The Index of Exhibits filed with the Report is found at Page 19.
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ACC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Amounts in 000's, except per share data)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
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Revenue:
Toll revenue $42,322 $26,584 $119,268 $83,817
Leased lines and other 3,589 1,825 7,973 5,735
45,911 28,409 127,241 89,552
Operating expenses:
Network costs 28,105 17,749 79,163 56,988
Depreciation and amortization 3,011 2,259 8,405 6,314
Selling, general and
administrative 15,159 11,943 41,345 30,632
Equal access costs - 2,463 - 2,463
46,275 34,414 128,913 96,397
Loss from operations (364) (6,005) (1,672) (6,845)
Other income (expense):
Interest (1,340) (644) (3,666) (1,143)
Terminated merger costs - - - (200)
Foreign exchange gain (loss) (14) (62) (109) 106
(1,354) (706) (3,775) (1,237)
Loss before provision for income
taxes and minority interest (1,718) (6,711) (5,447) (8,082)
Provision for income taxes 249 3,988 538 3,417
Loss before minority interest (1,967) (10,699) (5,985) (11,499)
Minority interest in loss of
consolidated subsidiary 118 2,243 225 2,367
Net loss ($1,849) ($8,456) ($5,760) ($9,132)
Net loss per common
& common equivalent share: ($0.24) ($1.20) ($0.77) ($1.29)
Average number of common
and common equivalent shares 7,978,225 7,047,071 7,643,174 7,060,731
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ACC CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in 000's except share data)
September 30, December 31,
1995 1994
(Unaudited) (Audited)
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Current assets:
Cash and cash equivalents $1,672 $1,021
Restricted cash - 272
Accounts receivable, net of allowance
for doubtful accounts of $2,659 in
1995 and $1,035 in 1994 31,867 20,499
Other receivables 5,504 5,433
Prepaid and other assets 1,859 1,124
Total current assets 40,902 28,349
Property, plant and equipment:
At cost 75,781 62,618
Less-accumulated depreciation and
amortization (24,789) (18,537)
50,992 44,081
Other assets:
Restricted cash - 157
Goodwill and customer base 14,602 6,884
Deferred installation costs, net 1,801 1,639
Other 4,777 3,642
21,180 12,322
Total assets $113,074 $84,752
Current liabilities:
Notes payable $2,966 $ -
Current maturities of
long-term debt 2,573 1,613
Accounts payable 6,386 10,498
Accrued network costs 25,651 10,443
Other accrued expenses 13,200 8,053
Dividends payable - 208
Total current liabilities 50,776 30,815
Deferred income taxes 4,088 3,675
Long-term debt 23,445 29,914
Redeemable preferred stock 8,997 -
Minority interest 1,092 1,262
Shareholders' equity:
Class A Common stock, $.015 par value
Authorized-50,000,000 shares
Issued- 8,498,580 in 1995 and
7,652,601 in 1994 127 115
Capital in excess of par value 31,515 20,070
Cumulative translation adjustment (888) (1,013)
Retained earnings (4,468) 1,524
26,286 20,696
Less-
Treasury stock, at cost (726,589
shares) (1,610) (1,610)
Total shareholders' equity 24,676 19,086
Total liabilities and
shareholders' equity $113,074 $84,752
</TABLE>
<TABLE>
ACC CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Amounts in 000's, except per share data)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
1995 1994
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Cash flows from operating activities:
Net loss ($5,760) ($9,132)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 8,405 6,314
Deferred income taxes 515 2,932
Minority interest in income of consolidated subsidiary (225) (2,367)
Unrealized foreign exchange loss 430 (50)
Amortization of deferred financing costs 165 -
Loss on disposal of equipment 193 -
(Increase) decrease in assets:
Restricted cash - -
Accounts receivable, net (10,040) (2,350)
Other receivables 252 184
Prepaid and other assets (329) 712
Deferred installation costs (1,160) (835)
Other 415 (827)
Increase (decrease) in liabilities:
Accounts payable (8,217) (991)
Accrued network costs 15,041 1,762
Other accrued expenses 3,305 2,021
Total adjustments 8,750 6,505
Net cash provided by (used in) operating activities 2,990 (2,627)
Cash flows from investing activities:
Capital expenditures, net (8,709) (21,525)
Payment for purchase of subsidiary, net of cash acquired (1,386) -
Acquisition of customer base (229) (2,077)
Net cash used in investing activities (10,324) (23,602)
Cash flows from financing activities:
Net borrowings (repayments) under lines of credit (7,602) 30,378
Repayment of long-term debt (1,734) (1,320)
Proceeds from issuance of common stock 11,395 87
Proceeds from issuance of preferred stock 10,000
Repurchase of minority interest - (215)
Financing costs (2,807) -
Dividends paid (440) (4,033)
Net cash provided by financing activities 8,812 24,897
Effect of exchange rate changes on cash (827) (135)
Net increase (decrease) in cash from continuing operations 651 (1,467)
Cash and cash equivalents at beginning of period 1,021 1,467
Cash and cash equivalents at end of period $1,672 -
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $2,831 $1,010
Income taxes $103 $280
Supplemental schedule of noncash investing activities:
Equipment purchased through capital leases $2,995 $942
Purchase of subsidiary with short-term notes payable $2,966 -
Supplemental schedule of noncash financing activities:
Exchange of treasury shares for common shares - $327
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ACC CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1995
1. Statement of Management
The condensed financial statements of ACC Corp. and subsidiaries
("The Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company's latest
Annual Report on Form 10-K.
The interim financial statements contained herein reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to a fair statement of the results of operations for
the interim periods presented.
2. Form 10-K
Reference is made to the following footnotes included in the
Company's 1994 Annual Report on Form 10-K:
Principles of Consolidation
Sale of Subsidiary Stock
Revenue
Property, Plant and Equipment
Deferred Installation Costs
Goodwill and Customer Base
Common and Common Equivalent Shares
Foreign Currency Translation
Income Taxes
Cash Equivalents and Restricted Cash
Currency Forward Contracts
Reclassifications
Operating Information
Discontinued Operations
Asset Write-down
Equal access costs
Merger of local exchange subsidiary
Acquisition
Long-Term Debt, Lines of Credit and
Financing Arrangements
Class A Common Stock
Treasury Stock
Commitments and Contingencies
Geographic Area Information
Related Party Transactions
Subsequent Event
3. Net Income Per Share
Net Income per common and common equivalent share is computed on
the basis of the weighted average number of common and common equivalent
shares outstanding during the period and net income reduced by preferred
dividends. For the three and nine month periods in 1995, preferred dividends
were $98,630. There were no preferred dividends in 1994. The average number
of shares outstanding is computed as follows:
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For the Nine Months For the Three Months
Ended September 30: Ended September 30:
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Average Number Outstanding: 1995 1994 1995 1994
Common Shares 7,478,161 6,909,012 7,763,949 6,910,883
Common Equivalent Shares 165,013 151,719 214,276 136,188
Total 7,643,174 7,060,731 7,978,225 7,047,071
</TABLE>
Fully diluted income per share amounts are not presented for the
three and nine month periods ended September 30, 1995, because inclusion of
these amounts would be anti-dilutive.
4. Reclassification
Certain reclassifications have been made to previously reported prior
year balances to conform to the September 30, 1995 presentation.
5. Sale of Class A Common Stock
During 1995, the Company made an offshore offering of 825,000 shares
of its Class A Common Stock at an average price of $14.53 per share, pursuant
to SEC Regulation S, to foreign investors through a placement agent. The
offering raised net proceeds of $11.1 million, after deduction of fees and
expenses of $0.9 million. In conjunction with this transaction, warrants to
purchase 82,500 shares of Class A Common Stock at an exercise price of $14.40
were issued. These warrants were exercised subsequent to September
30, 1995.
6. Private Placement
On May 22, 1995, the Company completed a $10 million private
placement of 12% convertible subordinated debt to a group of private investors
led by Fleet Equity Partners. The notes were converted into 10,000 shares of
cumulative, convertible Series A Preferred Stock on September 1, 1995. The
Series A preferred shares have a liquidation value of $1,000 per share,
accrue cumulative dividends of 12% annually, payable upon redemption, and
are convertible into Class A Common Stock at an initial conversion price of
$16 per share, or 625,000 shares, subject to certain adjustments. All of the
outstanding Series A preferred shares will be repaid in cash, or partly in
cash and partly in Class A Common Stock, on the seventh anniversary of the
closing at the greater of i) the principal amount plus all accrued and unpaid
interest and dividends or ii) the fair market value of the underlying Class A
Common Stock into which the preferred shares are convertible. Optional
repayments are permitted at any time. The preferred shares will be
automatically converted into Class A Common Stock if, after the second
anniversary of the closing, i) the daily trading volume of the Class A Common
Stock exceeds 5% of the number of shares of Class A Common Stock issuable
upon conversion of the preferred shares for 45 consecutive trading days,
ii) the holders of the preferred shares are not subject to any underwriters
lock up agreement and iii) the average closing price of the Class A Common
Stock for 15 consecutive trading days exceeds the price set forth in
the investment agreement (ranging from $32.00 to $57.33, depending on the
period of time that the preferred shares have been outstanding).
At closing, warrants for 100,000 shares of the Company's Class A
Common Stock were issued at an initial exercise price of $16 per share. Also
at closing, the Company issued warrants to purchase Class A Common Stock that
will become exercisable upon one or more optional repayments of the Series A
preferred shares at an exercise price of $16.00, subject to adjustments as
defined in the Agreement, and will permit each holder to acquire initially
the same number of shares of Class A Common Stock into which the preferred
shares were convertible as of the relevant repayment date.
The Series A preferred stock is senior to all classes and series of
preferred stock and Class A Common Stock as to the payment of dividends and
redemptions, and upon liquidation at liquidation value, senior to all other
classes of the Company's capital stock. In certain circumstances, the
holders of the Series A Preferred Stock will have preemptive rights to
purchase, on an as-converted basis, a pro rata portion of certain Class A
Common Stock issuances by the Company. The Fleet Equity investors are
entitled to elect one director to the Company's Board of Directors, so long
as more than 33% of the Series A Preferred Stock is outstanding. They also
have the right to approve certain transactions as listed in the agreement.
At September 30, 1995, the Series A preferred stock is reflected on
the accompanying balance sheet as redeemable preferred stock, and is shown
inclusive of cumulative unpaid dividends, and net of unamortized issuance
costs. The carrying value of the redeemable preferred stock will be
accreted to the liquidation value, as defined, over the seven year term.
7. Long-Term Debt
On June 7, 1995, the Company entered into a commitment for a $35
million five year senior credit facility with two financial institutions.
On July 21, 1995, the transaction was closed and $15 million was borrowed
under the new agreement, which was used to pay down and terminate the
Company's previously existing lines of credit and to pay fees related to the
transaction.
The agreement contains certain financial covenants, one of which
limits the amount that may be borrowed against this facility, based on the
Company's operating cash flow. The facility will be reduced in quarterly
increments commencing 24 months after closing. Borrowings under the facility
are secured by certain of the Company's assets, and will bear interest at
either LIBOR or prime interest rates, with additional percentage points added
based on a ratio of debt to operating cash flow, as defined in the loan
agreement.
The Company is obligated to pay the managing agent banks a contingent
interest payment based on the appreciation in value of 140,000 shares of the
Company's Class A Common Stock over the 18 month period following the date
of closing. The payment will range from $750,000 to $2,100,000.
In addition to repaying the Company's previously existing lines of
credit, proceeds from the facility will be used to finance capital
expenditures and provide working capital. In conjunction with the closing
the Company issued to a financing agent warrants to purchase 30,000 shares of
the Company's Class A Common Stock at an exercise price of $16.00 per share.
8. Purchase
As of August 1, 1995, the Company acquired Metrowide Communications
(Metrowide) in a business combination accounted for as a purchase. Metrowide
is based in Toronto, Canada, and provides local and long distance services
to Ontario based customers. The results of operations of Metrowide are
included in the accompanying financial statements since the date of
acquisition. The total cost of the acquisition was CDN $6 million
(US $4.4 million), of which CDN $2 million (US $1.5 million) was paid at
the date of purchase, with the remaining CDN $4 million (US $2.9 million)
due in installments through August 1, 1996.
The fair value of assets acquired, including goodwill and customer
base, was CDN $14.7 million (US $10.8 million), and liabilities assumed
totaled CDN $8.7 million (US $6.4 million). Goodwill of CDN $7.0 million
(US $5.0 million) is being amortized over twenty years, and customer base
of CDN $4.2 million (US $3.1 million) is being amortized over five years.
9. Subsequent Event
In October, 1995, the Company's former Chief Executive Officer
resigned his position, but remains an employee and Chairman of the Company's
Board of Directors. A new Chief Executive Officer was hired. In conjunction
with the management changes, the Company entered into agreements with both
executives. The contract with the Chief Executive Officer has a two year term
and provides for continuation of salary and benefits for the term of the
agreement, in the event of a change in control of the Company. The contract
with the Chairman of the Board provides for a payment of $1,000,000, payable
over a three year term, in the event that he resigns or is terminated.
Payments under this agreement are accelerated and are due in full within 30
days following a change in control of the Company. The Company has also
entered into a non-competition agreement with the Chairman of the Board,
for which $750,000 was paid in October, 1995.
ITEM 2. Management's Discussion and Analysis of Financial Condition
and the Results of Operations
RESULTS OF OPERATIONS
The following chart shows the total revenue contribution from each of
the Company's operating units as well as billable long distance minutes
(in 000's): Revenue and minutes are shown net of revenue and minutes from
affiliates.
Three months ended September 30,
Percent of Percent of
Revenue 1995 Total 1994 Total
United States $15,204 33.1% $12,698 44.7%
Canada 20,547 44.8% 14,907 52.5%
United Kingdom 10,073 21.9% 804 2.8%
Local Exchange 87 .2% - -
$45,911 100.0% $28,409 100.0%
Billable Minutes
United States 119,400 41.7% 107,607 52.0%
Canada 120,585 42.2% 96,276 46.6%
United Kingdom 46,118 16.1% 2,938 1.4%
286,103 100.0% 206,821 100.0%
Nine months ended September 30,
Percent of Percent of
Revenue 1995 Total 1994 Total
United States $43,693 34.3% $38,910 43.5%
Canada 59,737 47.0% 49,289 55.0%
United Kingdom 23,641 18.6% 1,353 1.5%
Local Exchange 170 .1% - -
$127,241 100.0% $89,552 100.0%
Billable Minutes
United States 343,813 41.6% 321,623 51.2%
Canada 376,829 45.5% 301,646 48.0%
United Kingdom 106,605 12.9% 4,920 .8%
827,247 100.0% 628,189 100.0%
For the three months ended September 30, 1995, toll revenue
increased by 59.0% to $42.3 million from $26.6 million for the three months
ended September 30, 1994. In the United States, toll revenue increased
18.2%, due to both volume and price increases. The volume increases are a
result of increased carrier revenue, university business, and an increased
focus on small to medium commercial customers in the Company's service region.
The price increases are a result of general price increases in the industry.
In Canada, toll revenue increased 32.2% primarily as a result of a 25.3%
increase in billable minutes, with a 5.7% increase in prices. These
increases reflect growth in the Company's successful 800 service program
in student and residential traffic. In the United Kingdom (U.K.), toll
revenue increased 1,156% due to substantial volume increases, offset slightly
by lower prices, as a result of entering into commercial and residential
markets, as compared to 1994 when ACC's U.K. customers were primarily
university students.
Exchange rate changes did not have a significant impact on Canadian
or U.K. toll revenue for the three month period.
For the nine months ended September 30, 1995, toll revenue increased
by 42.3% to $119.3 million from $83.8 million for the nine months ended
September 30, 1994. In the United States, toll revenue increased 11.0%,
and was fairly evenly split between volume and price increases. In Canada,
toll revenue increased 20.0%, largely attributable to volume increases,
with slight price decreases compared to the same nine months in 1994.
The price decreases were a result of competition that resulted in decreased
revenue per minute in the second quarter of 1994, but which has stabilized
since June 30, 1994. Exchange rate changes were not a significant percentage
of the increase in Canada. The U.K. had a 1,665% toll revenue increase, due
to significant volume increases offset by price declines as discussed in the
preceding paragraph. In the U.K., favorable exchange rate changes accounted
for approximately 3.0% of the increase.
Leased lines and other revenue increased 96.7% to $3.6 million for
the quarter ended September 30, 1995 from $1.8 million for the same period
in 1994. For the nine month period ended September 30, 1995, leased lines
and other revenue increased 39% to $8.0 million from $5.7 million for the
same period in 1994. These increases primarily related to increased local
revenue generated by the University Program in the U.S., the start up of
local exchange operations in upstate New York, and the Metrowide acquisition
as of August 1, 1995. The Metrowide acquisition accounted for approximately
$1.5 million of leased lines and other revenue, for both the three and the
nine month periods in 1995.
OPERATING EXPENSES
Network costs increased to $28.1 million and $79.2 million for the
three and nine month periods ended September 30, 1995, respectively, from
$17.7 million and $57.0 million for the same periods in 1994. Expressed as a
percentage of revenue, network costs decreased to 61% for the three months
ended September 30, 1995 from 63% for the same period in 1994, and decreased
to 62% for the nine month period ended September 30, 1995 from 64% for the
same period in 1994. The decreases, as a percentage of revenue, were mainly
due to lower Canadian contribution rates and volume related efficiencies in
Canada. These decreases were partially offset by increased per minute costs
in the United Kingdom where the Company's network is still being developed.
Depreciation and amortization increased to $3.0 million and $8.4
million for the three and nine month periods ended September 30, 1995,
respectively, from $2.3 million and $6.3 million for the same periods in
1994. These increases were primarily due to assets placed in service since
September 30, 1994, particularly equipment at U.S. university sites, the
London switching center and billing system, the local switching center in
Syracuse, New York and also a Rochester switching center upgrade in the third
quarter of 1995. The Company anticipates that depreciation and amortization
will increase during the fourth quarter of 1995, as a result of switching
center upgrades scheduled in Toronto and in Manchester, U.K., and the
customer base and goodwill associated with the Metrowide acquisition.
Selling, general and administrative expenses increased to $15.2
million and $41.3 million for the three and nine month periods ended
September 30, 1995, respectively, from $11.9 million and $30.6 million for
the same periods in 1994. These increases were primarily attributable to
increased payroll and related costs, increased marketing, sales and customer
acquisition costs associated with the rapid growth of the Company's operations
in the U.K. and Canada, and increased facility costs due to the Company's
expanding operations and headquarters in Rochester, New York. Costs incurred
in the operations of the local service business decreased to $0.4 million and
$1.3 million, respectively, for the three and nine month periods ended
September 30, 1995 from $0.8 million and $2.0 million for the same periods in
1994, related to the Company's decision to decrease expenditures in an effort
to take a controlled approach to this market opportunity.
Expressed as a percentage of revenue, selling, general and
administrative expenses declined to 33% for the three months ended September
30, 1995 compared to 42% for the same period in 1994, primarily as a
result of significant revenue increases in the U.K. For the nine month
periods ended September 30, 1995 and 1994, selling, general and administrative
expenses as a percentage of revenue were 32% and 34%, respectively. The
improvement in the percentages for the first nine months of 1995 is a result
of the significant increases in U.K. revenue. Worldwide, the Company had 700
employees at September 30, 1995, compared to 532 at September 30, 1994.
OTHER INCOME (EXPENSE)
Net interest expense increased to $1.3 million and $3.7 million,
respectively, for the three and nine month periods ended September 30, 1995
from $0.6 million and $1.1 million for the same periods in 1994. These
increases were due to increased borrowing on the Company's lines of credit
related to financing of university projects in the U.S., start up of the U.K.
and the local service businesses during 1994, write-off of deferred financing
costs related to the Company's lines of credit which were terminated in July,
1995, and debt service costs associated with the subordinated 12% notes
issued in May, 1995. On September 1, 1995, the subordinated notes were
converted to preferred stock, and there will be no further interest
expense associated with that transaction.
The provision for income taxes for the quarter was $.3 million
compared to $4.0 million for the third quarter of 1994. The income tax
provision that was recorded at September 30, 1995 is relative to the U.S.
operations only. No income tax benefits have been recorded for the 1995
operating losses in the U.K. and Canada, due to the uncertainty of the
Company's ability to utilize these losses to reduce future taxable
income in those countries. In the third quarter of 1994, the Company
recorded a valuation allowance for all previously recorded benefits in the
U.K. and in Canada.
Minority interest in income of consolidated subsidiary reflects the
portion of the Company's Canadian subsidiary's income attributable to the
approximately 30% of the shares of that subsidiary that are publicly traded
in Canada. For the three months ended September 30, 1995, minority interest
in loss of consolidated subsidiary was $0.1 million compared to $2.2 million
for the same period in 1994 due to the improvement in the Canadian
subsidiary's operating results in 1995, and the reserve for tax benefits that
was recorded in the third quarter of 1994.
The Company's net loss for the three and nine month periods ended
September 30, 1995 was $1.8 million and $5.8 million, respectively, versus
$8.5 million and $9.1 million for the same periods in 1994. The 1995 losses
were primarily due to continued start-up losses in the U.K. and in the local
exchange business, debt restructuring costs, and non-recognition of income
tax benefits in foreign subsidiaries. The 1994 losses include costs to
implement equal ease of access in Canada. The Company anticipates a net
loss for at least the next quarter as it continues to make investments in
all subsidiaries, particularly the U.K.
SEASONALITY
As the percentage of the Company's revenue generated by its
university customers has increased, especially in the U.S., the Company's
business has become more seasonal. Revenue generally increases during the
school year, which runs from September through May in the U.S. and Canada,
and from October through May in the U.K. During the summer months while
university customer revenue is low, selling and administrative expenses, as
a percent of revenue, generally increase due to the sales and marketing
efforts related to generating new university customers for the following fall
semester.
CAPITAL RESOURCES AND LIQUIDITY
To date, the bulk of the Company's working capital needs have been met
through funds generated from operations, from the Company's lines of credit,
and from the equity placements discussed in the Notes to Consolidated Financial
Statements. In addition, the Company has used the proceeds from the sale of
ACC TelEnterprises Ltd.'s Common Stock and the sale of its cellular operations,
both in 1993, to fund the expansion of its operations in Canada and the U.K.
The Company's principal need for working capital is to meet its
selling, general and administrative expenses as its business expands. In
addition, the Company's resources have been used for the Metrowide
acquisition, asset additions, various customer base acquisitions and payments
of dividends to its shareholders.
At September 30, 1995, the Company had a working capital deficit of
approximately $9.8 million. This related to 1) short term debt associated
with the Metrowide acquisition and 2) delays in billing from certain network
vendors. The Company believes its cash flow from operations, vendor
financing agreements and its new credit facility are sufficient to meet the
cash requirements of its current operations for the foreseeable future.
During 1995, the Company has been focused on strengthening its balance
sheet, as well as obtaining debt and equity financing to continue to finance
the growth of the business. In the second quarter, the Company discontinued
paying regular dividends on its Class A Common Stock as part of its plan to
retain funds to support its growth and operations. During the second quarter
and subsequently, three transactions were completed to accomplish its
financing goals.
In April, the Company completed an offshore offering of 825,000 shares
of its Class A Common Stock at an average price of $14.53 per share, pursuant
to SEC Regulation S, to foreign investors through a placement agent, raising
net proceeds of $11.1 million, after fees of $0.9 million.
In May, the Company completed a $10 million private placement of
12% convertible subordinated debt to a group of private investors led by
Fleet Equity Partners. The notes were converted into 10,000 shares
of cumulative, convertible Series A Preferred Stock on September 1, 1995.
The Series A preferred shares have a liquidation value of $1,000 per share,
accrue cumulative dividends of 12% annually, and will be convertible into
Class A Common Stock at an initial conversion price of $16 per share, or
625,000 shares, subject to certain adjustments. All of the outstanding
Series A preferred shares will be repaid in cash, or partly in cash and
partly in Class A Common Stock, on the seventh anniversary of the closing
at the greater of i) the principal amount plus all accrued and unpaid interest
and dividends or ii) the fair market value of the underlying Class A Common
Stock into which the preferred shares are convertible. The preferred
shares are automatically converted to Class A Common Stock if certain
conditions are met.
The Company used the proceeds from the two private placements mentioned
above to reduce its previously existing lines of credit.
The third phase of the Company's financing plan was to restructure
existing debt. On June 7, 1995, the Company entered into a commitment for a
$35 million five year senior credit facility with two leading
telecommunications lending financial institutions. On July 21, 1995, the
transaction was closed and $15 million was borrowed under the new agreement
which was used to pay down and terminate the Company's previously existing
lines of credit and to pay fees related to the transaction. In addition to
paying off the Company's previously existing lines of credit, proceeds from
the facility will be used to finance capital expenditures and provide working
capital for all business segments, and pay the remaining amounts due for
the Metrowide acquisition.
The agreement contains certain financial covenants, one of which
limits the amount that may be borrowed against this facility, based on the
Company's operating cash flow. The facility will be reduced in
quarterly increments commencing 24 months after closing. At September 30,
1995, the available facility was approximately $30 million, of which
$11 million was unused. Borrowings bear interest based on either LIBOR or
prime interest rates, with additional percentage points added based on a
ratio of debt to operating cash flow, as defined in the loan agreement.
The Company is obligated to pay the lenders a contingent interest
payment based on the appreciation in market value of 140,000 shares of the
Company's Class A Common Stock from $14.92 per share. The payment will range
from $750,000 to $2,100,000 and is due upon the earlier of i) 18 months
following the closing date, ii) any subsequent refinancing of the facility,
iii) the signing of a letter of intent to sell the Company or any material
subsidiary, or iv) the cessation of active trading of the Company's Class A
Common Stock on other than a temporary basis. The Company believes that it
will have adequate cash flow from operations or available bank lines to make
this payment and is accruing this obligation over the 18 month period
following the closing date.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
1) Yankee Microwave, Inc. v. ACC Corp., et al. This matter was
concluded substantially in favor of the Company during the second quarter of
1995. For further information concerning this matter, reference is made to
the discussion of this matter found at Part II, Item 1 of the Company's Report
on Form 10-Q for its Quarter ended June 30, 1995, as filed with the SEC.
2) Matters Involving Vivian Warner. There were no developments in
these matters during the quarter for which this Report is being filed. For
additional information concerning these matters, reference is made to the
discussions found at Part II, Item 1 of the Company's Report on Form 10-Q
for its Quarter ended June 30, 1995, as filed with the SEC.
Item 2. Changes in Securities.
(b) As disclosed in a Form 8-K filed on June 22, 1995 with
respect to this matter, on May 22, 1995, an investment group composed of
Fleet Venture Resources, Inc., Fleet Equity Partners VI, L.P., and Chisholm
Partners II, L.P. (collectively the "Fleet Investors") completed a
$10,000,000 investment in the Company by purchasing $10,000,000 in principal
amount of the Company's 12% subordinated convertible notes (the "Notes") and
certain warrants to acquire shares of the Company's Common Stock.
Thereafter, at their 1995 Annual Meeting held on July 19, 1995, and
as more fully described under Proposal 4 of the Company's Proxy Statement
prepared and circulated with respect to this meeting, the Company's
shareholders approved an amendment to the Company's Certificate of
Incorporation that (1) authorized the creation of 2,000,000 shares of
"blank check" Preferred Stock, par value $1.00 per share, (2) authorized the
creation of 25,000,000 shares of Class B non-voting Common Stock, par value
$.015 per share, and (3) redesignated the 50,000,000 shares of Common Stock,
par value $.015 per share, that were previously authorized for issuance as
50,000,000 shares of Class A Common Stock.
Thereafter, pursuant to the terms of the Note and Warrant Purchase
Agreement under which the Notes were purchased (the "Purchase Agreement"),
the Notes were automatically converted into 10,000 shares of Series A
Preferred Stock, par value $1.00 per share, effective August 31, 1995,
the date on which the Company filed with the Delaware Secretary of State of
a Certificate of Designation authorizing the issuance of this series of
Preferred Stock. This Series A Preferred Stock has the following rights and
preferences:
(1) a liquidation value of $1,000 per share;
(2) convertible into shares of Class A Common Stock at an initial
conversion price of $16.00 per share, subject to certain antidilution
adjustments;
(3) dividends payable at the rate of 12% per annum, cumulative
and compounded quarterly and extinguished upon conversion into shares
of Class A Common Stock;
(4) senior to all other classes and series of Preferred Stock
and Common Stock as to the payment of dividends and redemptions, and
upon liquidation at liquidation value, senior to all other classes of
the Company's capital stock;
(5) subject to mandatory redemption on the seventh anniversary of
the closing of the transaction at the greater of liquidation value
(plus all accrued but unpaid dividends) or the then-fair market value
of the underlying Class A Common Stock into which the Series A
Preferred Stock is convertible, and subject to redemption at the
greater of such amounts at the request of the holders of the Series A
Preferred Stock in the event of a change in control of the Company;
(6) mandatory conversion of the Series A Preferred Stock into
shares of Class A Common Stock upon the occurrence of certain events;
(7) the Series A Preferred Stock will vote on an as-converted basis
with the shares of Class A Common Stock outstanding on all matters to
be voted on by the Company's shareholders, including the election of
Directors, and the holders of the Series A Preferred Stock, voting as a
separate class, shall be entitled to elect one Director so long as more
than 33% of the Series A Preferred shares issued in this transaction
remain issued and outstanding;
(8) so long as any shares of the Series A Preferred Stock remain
outstanding, the Company will not be able to take any of the following
actions without obtaining the prior written consent of the holders of a
majority of the Series A Preferred Stock: (a) declare dividends on
any class of capital stock other than the Series A Preferred Stock;
(b) redeem any capital stock other than Series A Preferred Stock;
(c) make any amendment to the Company's Certificate of Incorporation
or Bylaws that would include or make any changes to any anti-takeover
provisions in the Company's Certificate of Incorporation or Bylaws;
(d) make any amendment to the Company's Certificate of Incorporation
or Bylaws that would have an adverse effect on or impair the rights or
relative priority of the Series A Preferred Stock; (e) make any changes
in the nature of the Company's business beyond the telecommunications
field; or (f) engage in any transactions with affiliates (other than
subsidiaries) (except for compensation and benefit matters approved
by the Executive Compensation Committee of the Company's Board or
other transactions approved by an independent committee of the Board);
and
(9) preemptive rights to purchase, on an as-converted basis, a
pro-rata portion of any issuance by the Company of any Class A Common
Stock or securities containing options or rights to acquire shares of
Class A Common Stock, except for issuances of Class A Common Stock in
connection with any of the following matters, in which events such
preemptive rights would not apply: (a) option exercises under any
stock option plans of the Company; (b) conversion of the Notes or
the Series A Preferred Stock into shares of Class A Common Stock;
(c) exercise of the warrants issued in this transaction; (d) an
acquisition of another business or company; (e) a public offering
of securities registered under the Securities Act of 1933;
(f) the provision or extension of senior debt financing to the
Company; or (g) strategic investments by other entities in the
telecommunications field.
Also, pursuant to the terms of the Purchase Agreement,
Robert M. Van Degna was elected a Director of the Company at its 1995
Annual Meeting as the representative of the Series A Preferred
shareholders on the Company's Board.
Subject to all of the preferences and rights of both the
Preferred Stock or any series thereof and of the Class B Common Stock at any
time outstanding, all of which may be fixed by resolution of the Company's
Board of Directors: (1) dividends can continue to be paid on the Class A
Common Stock as and when declared by the Company's Board of Directors out of
funds legally available for the payment of such dividends; and (2) each
share of Class A Common Stock continues to have one vote on all matters with
respect to which such stock is entitled to vote. Subject to the foregoing,
the vote of the holders of a majority of the shares of Class A Common Stock
represented at a meeting at which a quorum is present will be the act of the
shareholders' meeting unless the vote of a greater number is required by law
and except that the vote of a plurality of the shares of Class A Common Stock
represented at a meeting at which a quorum is present is sufficient to elect
members of the Board of Directors (other than the representative of the
Series A Preferred shareholders). Cumulative voting in the election of
Directors is not permitted. Holders of the Company's Class A Common Stock
have no preemptive rights, nor are there any redemption rights provisions
with respect to the Company's Class A Common Stock. Subject to all of the
preferences and rights of both the Preferred Stock or any series thereof
and of the Class B Common Stock at any time outstanding, all of which may be
fixed by resolution of the Company's Board of Directors, holders of the
Company's Class A Common Stock shall be entitled to participate pro rata in
any distribution of the Company's assets upon liquidation.
For additional information concerning this matter, reference is made
to the discussion under Proposal 4 in the Company's Proxy Statement for its
1995 Annual Meeting, as filed with the SEC.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on July 19,
1995. At that Meeting, there were four Proposals acted upon. The first was
the election of the Company's Board of Directors. Richard T. Aab, Hugh F.
Bennett, Arunas A. Chesonis, Willard Z. Estey, David K. Laniak, Robert F.
Sykes and Daniel D. Tessoni were each elected as Directors of the Company
for a one-year term. The detail concerning the votes cast for and withheld
from voting with respect to each such Director is as follows:
Votes:
Name: For Withheld
R. T. Aab 6,724,168 409,015
H. F. Bennett 5,855,469 1,277,714
A. A. Chesonis 6,730,562 402,621
W. Z. Estey 6,727,065 406,118
D. K. Laniak 6,730,093 403,090
R. F. Sykes 6,584,589 548,594
D. D. Tessoni 5,856,769 1,276,414
R.M. Van Degna 5,989,719 1,143,464
There were no other Directors whose terms of office continued after this
Meeting.
Also at this Meeting, the Company's shareholders ratified the
selection of Arthur Andersen LLP as the Company's independent auditors for
its 1995 fiscal year. The detail concerning the votes cast for, against, and
abstaining from voting with respect to this Proposal is as follows:
Votes:
For Against Abstaining
7,069,994 37,447 25,742
There were no broker non-votes with respect to this Proposal.
Also at this Meeting, the Company's shareholders approved an amendment
to the Company's Employee Stock Option Plan to increase the number of shares
of the Company's Class A Common Stock authorized for issuance thereunder by
500,000 shares, to add the ability to grant stock incentive rights ("SIRs")
to the Plan, to require the mandatory withholding of income taxes against the
issuance of shares in respect of SIR awards by withholding a number of shares
equal to the amount of all required tax withholdings, and to change the name
of the Plan to the "Employee Long-Term Incentive Plan." The detail concerning
the votes cast for, against and abstaining from voting with respect to this
Proposal is as follows:
Votes:
For Against Abstaining
4,421,983 393,943 171,604
There were 2,145,653 broker non-votes with respect to this Proposal.
Also at this Meeting, the Company's shareholders approved a proposal
to amend the Company's Certificate of Incorporation to: (a) authorize the
creation of 2,000,000 shares of "blank check" Preferred Stock, par value
$1.00 per share; and (b) to authorize the creation of 25,000,000 shares of
Class B non-voting Common Stock, par value $.015 per share, and to
redesignate the 50,000,000 shares of Common Stock, par value $.015 per share,
that were previously authorized for issuance as 50,000,000 shares of Class A
Common Stock. The detail concerning the votes cast for, against and
abstaining from voting with respect to this Proposal is as follows:
Votes:
For Against Abstaining
(a) 3,883,914 981,869 81,747
(b) 5,423,084 947,775 85,412
There were 2,185,653 broker non-votes with respect to part (a) of this
Proposal, and 676,912 broker non-votes with respect to part (b) of this
Proposal.
Subsequent to the 1995 Annual Meeting, at the end of July, 1995,
Robert F. Sykes resigned as a Director of the Company for personal reasons
and to pursue other interests.
Item 5. Other Information.
Effective October 6, 1995, Richard T. Aab resigned his position as
the Company's Chief Executive Officer. He remains its Chairman of the Board
and an employee of the Company, however. Effective the same date, the Board
of Directors named David K. Laniak, a Company Director since 1989, to succeed
Mr. Aab as the Company's Chief Executive Officer. In connection with these
management changes, the Company entered into an Employment Agreement with
Mr. Laniak and into both a Non-Competition Agreement and a Salary
Continuation and Deferred Compensation Agreement with Mr. Aab. Under the
terms of Mr. Laniak's two-year Employment Agreement, he will receive a base
salary of $300,000 per year, plus a bonus determined under the Company's
Annual Incentive Plan, plus other benefits given to the Company's other
executives. Under the terms of Mr. Aab's Non-Competition Agreement, he
will not compete against the Company for three years following any "event
of termination" (as defined in this Agreement) as an employee of the Company
and as its Chairman of the Board, for which he received a lump-sum payment of
$750,000. Under the terms of his Salary Continuation and Deferred Compensation
Agreement, Mr. Aab will receive a salary of $200,000 per year, plus a bonus
determined under the Company's Annual Incentive Plan, plus continuation of
his current benefits for as long as he remains the Chairman of the Board and
an employee of the Company. At such time as he ever resigns or is terminated
as a Company employee and from serving as the Chairman of the Board, except
in a circumstance involving a "termination for cause" as defined in
this Agreement, he will receive a payment of $1,000,000, payable over a
three year term following the date of such termination or resignation, with
the payment of such amount accelerated and paid in full within 30 days
following a change in control of the Company.
Item 7. Exhibits and Reports on Form 8-K.
(a) Exhibits. See Exhibit Index.
(b) Reports on Form 8-K. On October 27, 1995, the Company filed
a Report on Form 8-K to report, under the heading of Item 2,
Acquisition or Disposition of Assets, on the August 14, 1995
acquisition by the Company's 70% owned Canadian subsidiary, ACC
TelEnterprises Ltd., of four affiliated privately-held Canadian
corporations operating under the business name of Metrowide
Communications. No financial statements have yet been filed with
this Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACC CORP.
(Registrant)
Dated: November 14, 1995 /s/ Michael R. Daley
Michael R. Daley
Executive Vice President &
Chief Financial Officer
Dated: November 14, 1995 /s/ Sharon L. Barnes
Sharon L. Barnes
Controller
EXHIBIT INDEX
Exhibit
Number Description Location
3 First Restated Certificate of Incorporation Filed herewith
of ACC Corp.
4-1 Certificate of Designations of 10,000 Shares Filed herewith
of Series A Preferred Stock, par value
$1.00 per share, of ACC Corp.
4-2 Form of Class A Common Stock Purchase Filed herewith
Warrant Issued to Columbia Capital Corp.,
dated as of July 21, 1995
10-1 Credit Agreement, dated as of July 21, 1995, Filed herewith
by and among ACC Corp. and certain
Subsidiaries as Borrowers, ACC Corp. as
Guarantor, and First Union National Bank of
North Carolina, as Managing Agent and
Administrative Agent, and Shawmut Bank
Connecticut, N.A., as Managing Agent
10-2 Employment Agreement between ACC Corp. Filed herewith
and David K. Laniak, dated October 6, 1995
10-3 Salary Continuation and Deferred Compensation Filed herewith
Agreement between ACC Corp. and Richard T.
Aab, dated October 6, 1995
10-4 Non-Competition Agreement between ACC Corp. Filed herewith
and Richard T. Aab, dated October 6, 1995
11 Statement re Computation of Per Share Earnings See Note 3 to
the Notes to
Consolidated
Financial
Statements
filed herewith
27 Financial Data Schedule Filed only
with EDGAR
filing, per
Reg. S-K,
Rule 601(c)
(1)(v)
Exhibit 3
FIRST RESTATED CERTIFICATE OF INCORPORATION
OF
ACC CORP.
ACC CORP., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is ACC Corp. ACC Corp. was originally
incorporated under the same name, and the original Certificate of Incorporation
of the Corporation was filed with the Secretary of State of the State of
Delaware on April 9, 1987.
2. Pursuant to Section 245 of the General Corporation Law of the State
of Delaware, this First Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this Corporation as heretofore amended or supplemented, and
there is no discrepancy between those provisions and the provisions of this
First Restated Certificate of Incorporation.
3. This First Restated Certificate of Incorporation was duly adopted
by the Board of Directors of this Corporation at a meeting held on August 17,
1995, in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware.
4. The text of the First Restated Certificate of Incorporation is as
follows:
<PAGE>
FIRST RESTATED CERTIFICATE OF INCORPORATION
OF ACC CORP.
(a Delaware corporation)
ARTICLE ONE
The name of the Corporation is ACC CORP.
ARTICLE TWO
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle.
The name of the registered agent of the Corporation at such address is The
Corporation Trust Company.
ARTICLE THREE
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.
ARTICLE FOUR
The total number of shares of stock which the Corporation shall have
authority to issue is 77,000,000 shares, divided into the following classes:
(1) 50,000,000 shares shall be Class A Common Stock having a par value of $.015
per share; (2) 25,000,000 shares shall be Class B Common Stock having a par
value of $.015 per share; and (3) 2,000,000 shares shall be Preferred Stock
having a par value of $1.00 per share. The following is a statement of the
designations of the authorized classes of stock or any series thereof, and the
powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, or of the
authority of the Board of Directors to fix by resolution(s) such designations
and other terms:
CLASS A COMMON STOCK
Subject to all of the preferences and rights of both the Preferred Stock
or a series thereof and of the Class B Common Stock, all of which may be fixed
by resolution(s) of the Board of Directors, (i) dividends may be paid on the
Class A Common Stock of the Corporation as and when declared by the Board of
Directors, out of funds of the Corporation legally available for the payment of
such dividends, and (ii) each share of Class A Common Stock shall be entitled
to one vote on all matters on which such stock is entitled to vote. The
50,000,000 shares of Common Stock, par value $.015 per share, previously
authorized for issuance hereunder are hereby redesignated as 50,000,000 shares
of Class A Common Stock, and all references in this Certificate of
Incorporation to Common Stock are hereby changed to refer to Class A Common
Stock.
CLASS B COMMON STOCK
Subject to all of the preferences and rights of the Preferred Stock or a
series thereof that may be fixed by resolution(s) of the Board of Directors,
the Class B Common Stock shall have such preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be established in the
resolution(s) providing for the issuance of such stock adopted by the Board of
Directors, EXCEPT THAT the shares of Class B Common Stock shall not be entitled
to vote on any matters brought before the stockholders of the Corporation, nor
shall the holders of the Class B Common Stock be entitled to vote as a class
upon any proposed increase or decrease in the aggregate number of authorized
shares of Class B Common Stock.
PREFERRED STOCK
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is expressly authorized to fix by
resolution(s) the designation of each series of Preferred Stock and the powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including, without
limitation, such provisions as may be desired concerning the dividend rights,
the dividend rate, conversion rate, conversion rights, voting rights, rights in
terms of redemption (including sinking fund provisions), the redemption price
or prices, the liquidation preferences and such other subjects or matters as
may be fixed by resolution(s) of the Board of Directors under the General
Corporation Law of Delaware; and to fix the number of shares constituting any
such series, and to increase or decrease the number of shares of any such
series (but not below the number of shares of any such series then
outstanding). In the event that the number of shares of any such series shall
be so decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution(s) originally fixing the
number of shares of such series. All Preferred Stock of the same series shall
be identical in all respects, except for the dates from which dividends, if
any, shall be cumulative.
ARTICLE FIVE
The business and affairs of the Corporation shall be managed by its Board
of Directors which shall consist of not less than three persons. The exact
number of Directors shall be fixed from time to time by, or in the manner
provided in, the By-laws of the Corporation and may be increased or
decreased as therein provided. Directors of the Corporation need not be
elected by ballot unless required by the By-laws. The Board of Directors is
authorized to adopt, alter, amend or repeal the By-laws, subject to the right
of the stockholders to adopt, alter, amend or repeal By-laws made by the Board
of Directors; PROVIDED, HOWEVER, that By-laws shall not be adopted, altered,
amended or repealed by the stockholders except by the affirmative vote of the
holders of at least 80% of the issued and outstanding Class A Common Stock of
the Corporation.
ARTICLE SIX
Action shall be taken by stockholders of the Corporation only at duly
called annual or special meetings of stockholders and stockholders may not act
by written consent. Special meetings of stockholders of the Corporation may be
called only by the Chairman of the Board, the President, or the Board of
Directors pursuant to a resolution approved by a majority of the entire Board.
ARTICLE SEVEN
SECTION 1
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the Director derived
any improper personal benefit. If the Delaware General Corporation Law is
amended after approval by the stockholders of this Article to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or
modification.
SECTION 2
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
Director, officer or employee of the Corporation or is or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a Director, officer, employee or agent or in any other
capacity while serving as a Director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss, including without
limitation attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement, reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as
to an indemnitee who has ceased to be a Director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; PROVIDED, HOWEVER, that, except as provided in Paragraph (b)
hereof with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a
proceeding, or part thereof, initiated by such indemnitee only if such
proceeding, or part thereof, was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Section shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter an "advancement of expenses"); PROVIDED, HOWEVER,
that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a Director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking, by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by the Court of Chancery of the State of Delaware or
the court in which such proceeding is brought, that such indemnitee is not
entitled to be indemnified for such expenses under this Section or otherwise
(hereinafter an "undertaking').
(b) RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Paragraph (a)
of this Section is not paid in full by the Corporation within sixty days after
a written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by the indemnitee
to enforce a right to an advancement of expenses) it shall be a defense, and
(ii) in any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Corporation shall be entitled to
recover such expenses upon an adjudication by the Court of Chancery of the
State of Delaware or the court in which such suit is brought, that the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right hereunder, or by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified or to such advancement of
expenses under this Section or otherwise shall be on the Corporation.
(c) NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and the
advancement of expenses conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
this Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested Directors or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at its expense,
to protect itself and any Director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
(e) INDEMNIFICATION OF AGENTS OF THE CORPORATION. The Corporation may,
to the extent authorized from time to time by the Board of Directors, grant
rights to indemnification, and to the advancement of expenses, to any agent of
the Corporation to the fullest extent of the provisions of this Section with
respect to the indemnification and advancement of expenses of Directors,
officers and employees of the Corporation.
ARTICLE EIGHT
SECTION 1
Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80% of the
issued and outstanding Class A Common Stock of the Corporation shall be
required to alter, amend, adopt any provision inconsistent with or repeal
Articles Five, Six, Seven and this Section 1 of Article Eight of this
Certificate of Incorporation in any respect.
SECTION 2
Except as otherwise provided in this Certificate of Incorporation, the
Corporation reserves the right at any time and from time to time to amend,
alter or repeal any provision contained in this Certificate of Incorporation in
the manner now or as hereafter prescribed by law, and all rights, preferences
and privileges conferred upon stockholders, Directors and officers by and
pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are subject to the right reserved in this Section.
<PAGE>
IN WITNESS WHEREOF, this Corporation has caused this First Restated
Certificate of Incorporation to be duly executed by Arunas A. Chesonis, its
President and Chief Operating Officer, and attested by Francis D. R. Coleman,
its Secretary, this 28th day of August,1995.
ACC CORP.
By:__/s/ Arunas A. Chesonis
Arunas A. Chesonis
President and Chief Operating
Officer
Attest: /s/ Francis D.R. Coleman
___________________________________
Francis D. R. Coleman, Secretary
Exhibit 4-1
CERTIFICATE OF DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS,
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF
OF THE
SERIES A PREFERRED STOCK
OF
ACC CORP.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, ACC Corp., a Delaware corporation ( the "Corporation") certifies
that, pursuant to the authority contained in Article FOUR of its Certificate of
Incorporation, and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, its Board of Directors has
adopted the following resolutions creating a series of its Series A Preferred
Stock, par value $1.00 per share, designated as Series A Preferred Stock:
RESOLVED, that a series of the authorized $1.00 par value Preferred
Stock of this Corporation be hereby created, and that the shares of such
series shall be designated as "Series A Preferred Stock" and the number
of shares constituting such series shall be 10,000, and that the voting
powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as set forth in full as follows:
Section 1. DIVIDENDS.
A. GENERAL OBLIGATION. When and as declared by the Corporation's
Board of Directors and to the extent permitted under the General Corporation
Law of Delaware, the Corporation shall pay preferential dividends in cash to
the holders of the Series A Preferred Stock (the "Series A Preferred") as
provided in this Section 1. Except as otherwise provided herein, dividends on
each share of the Series A Preferred (a "Share") shall accrue on a daily basis
at the rate of 12% per annum of the sum of the Liquidation Value thereof plus
all accumulated and unpaid dividends thereon from and including the date of
issuance of such Share to and including the first to occur of (i) the date on
which the Liquidation Value of such Share (plus all accrued and unpaid
dividends thereon) is paid to the holder thereof in connection with the
liquidation of the Corporation or the redemption of such Share by the
Corporation, (ii) the date on which such Share is converted into shares of
Conversion Stock hereunder or (iii) the date on which such share is otherwise
acquired by the Corporation. Such dividends shall accrue whether or not they
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends. The date on
which the Corporation initially issues any Share shall be deemed to be its
"date of issuance" regardless of the number of times transfer of such Share is
made on the stock records maintained by or for the Corporation and regardless
of the number of certificates which may be issued to evidence such Share.
B. DIVIDEND REFERENCE DATES. To the extent not paid on March 31, June
30, September 30 and December 31 of each year, beginning June 30, 1995 (the
"Dividend Reference Dates"), all dividends which have accrued on each Share
outstanding during the three-month period (or other period in the case of the
initial Dividend Reference Date) ending upon each such Dividend Reference Date
shall be accumulated and shall remain accumulated dividends with respect to
such Share until paid to the holder thereof.
C. DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A Preferred, such payment
shall be distributed pro rata among the holders thereof based upon the number
of Shares held by each such holder.
Section 2. LIQUIDATION.
Upon any liquidation, dissolution or winding up of the Corporation
(whether voluntary or involuntary), each holder of Series A Preferred shall be
entitled to be paid, before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate Liquidation Value of all
Shares held by such holder (plus all accrued and unpaid dividends thereon), and
the holders of Series A Preferred shall not be entitled to any further payment.
If upon any such liquidation, dissolution or winding up of the Corporation the
Corporation's assets to be distributed among the holders of the Series A
Preferred are insufficient to permit payment to such holders of the aggregate
amount which they are entitled to be paid under this Section 2, then the entire
assets available to be distributed to the Corporation's stockholders shall be
distributed pro rata among such holders based upon the aggregate Liquidation
Value (plus all accrued and unpaid dividends) of the Series A Preferred held by
each such holder. Prior to the liquidation, dissolution or winding up of the
Corporation, the Corporation shall declare for payment all accrued and unpaid
dividends with respect to the Series A Preferred, but only to the extent of
funds of the Corporation legally available for the payment of dividends. Not
less than 60 days prior to the payment date stated therein, the Corporation
shall mail written notice of any such liquidation, dissolution or winding up to
each record holder of Series A Preferred, setting forth in reasonable detail
the amount of proceeds to be paid with resect to each Share and each share of
Common Stock in connection with such liquidation, dissolution or winding up.
Neither the consolidation or merger of the Corporation into or with any other
entity or entities (whether or not the Corporation is the surviving entity),
nor the sale or transfer by the Corporation of all or any part of its assets,
nor the reduction of the capital stock of the Corporation nor any other form of
recapitalization or reorganization affecting the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 2.
Section 3. PRIORITY OF SERIES A PREFERRED ON DIVIDENDS AND REDEMPTIONS.
So long as any Series A Preferred remains outstanding, without the prior
written consent of the holders of a majority of the outstanding shares of
Series A Preferred, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly or indirectly any
Junior Securities, nor shall the Corporation directly or indirectly pay or
declare any dividend or make any distribution upon any Junior Securities.
Section 4. REDEMPTIONS.
A. SCHEDULED REDEMPTION. On May 19, 2002 (the "Scheduled Redemption
Date"), the Corporation shall redeem all outstanding Shares of Series A
Preferred at a price per Share equal to the greater of (i) the Liquidation
Value thereof (plus accrued and unpaid dividends thereon) or (ii) the Market
Price of the Common Stock into which such Shares of Series A Preferred (on the
date which is five days prior to the Scheduled Redemption Date) are convertible
on the Schedule Redemption Date.
B. OPTIONAL REDEMPTIONS. The Corporation may at any time and from
time to time redeem all or any portion of the Shares of Series A Preferred then
outstanding; provided that the minimum number of shares subject to such
redemption shall be the lesser of 100 shares or the number of shares
outstanding as of such redemption. Upon any such redemption, the Corporation
shall pay a price per Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon).
C. REDEMPTION PAYMENTS. For each Share which is to be redeemed
hereunder, the Corporation shall be obligated on the Redemption Date to pay to
the holder thereof (upon surrender by such holder at the Corporation's
principal office of the certificate representing such Share) an amount in cash
equal to the Liquidation Value of such Share (plus all accrued and unpaid
dividends thereon); provided that, in the case of a redemption pursuant to
paragraph 4A, to the extent the amount in subparagraph 4A(ii) exceeds the
amount in subparagraph 4A(i), all or a portion of such excess may, at the
option of the Corporation's Board of Directors, be paid in the form of Common
Stock (valued at the Market Price of the Common Stock on the date which is five
trading days prior to the Scheduled Redemption Date) up to and not exceeding a
number of shares of Common Stock equal to 20 multiplied by the average daily
trading volume of the Common Stock in the public markets for a period of 45
consecutive trading days ending five days prior to the Scheduled Redemption
Date and the remainder shall be paid in cash. Such shares of Common Stock
shall be applied first to the repayment of Liquidation Value, then to accrued
but unpaid dividends. If the funds of the Corporation legally available for
redemption of Shares on the Scheduled Redemption Date are insufficient to
redeem the total number of Shares to be redeemed on such date, those funds
which are legally available shall be used to redeem the maximum possible number
of Shares pro rata among the holders of the Shares to be redeemed based upon
the aggregate Liquidation Value of such Shares held by each such holder (plus
all accrued and unpaid dividends thereon). At any time thereafter when
additional funds of the Corporation are legally available for the redemption of
Shares, such funds shall immediately be used to redeem the balance of the
Shares which the Corporation has become obligated to redeem on the Scheduled
Redemption Date but which it has not redeemed. Prior to any redemption of
Series A Preferred, the Corporation shall declare for payment all accrued and
unpaid dividends with respect to the Shares which are to be redeemed, but only
to the extent of funds of the Corporation legally available for the payment of
dividends.
D. NOTICE OF REDEMPTION. Except as otherwise provided herein, the
Corporation shall mail written notice of each redemption of any Series A
Preferred (other than a redemption at the request of a holder or holders of
Series A Preferred) to each record holder thereof not more than 60 nor less
than 30 days prior to the date on which such redemption is to be made. Upon
mailing any notice of redemption which relates to a redemption at the
Corporation's option, the Corporation shall become obligated to redeem the
total number of Shares specified in such notice at the time of redemption
specified therein. In case fewer than the total number of Shares represented
by any certificate are redeemed, a new certificate representing the number of
unredeemed Shares shall be issued to the holder thereof without cost to such
holder within five business days after surrender of the certificate
representing the redeemed Shares.
E. DETERMINATION OF THE NUMBER OF EACH HOLDER'S SHARES TO BE REDEEMED.
Except as otherwise provided herein, the number of Shares of Series A Preferred
to be redeemed from each holder thereof in redemptions hereunder shall be the
number of Shares determined by multiplying the total number of Shares to be
redeemed times a fraction, the numerator of which shall be the total number of
Shares then held by such holder and the denominator of which shall be the total
number of Shares then outstanding.
F. DIVIDENDS AFTER REDEMPTION DATE. No Share shall be entitled to any
dividends accruing after the date on which the Liquidation Value of such Share
(plus all accrued and unpaid dividends thereon) is paid to the holder of such
Share. On such date, all rights of the holder of such Share shall cease, and
such Share shall no longer be deemed to be issued and outstanding.
G. REDEEMED OR OTHERWISE ACQUIRED SHARES. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be canceled and retired
to authorized but unissued shares and shall not be reissued, sold or
transferred.
H. OTHER REDEMPTIONS OR ACQUISITIONS. The Corporation shall not, nor
shall it permit any Subsidiary to, redeem or otherwise acquire any Shares of
Series A Preferred, except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Series A Preferred on the basis
of the number of Shares owned by each such holder.
I. PAYMENT OF ACCRUED DIVIDENDS. Except as provided in paragraph 4J,
the Corporation may not redeem any Series A Preferred, unless all dividends
accrued on the outstanding Series A Preferred through the immediately preceding
Dividend Reference Date have been declared and paid in full.
J. SPECIAL REDEMPTIONS.
(i) If a Change in Control has occurred or the Corporation
obtains knowledge that a Change in Control is proposed to occur, the
Corporation shall give prompt written notice of such Change in Control
describing in reasonable detail the material terms and date of consummation
thereof to each holder of Series A Preferred, but in any event such notice
shall not be given later than five days after the occurrence of such Change in
Control, and the Corporation shall give each holder of Series A Preferred
prompt written notice of any material change in the terms or timing of such
transaction. Any holder of Series A Preferred may require the Corporation to
redeem all or any portion of the Series A Preferred owned by such holder or
holders at a price per Share equal to the greater of (1) the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon), (2) the Market Price
(as of the date which is five trading days prior to the occurrence of such
Change in Control) of the Common Stock into which such Shares of Series A
Preferred are convertible on such date or (3) the value of the Common Stock
into which such Shares of Series A Preferred are convertible as of the
consummation of the Change in Control reflected by the Change in Control
transaction, by giving written notice to the Corporation of such election prior
to the later of (a) 21 days after receipt of the Corporation's notice and (b)
five days prior to the consummation of the Change in Control (the "Expiration
Date"). The Corporation shall give prompt written notice of any such election
to all other holders of Series A Preferred within five days after the receipt
thereof, and each such holder shall have until the later of (a) the Expiration
Date or (b) ten days after receipt of such second notice to request redemption
hereunder (by giving written notice to the Corporation) of all or any portion
of the Series A Preferred owned by such holder.
(ii) Upon receipt of such election(s), the Corporation shall be
obligated to redeem the aggregate number of Shares specified therein on the
occurrence of the Change in Control. If any proposed Change in Control does
not occur, all requests for redemption in connection therewith shall be
automatically rescinded, or if there has been a material change in the terms or
the timing of the transaction, any holder of Series A Preferred may rescind
such holder's request for redemption by giving written notice of such
rescission to the Corporation.
(iii) A "Change in Control" shall be deemed to have occurred at
such time as any of the following events shall occur: (a) any sale, transfer or
issuance or series of sales, transfers and/or issuances of Common Stock by the
Corporation or any holders thereof which results in any Person or group of
Persons (as the term "group" is used under the Securities Exchange Act of 1934)
owning more than 40% of the Common Stock outstanding immediately after such
sale, transfer or issuance or series of sales, transfers and/or issuances or
(b) during any 12-month period, individuals who at the beginning of such period
constituted the Corporation's Board of Directors (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Corporation was approved by a majority vote
of the directors who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Corporation's Board of Directors
then in office.
(iv) If a Fundamental Change is proposed to occur, the Corporation
shall give written notice of such Fundamental Change describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Series A Preferred not more than 45 days nor less than 20 days prior to the
consummation of such Fundamental Change, and the Corporation shall give each
holder of Series A Preferred prompt written notice of any material change in
the terms or timing of such transaction. Any holder of Series A Preferred may
require the Corporation to redeem all or any portion of the Series A Preferred
owned by such holder at a price per Share equal to the greater of (1)
Liquidation Value thereof (plus all accrued and unpaid dividends thereon), (2)
the Market Price (as of the date which is five trading days prior to the
occurrence of such Fundamental Change) of the Common Stock into which such
Shares of Series A Preferred are convertible on such date or (3) the value of
the Common Stock into which such Shares of Series A Preferred are convertible
as of the consummation of the Fundamental Change reflected by the Fundamental
Change transaction, by giving written notice to the Corporation of such
election prior to the later of (a) ten days prior to the consummation of the
Fundamental Change or (b) ten days after receipt of notice from the
Corporation. The Corporation shall give prompt written notice of such election
to all other holders of Series A Preferred (but in any event within five days
prior to the consummation of the Fundamental Change), and each such holder
shall have until two days after the receipt of such notice to request
redemption (by written notice given to the Corporation) of all or any portion
of the Series A Preferred owned by such holder.
(v) Upon receipt of such election(s), the Corporation shall be
obligated to redeem the aggregate number of Shares specified therein upon the
consummation of such Fundamental Change. If any proposed Fundamental Change
does not occur, all requests for redemption in connection therewith shall be
automatically rescinded, or if there has been a material change in the terms or
the timing of the transaction, any holder of Series A Preferred may rescind
such holder's request for redemption by delivering written notice thereof to
the Corporation prior to the consummation of the transaction.
(vi) The term "Fundamental Change" means (a) any sale or transfer
of more than 50% of the assets of the Corporation and its Subsidiaries on a
consolidated basis (measured either by book value in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith judgment of the Corporation's Board of
Directors) in any transaction or series of transactions (other than sales in
the ordinary course of business) and (b) any merger or consolidation to which
the Corporation is a party, except for a merger in which the Corporation is the
surviving corporation, the terms of the Series A Preferred are not changed and
the Series A Preferred is not exchanged for cash, securities or other property,
and after giving effect to such merger, no Person or group of Persons (as the
term "group" is used under the Securities Act of 1934) owns more than 40% of
the Common Stock outstanding immediately after such merger.
Section 5. VOTING RIGHTS.
A. ELECTION OF DIRECTORS. So long as at least 3,300 Shares of the
Series A Preferred remain outstanding, in the election of directors of the
Corporation, the holders of the Series A Preferred, voting separately as a
single class to the exclusion of all other classes of the Corporation's capital
stock and with each Share of Series A Preferred entitled to one vote, shall be
entitled to elect one director to serve on the Corporation's Board of Directors
until his successor is duly elected by the holders of the Series A Preferred or
he is removed from office by the holders of the Series A Preferred. If the
holders of the Series A Preferred for any reason fail to elect anyone to fill
any such directorship, such position shall remain vacant until such time as the
holders of the Series A Preferred elect a director to fill such position and
shall not be filled by resolution or vote of the Corporation's Board of
Directors or the Corporation's other stockholders.
B. OTHER VOTING RIGHTS. The holders of the Series A Preferred shall
be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and the holders of the Series A Preferred shall be
entitled to vote on all matters submitted to the stockholders for a vote
together with the holders of the Common Stock voting together as a single class
with each share of Common Stock entitled to one vote per share and each Share
of Series A Preferred entitled to one vote for each share of Common Stock
issuable upon conversion of the Series A Preferred as of the record date for
such vote or, if no record date is specified, as of the date of such vote.
Section 6. CONVERSION.
A. CONVERSION PROCEDURE.
(i) At any time and from time to time, any holder of Series A
Preferred may convert all or any portion of the Series A Preferred (including
any fraction of a Share) held by such holder into a number of shares of
Conversion Stock computed by multiplying the number of Shares to be converted
by $1,000 and dividing the result by the Conversion Price then in effect.
(ii) Except as otherwise provided herein, each conversion of
Series A Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series A Preferred to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any such conversion has been
effected, the rights of the holder of the Shares converted as a holder of
Series A Preferred shall cease and the Person or Persons in whose name or names
any certificate or certificates for shares of Conversion Stock are to be issued
upon such conversion shall be deemed to have become the holder or holders of
record of the shares of Conversion Stock represented thereby.
(iii) The conversion rights of any Share subject to redemption
hereunder shall terminate on the Redemption Date for such Share unless the
Corporation has failed to pay to the holder thereof the Liquidation Value of
such Share (plus all accrued and unpaid dividends thereon).
(iv) Notwithstanding any other provision hereof, if a conversion
of Series A Preferred is to be made in connection with a Public Offering, a
Change in Control, a Fundamental Change or other transaction affecting the
Corporation, the conversion of any Shares of Series A Preferred may, at the
election of the holder thereof, be conditioned upon the consummation of such
transaction, in which case such conversion shall not be deemed to be effective
until such transaction has been consummated.
(v) As soon as possible after a conversion has been effected (but
in any event within five business days in the case of subparagraph (a) below),
the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number
of shares of Conversion Stock issuable by reason of such conversion in
such name or names and such denomination or denominations as the
converting holder has specified; and
(b) a certificate representing any Shares of Series A
Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but which
were not converted.
(vi) Upon conversion, the accrued and unpaid dividends on the
Series A Preferred being converted shall be extinguished and shall no longer be
deemed payable.
(vii) The issuance of certificates for shares of Conversion Stock
upon conversion of Series A Preferred shall be made without charge to the
holders of such Series A Preferred for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
Share of Series A Preferred, the Corporation shall take all such actions as are
necessary in order to insure that the Conversion Stock issuable with respect to
such conversion shall be validly issued, fully paid and nonassessable, free and
clear of all taxes, liens, charges and encumbrances with respect to the
issuance thereof.
(viii) The Corporation shall not close its books against the
transfer of Series A Preferred or of Conversion Stock issued or issuable upon
conversion of Series A Preferred in any manner which interferes with the timely
conversion of Series A Preferred. The Corporation shall assist and cooperate
with any holder of Shares required to make any governmental filings or obtain
any governmental approval prior to or in connection with any conversion of
Shares hereunder (including, without limitation, making any filings required to
be made by the Corporation).
(ix) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock,
solely for the purpose of issuance upon the conversion of the Series A
Preferred, such number of shares of Conversion Stock issuable upon the
conversion of all outstanding Series A Preferred. All shares of Conversion
Stock which are so issuable shall, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Corporation shall take all such actions as may be necessary to assure that all
such shares of Conversion Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Conversion Stock may be listed (except
for official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance). The Corporation shall not take any
action which would cause the number of authorized but unissued shares of
Conversion Stock to be less than the number of such shares required to be
reserved hereunder for issuance upon conversion of the Series A Preferred.
(x) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of the Series A Preferred, the Corporation, in lieu of delivering
the fractional share therefor, shall pay an amount to the holder thereof equal
to the Market Price of such fractional interest as of the date of conversion.
B. CONVERSION PRICE.
(i) The initial Conversion Price shall be $16.00. In order to
prevent dilution of the conversion rights granted under this Section 6, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this paragraph 6B.
(ii) If and whenever the Corporation issues or sells, or in
accordance with paragraph 6C is deemed to have issued or sold, any share of
Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to such time, then immediately upon such issue or sale
or deemed issue or sale the Conversion Price shall be reduced to the lowest net
price per share (as determined pursuant to paragraph 6C(v) below) at which any
such share of Common Stock has been issued or sold or is deemed to have been
issued or sold.
(iii) Notwithstanding the foregoing, there shall be no adjustment
to the Conversion Price hereunder with respect to the granting of stock options
to employees or directors of the Corporation and its Subsidiaries or the
exercise thereof or the granting of stock appreciation rights, phantom stock
rights or other similar rights to employees or directors of the Corporation for
(or rights relating to) an aggregate of 1,596,702 shares of Common Stock
(976,594 options being currently outstanding) (as such number of shares is
equitably adjusted for subsequent stock splits, stock combinations, stock
dividends and recapitalizations and such number shall include all stock options
outstanding as of the date of the Purchase Agreement).
C. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under paragraph 6B, the following
shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any
manner grants or sells any Option and the lowest price per share for which any
one share of Common Stock is issuable upon the exercise of any such Option, or
upon conversion or exchange of any Convertible Security issuable upon exercise
of any such Option, is less than the Conversion Price in effect immediately
prior to the time of the granting or sale of such Option, then such share of
Common Stock shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such Option for such
price per share. For purposes of this paragraph, the "lowest price per share
for which any one share of Common Stock is issuable" shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
of any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issue of such
Common Stock or such Convertible Security upon the exercise of such Options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Security.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance or
sale of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
any Convertible Security, and if any such issue or sale of such Convertible
Security is made upon exercise of any Options for which adjustments of the
Conversion Price had been or are to be made pursuant to other provisions of
this Section 6, no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Option, the additional consideration (if any) payable
upon the issue, conversion or exchange of any Convertible Security or the rate
at which any Convertible Security is convertible into or exchangeable for
Common Stock changes at any time, the Conversion Price in effect at the time of
such change shall be adjusted immediately to the Conversion Price which would
have been in effect at such time had such Option or Convertible Security
originally provided for such changed purchase price, additional consideration
or conversion rate, as the case may be, at the time initially granted, issued
or sold. For purposes of paragraph 6C, if the terms of any Option or
Convertible Security which was outstanding as of May 19, 1995 are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change; provided that no such change shall at any time cause the
Conversion Price hereunder to be increased.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right
to convert or exchange any Convertible Security without the exercise of any
such Option or right, the Conversion Price then in effect hereunder shall be
adjusted immediately to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been issued; provided that if such expiration or termination
would result in an increase in the Conversion Price then in effect, such
increase shall not be effective until 30 days after written notice thereof has
been given to all holders of the Series A Preferred. For purposes of paragraph
6C, the expiration or termination of any Option or Convertible Security which
was outstanding as of May 19, 1995 shall not cause the Conversion Price
hereunder to be adjusted unless, and only to the extent that, a change in the
terms of such Option or Convertible Security caused it to be deemed to have
been issued after such date.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Option or Convertible Security is issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor (net of discounts, commissions and
related expenses). If any Common Stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Market Price thereof as of the date of receipt. If
any Common Stock, Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Option or
Convertible Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation
and the holders of a majority of the outstanding Series A Preferred. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of such consideration shall be determined by an independent
appraiser experienced in valuing such type of consideration jointly selected by
the Corporation and the holders of a majority of the outstanding Series A
Preferred. The determination of such appraiser shall be final and binding upon
the parties, and the fees and expenses of such appraiser shall be borne by the
Corporation.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $.01.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) RECORD DATE. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at
any time combines (by reverse stock split or otherwise) one or more classes of
its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A Preferred then outstanding) to insure that each of the holders of
Series A Preferred shall thereafter have the right to acquire and receive, in
lieu of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series A Preferred, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such
holder had converted its Series A Preferred immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A Preferred then outstanding) to insure that the provisions of this
Section 6 and Sections 7 and 8 hereof shall thereafter be applicable to the
Series A Preferred (including, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is other than the
Corporation, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and a corresponding immediate adjustment in the number of shares of Conversion
Stock acquirable and receivable upon conversion of Series A Preferred, if the
value so reflected is less than the Conversion Price in effect immediately
prior to such consolidation, merger or sale). The Corporation shall not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Corporation) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the holders of a majority of
the Series A Preferred then outstanding), the obligation to deliver to each
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
F. CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this Section 6 but not expressly provided for by such
provisions (including the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Corporation's Board of
Directors shall make an appropriate adjustment in the Conversion Price so as to
protect the rights of the holders of Series A Preferred; provided that no such
adjustment shall increase the Conversion Price as otherwise determined pursuant
to this Section 6 or decrease the number of shares of Conversion Stock issuable
upon conversion of each Share of Series A Preferred.
G. NOTICES.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series A
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders of
Series A Preferred at least 20 days prior to the date on which the Corporation
closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the holders
of Series A Preferred at least 20 days prior to the date on which any Organic
Change shall take place.
H. MANDATORY CONVERSION. All of the Shares of issued and outstanding
Series A Preferred will be automatically converted to Common Stock at the
Conversion Price then in effect without any further action on the part of the
Corporation or the holders thereof if, at any time after May 19, 1997, (i) the
daily trading volume of the Common Stock in the public markets exceeds 5% of
the number of shares of Common Stock issuable upon conversion of all Shares of
Series A Preferred for each of 45 consecutive trading days, (ii) no holder of
Series A Preferred is subject to any underwriters lockup agreement restricting
the transferability of the shares of Conversion Stock issuable upon conversion
of such Series A Preferred and (iii) the Market Price of the Common Stock on
any of the anniversary dates of the issuance of the Notes set forth below
equals or exceeds the corresponding price set forth below (subject to
adjustment for stock splits, stock consolidations and stock dividends):
2nd Anniversary $32.00
3rd Anniversary $32.00
4th Anniversary $39.06
5th Anniversary $39.81
6th Anniversary $47.78
7th Anniversary $57.33
In the event that any measurement of the market price of the Common
Stock is to occur on a date between two anniversary dates, the share price
amounts above shall be prorated (based upon the number of days elapsed between
such anniversary dates).
Section 7. LIQUIDATING DIVIDENDS.
If the Corporation declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the Corporation shall pay to the holders of Series A Preferred
at the time of payment thereof the Liquidating Dividends which would have been
paid on the shares of Conversion Stock had such Series A Preferred been
converted immediately prior to the date on which a record is taken for such
Liquidating Dividend, or, if no record is taken, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
Section 8. PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then each holder of Series A Preferred shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Conversion Stock acquirable upon conversion of such
holder's Series A Preferred immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
Section 9. EVENTS OF NONCOMPLIANCE.
A. DEFINITION. An Event of Noncompliance shall have occurred if:
(i) the Corporation fails to make any redemption payment with
respect to the Series A Preferred which it is required to make hereunder,
whether or not such payment is legally permissible or is prohibited by any
agreement to which the Corporation is subject, and such failure is not cured
within 5 days after the occurrence thereof;
(ii) the Corporation breaches or otherwise fails to perform or
observe any other material covenant or agreement set forth herein or in the
Purchase Agreement, and such failure is not cured within 30 days after the
earlier of (A) the receipt of notice thereof by the holders of the Series A
Preferred or (B) the discovery thereof by the Corporation;
(iii) any representation or warranty contained in the Purchase
Agreement or required to be furnished to any holder of Series A Preferred
pursuant to the Purchase Agreement, is false or misleading in any material
respect on the date made or furnished and such false or misleading
representation, warranty or information relates to a material adverse effect on
the Corporation and its Subsidiaries, taken as a whole, or fails to disclose a
material adverse change on the Corporation and its Subsidiaries, taken as a
whole; provided that, notwithstanding the foregoing, in the case of paragraph
5J of the Purchase Agreement, any occurrence, event, transaction or claim which
results in any loss, damage or injury to the Corporation and its Subsidiaries
in excess of $4,000,000 shall conclusively be deemed to have material adverse
effect and be a material adverse change hereunder;
(iv) the Corporation or any Subsidiary makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Material Subsidiary bankrupt or insolvent;
or any order for relief with respect to the Corporation or any Material
Subsidiary is entered under the Federal Bankruptcy Code; or the Corporation or
any Material Subsidiary petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Corporation
or any Material Subsidiary or of any substantial part of the assets of the
Corporation or any Material Subsidiary, or commences any proceeding (other than
a proceeding for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Corporation or any Material Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against the Corporation or any
Material Subsidiary and either (a) the Corporation or any such Material
Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein or (b) such petition, application or proceeding is not
dismissed within 60 days;
(v) a judgment in excess of $500,000 is rendered against the
Corporation or any Material Subsidiary and, within 60 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged; or
(vi) the Corporation or any Material Subsidiary defaults in the
performance of any obligation or agreement if the effect of such default is to
cause an amount exceeding $500,000 to become due prior to its stated maturity
or to permit the holder or holders of any obligation to cause an amount
exceeding $500,000 to become due prior to its stated maturity.
The foregoing shall constitute Events of Noncompliance whatever the
reason or cause for any such Event of Noncompliance and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
B. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE.
(i) If an Event of Noncompliance of the type described in
subparagraph 9A(i), 9A(ii) or 9A(iii) (with respect to paragraphs 5J and 5X of
the Purchase agreement only) has occurred and is continuing, the dividend rate
on the Series A Preferred shall increase immediately to 15%. Any increase of
the dividend rate resulting from the operation of this subparagraph shall
terminate as of the close of business on the date on which no Event of
Noncompliance of the type described in subparagraph 9A(i) or 9A(ii) exists,
subject to subsequent increases pursuant to this paragraph.
(ii) If any Event of Noncompliance of the type described in
subparagraph 9A(i), 9A(ii) or 9A(iii) (with respect to paragraphs 5J and 5X of
the Purchase Agreement only) has occurred, the Conversion Price on the Series A
Preferred shall be reduced immediately by 1/3 of the Conversion Price in effect
immediately prior to such adjustment. In no event shall such Conversion Price
adjustment be rescinded, and in no event shall there be more than one
adjustment pursuant to this subparagraph.
(iii) If an Event of Noncompliance (other than an Event of
Noncompliance of the type described in subparagraph 9A(iv)) has occurred and is
continuing, the holder or holders of a majority of the Series A Preferred then
outstanding may demand (by written notice delivered to the Corporation)
immediate redemption of all or any portion of the Series A Preferred owned by
such holder or holders at a price per Share equal to the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon). The Corporation shall
give prompt written notice of such election to the other holders of Series A
Preferred (but in any event within five days after receipt of the initial
demand for redemption), and each such other holder may demand immediate
redemption of all or any portion of such holder's Series A Preferred by giving
written notice thereof to the Corporation within seven days after receipt of
the Corporation's notice. The Corporation shall redeem all Series A Preferred
as to which rights under this paragraph have been exercised within 15 days
after receipt of the initial demand for redemption. The amounts payable
hereunder with respect to the Series A Preferred shall be the greater of (1)
the Liquidation Value of such Series A Preferred and (2) the Market Price (on
the date which is five trading days prior to the date of payment) of the Common
Stock into which such Series A Preferred is convertible; provided that to the
extent the amount in clause (2) above exceeds the amount in clause (1) above,
all or a portion of such excess may, at the option of the Corporation's Board
of Directors, be paid in the form of Common Stock (valued at the Market Price
of the Common Stock on such date) up to and not exceeding a number of shares of
Common Stock equal to 20 multiplied by the average daily trading volume of the
Common Stock in the public markets for a period of 45 consecutive trading days
ending on such date and the remainder shall be paid in cash.
(iv) If an Event of Noncompliance of the type described in
subparagraph 9A(iv) has occurred, all of the Series A Preferred then
outstanding shall be subject to immediate redemption by the Corporation
(without any action on the part of the holders of the Series A Preferred) at a
price per Share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Corporation shall immediately redeem all Series
A Preferred upon the occurrence of such Event of Noncompliance.
(v) If any Event of Noncompliance exists, each holder of Series A
Preferred shall also have any other rights which such holder is entitled to
under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
Section 10. REGISTRATION OF TRANSFER.
The Corporation shall keep at its principal office a register for the
registration of Series A Preferred. Upon the surrender of any certificate
representing Series A Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of Shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of Shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series A Preferred
represented by such new certificate from the date to which dividends have been
fully paid on such Series A Preferred represented by the surrendered
certificate.
Section 11. REPLACEMENT.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing Shares
of Series A Preferred, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional investor
its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Corporation shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the number of Shares of such class represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on
the Series A Preferred represented by such new certificate from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
Section 12. DEFINITIONS.
"CHANGE IN CONTROL" has the meaning set forth in paragraph 4J hereof.
"COMMON STOCK" means, collectively, the Corporation's Common Stock, par
value $.015, and any capital stock of any class of the Corporation which is not
limited to a fixed sum or percentage of par or stated value in respect to the
rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation.
"CONVERSION STOCK" means shares of the Corporation's Common Stock, par
value $.015 per share; provided that if there is a change such that the
securities issuable upon conversion of the Series A Preferred are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share
of the security issuable upon conversion of the Series A Preferred if such
security is issuable in shares, or shall mean the smallest unit in which such
security is issuable if such security is not issuable in shares.
"CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) directly or indirectly convertible into or exchangeable for Common
Stock.
"FUNDAMENTAL CHANGE" has the meaning set forth in paragraph 4J hereof.
"JUNIOR SECURITIES" means any capital stock or other equity securities of
the Corporation, except for the Series A Preferred.
"LIQUIDATION VALUE" of any Share as of any particular date shall be equal
to $1,000.
"MARKET PRICE" of any publicly traded security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day such
security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on
any day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 15 days consisting of the day as of which "Market Price" is
being determined and the 14 consecutive business days prior to such day.
"MARKET PRICE" of any security which is not publicly traded means the fair
value of such security determined jointly by the Corporation and the holders of
a majority of the Series A Preferred; provided that if such parties are unable
to reach agreement within a reasonable period of time, such fair value shall be
determined by an independent appraiser experienced in valuing securities
jointly selected by the Corporation and the holders of a majority of the Series
A Preferred without application of any minority or blockage discounts. The
determination of such appraiser shall be final and binding upon the parties,
and the Corporation shall pay the fees and expenses of such appraiser.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any
comparable statement under any similar federal statute then in force.
"PURCHASE AGREEMENT" means the Note and Warrant Purchase Agreement, dated
as of May 19, 1995 by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"REDEMPTION DATE" as to any Share means the date specified in the notice
of any redemption at the Corporation's option or the applicable date specified
herein in the case of any other redemption; provided that no such date shall be
a Redemption Date unless the Liquidation Value of such Share (plus all accrued
and unpaid dividends thereon and any required premium with respect thereto) is
actually paid in full on such date, and if not so paid in full, the Redemption
Date shall be the date on which such amount is fully paid.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
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 that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
Section 13. AMENDMENT AND WAIVER.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 14 hereof without the prior written
consent of the holders of a majority of the Series A Preferred outstanding at
the time such action is taken; provided that no such action shall change (a)
the rate at which or the manner in which dividends on the Series A Preferred
accrue or the times at which such dividends become payable or the amount
payable on redemption of the Series A Preferred or the times at which
redemption of Series A Preferred is to occur, without the prior written consent
of the holders of at least 66% of the Series A Preferred then outstanding, (b)
the Conversion Price of the Series A Preferred or the number of shares or class
of stock into which the Series A Preferred is convertible, without the prior
written consent of the holders of at least 66% of the Series A Preferred then
outstanding or (c) the percentage required to approve any change described in
clauses (a) and (b) above, without the prior written consent of the holders of
at least 66% of the Series A Preferred then outstanding; and provided further
that no change in the terms hereof may be accomplished by merger or
consolidation of the Corporation with another corporation or entity unless the
Corporation has obtained the prior written consent of the holders of the
applicable percentage of the Series A Preferred then outstanding.
Section 14. NOTICES.
Except as otherwise provided hereunder, all notices referred to herein
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
carrier service (charges prepaid) or five days after being mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent (i) to
the Corporation, at its principal executive offices and (ii) to any
stockholder, at such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such holder).
Be it further
RESOLVED, that the Chairman and Chief Executive Officer, the
President and Chief Operating Officer, the Executive Vice President and
Chief Financial Officer, the Vice President-Finance, the Treasurer and
the Secretary of this Corporation be, and they each hereby are,
authorized and directed to execute and file this Certificate of
Designations with respect to this Corporation's Series A Preferred Stock
with the Secretary of State of the State of Delaware, and to take such
further actions and to execute, deliver, certify and file such additional
documents in the name of and on behalf of this Corporation as the
officers executing the same shall deem necessary or advisable to
effectuate the intent of these resolutions in the exercise of their best
judgment.
IN WITNESS WHEREOF, ACC Corp. has caused this Certificate of
Designations, Powers, Preferences and Relative, Participating, Optional or
Other Special Rights, and the Qualifications, Limitations or Restrictions
thereof of its Series A Preferred Stock to be duly executed by Arunas A.
Chesonis, its President and Chief Operating Officer, and attested by Francis
D.R. Coleman, its Secretary, this 28th day of August, 1995.
ACC CORP.
By: /s/ Arunas A. Chesonis
Arunas A. Chesonis
President and Chief Operating
Officer
ATTEST:
/s/ Francis D.R. Coleman
Francis D. R. Coleman, Secretary
Exhibit 4-2
WARRANT NO. PW/A-12
PURCHASE WARRANT
30,000 SHARES OF ACC CORP. $.015 PAR VALUE
CLASS A COMMON STOCK
FOR VALUE RECEIVED, ACC Corp., a Delaware corporation (the "Company"),
hereby grants to Columbia Capital Corporation (the "Holder"), with an address
of 201 North Main Street, Suite 300, Alexandria, Virginia 22314, the right,
subject to the further terms and conditions set forth herein, to purchase from
the Company 30,000 whole, fully paid and nonassessable shares (the "Shares") of
its $.015 par value Class A Common Stock at a purchase price per Share of
$16.00 (the "Purchase Price"). This Warrant shall be fully exercisable on its
date of issuance and in all events shall expire and be of no further force or
effect at the earlier of the time when it has been exercised with respect to
all Shares which the Holder is entitled to purchase hereunder or 11:59 P.M.,
New York City time, on the date which is three and one-half years from the
issuance date hereof (the "Expiration Date"). The number and character of the
Shares and the Purchase Price are subject to adjustment as hereinafter
provided. As used herein, this "Warrant" means and includes this Warrant and
any Common Stock purchase warrant of the Company hereafter issued in
substitution for or in replacement of this Warrant or to evidence the
continuing effect of any part of this Warrant after any partial exercise
hereof.
1. EXERCISE. This Warrant may be exercised in whole, or in part from
time to time, by the Holder by delivering this Warrant together with an
executed Subscription Agreement in the form annexed hereto as Exhibit A to the
Company or such person as the Company may have appointed as warrant agent, at
its principal office (or at the office of the agency maintained for such
purpose), accompanied by payment by certified or bank check or wire transfer of
funds payable to the order of the Company, in an aggregate amount equal to the
per share Purchase Price as then adjusted multiplied by the number of Shares as
to which this Warrant is then being exercised. The Company or such agent shall
cancel this Warrant on any such exercise and, if such exercise is partial,
shall issue and deliver to the Holder a new Warrant upon the same terms as
contained herein with respect to the unexercised portion of this Warrant.
Anything in this Warrant to the contrary notwithstanding, this Warrant may not
be exercised after the Expiration Date and may be exercised only with respect
to whole Shares.
The Company will, or will direct its transfer agent to, issue a
certificate or certificates for the number of fully paid and nonassessable
Shares as to which this Warrant is so exercised, and in lieu of any fractional
shares to which the Holder would otherwise be entitled, pay cash equal to such
fraction multiplied by the Purchase Price as then adjusted, as soon as
practicable after any exercise of this Warrant, and in any event within five
business days thereafter, at the Company's expense (including the payment by it
of any applicable issue taxes), in the name of, and deliver the same to, the
Holder (on payment by the Holder of any applicable transfer taxes).
Notwithstanding the preceding paragraph, any Shares as to which this
Warrant is exercised shall be deemed issued on and as of the date of such
exercise in accordance with the first paragraph of this Section and the Holder
shall thereupon be deemed to be the owner of record thereof.
All shares issued pursuant to any exercise of this Warrant shall be
"restricted securities" within the meaning of the Securities Act of 1933, as
amended (the "Act") and the rules and regulations thereunder, and shall bear
the standard restrictive legend under the Act. Upon any exercise of this
Warrant, the Holder shall also execute the form of representation letter
attached as Exhibit B hereto making the representations regarding the status of
the Shares contained therein.
2. ADJUSTMENTS.
(a) STOCK DIVIDENDS, SPLITS, ETC. The number of Shares that may be
purchased on exercise of this Warrant and the Purchase Price therefor shall be
proportionately increased or decreased, as the case may be, for any stock
dividend, stock split, combination, subdivision or other changes made with
respect to the Class A Common Stock of the Company at any time prior to the
Expiration Date. An adjustment made pursuant to this paragraph shall, in the
case of a stock dividend or distribution, be made as of the record date
therefor and, in the case of a subdivision or combination, be made as of the
effective date thereof.
(b) REORGANIZATION, RECAPITALIZATION, CONSOLIDATION, MERGER OR SALE OF
ASSETS. In the event of any reorganization or recapitalization of the Company
or in the event the Company consolidates with or merges into another
corporation or transfers all or substantially all of its assets to another
entity, the Holder, at any time after the consummation of such event, upon the
exercise of this Warrant and payment of the Purchase Price as provided herein,
shall be entitled to receive the stock to which the Holder would have been
entitled on such consummation if the Holder had exercised this Warrant
immediately prior thereto. In such case, the terms of this Warrant shall
survive the consummation of any such event and shall be applicable to the
shares of stock receivable on the exercise of this Warrant after such
consummation.
3. NOTICES OF RECORD DATES, ETC. The Company shall mail or cause to
be mailed to the Holder, at the same time it mails such notices to its
shareholders of Class A Common Stock, all notices specifying any record date
for shareholders of its Class A Common Stock with respect to any dividend,
distribution or right, or with respect to any shareholder meeting to be held at
which a vote is to be taken for the purpose of approving any reorganization,
recapitalization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding up of the affairs of the Company. The
Company also shall provide to the Holder all notices and reports that it
provides to its shareholders generally.
4. TRANSFER OF WARRANT OR SHARES.
(a) TRANSFER OF WARRANT. Neither this Warrant, nor any part or
right with respect to it, shall be sold, transferred, assigned or hypothecated
other than in accordance with Section 6 hereof. Before selling or otherwise
disposing of this Warrant or any part thereof (in any case in accordance with
the terms hereof) the Holder agrees to give 10 days' prior written notice to
the Company of its intention to do so. The notice shall describe with
particularity the proposed transfer. If, in the reasonable opinion of counsel
to the Company, such transaction may lawfully be effected under the Act and
under any other applicable Federal or state law or regulation, the Company
shall then permit the Holder to sell or otherwise dispose of this Warrant or
portion thereof in the manner described in the notice given to the Company.
(b) TRANSFER OF SHARES. Should the Holder desire to sell or
otherwise dispose of any Shares acquired upon the exercise of this Warrant, the
Holder shall notify the Company of the terms of such transaction and shall
comply with the requirements contained in the form of investment letter
attached as Exhibit B hereto. If, in the opinion of counsel to the Company,
such transaction may lawfully be effected under the Act and under any other
applicable Federal or state law or regulation, the Holder shall be entitled to
sell or otherwise dispose of such Shares in the manner described in the notice
given to the Company.
5. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of any such loss, theft or destruction, on
delivery of a bond or other indemnity reasonably satisfactory to the Company,
or, in the case of any such mutilation, on surrender and cancellation of this
Warrant, the Company shall issue a new Warrant, of like tenor in lieu of such
lost, stolen, destroyed or mutilated Warrant.
6. TRANSFERS. The Holder represents by its acceptance hereof that
this Warrant is being acquired for investment and not with a view to the
distribution thereof. The Holder shall not transfer or assign this Warrant
except (a) in a transaction which is permitted under applicable securities
laws, or (b) by will or pursuant to laws of descent and distribution. Any
attempted or purported assignment or transfer of this Warrant not in compliance
with this Section shall be void. The Company shall cause to be kept a register
of the Holder(s) of this Warrant (the "Warrant Register"). In the event of any
transfer permitted by this Section, the Company shall or shall cause its agent
to register the transfer or assignment on its Warrant Register on surrender of
this Warrant, duly endorsed, or accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the Company, duly
executed by the Holder or by the duly appointed legal representative or
attorney-in-fact thereof. On any such registration of transfer, the Company
shall issue a new Warrant or Warrants, of like tenor, in lieu of the
transferred or assigned Warrant. Notwithstanding the foregoing provisions of
this Section, this Warrant may be surrendered to the Company, together with a
written request for exchange, and thereupon the Company shall issue and
exchange therefor one or more new Warrants, of like tenor as requested by the
Holder, and the Company shall cancel this Warrant on such surrender for
exchange. In no event, however, will the Company be required to effect any
registration of transfer, assignment or exchange that would result in the
issuance of a fraction of a share. For purposes of this Warrant, the term
"Holder" shall refer to all persons who at any time are listed in the Warrant
Register as holding a Warrant representing any portion of the rights hereunder.
7. REGISTRATION OF SHARES UNDER THE ACT. At any time prior to the
Expiration Date of this Warrant, and subject to the further limitations
contained in this Section, the Holder(s) shall be entitled to demand and
receive one registration, under the Act and the laws of the State of New York,
of all but not less than all of the Shares acquired or acquirable pursuant to
the exercise of this Warrant in full, as follows:
(a) To initiate the registration, the Company must receive
written requests for such registration from the Holder(s) of all of the Shares.
(b) Upon receipt of such request(s), the Company shall:
(i) Use its best efforts to promptly cause to be prepared and
filed with the Securities and Exchange Commission (the "SEC") under the
Act and also filed with the applicable New York State authorities, within
45 days following receipt of such request(s), a registration statement
(the "Registration Statement") and prospectus or post-effective amendment
(the "Amendment") to the Registration Statement relating to the
distribution of such Shares;
(ii) Use its best efforts, through its officers and Directors,
auditors and counsel to cause the Registration Statement or Amendment to
become effective at the earliest practicable date after the filing
thereof;
(iii) Deliver to the Holder(s) such number of copies of such
prospectuses in preliminary and definitive form, and amendments thereto,
as such Holder(s) may reasonably request; and
(iv) Keep effective such Registration Statement, make such other
filings related to it, and do such other acts and things as may be
reasonably necessary in the opinion of counsel for the Company to permit
the public sale or other disposition of such Shares for a period of 90
days after the effective date of such Registration Statement or Amendment
as the case may be.
The Company's obligation to commence such a demand registration set forth
in subparagraph (b)(i) above is subject to deferral for a period not to exceed
90 days if such deferral is deemed necessary or appropriate by counsel to the
Company. In lieu of accepting such deferral, however, the Holder(s) may elect
to cancel their registration demand and exercise such right at a later date,
but in no event later than the Expiration Date of this Warrant.
The Company will also cooperate with the Holder(s) and their respective
counsel with respect to any registration or other qualification of the Shares
by the Holder(s) for sale under the securities or "blue sky" laws of up to five
jurisdictions, in addition to New York State, as such Holder(s) shall
reasonably designate and continue its cooperation with respect to such state
registrations or qualifications so long as reasonably required for the purpose
of sale of the Shares.
The Holder(s) likewise shall cooperate fully with the Company in
effecting such registration.
The Company shall pay all fees, taxes, and expenses pertaining to filing
a Registration Statement or Amendment with the SEC and with New York State,
including but not limited to, Federal and New York State registration and
filing fees, fees and expenses of the Company's counsel and auditors, and
printing, mailing and other distribution expenses incident to such Registration
Statement or Amendment. The Holder(s) selling Shares in such registration
shall be responsible for all state "blue sky" expenses in all states other than
New York State, all underwriting fees and expenses and all fees of their
counsel and accountants.
In the event that the registration shall for any reason other than an
act(s) of the Holder(s) not become effective, or if the Company shall fail to
keep such registration effective for the period of time set forth above, then
such attempted registration shall not be deemed a registration hereunder and
the Holder(s) shall continue to be entitled to a registration pursuant to this
Section.
The Company shall indemnify and hold harmless each Holder and each
"underwriter" within the meaning of the Act who may purchase from or sell for
any such Holder any portion of the Shares (and each person, if any, who
controls any such Holder or underwriter) from and against any and all such
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) joint and several to which they or any of them may become
subject under the Act or otherwise and, except as hereinafter provided, will
reimburse each such Holder and each such underwriter for any legal or other
expenses incurred by any of them in connection with investigating or defending
any claims or actions, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any misstatement or
alleged misstatement of a material fact contained in any registration statement
under the Act or any prospectus included therein, or any amendments or
supplements thereto, which is filed or furnished by reason of this Section or
arise out of or are based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, expenses, liabilities or actions are caused by any such misstatement
or omission made in reliance upon and in conformity with information furnished
to the Company by or on behalf of any such Holder or underwriter expressly for
use in connection therewith. The indemnity agreement in this paragraph shall
be in addition to any liability which the Company may otherwise have.
In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in this Section is unavailable to any
Holder or underwriter under the Act or any person who controls any such Holder
or underwriter (collectively, "Indemnified Parties"), the Company and
Indemnified Parties shall contribute to the aggregate losses, claims, damages,
and liabilities of the nature contemplated by said indemnification in
proportion to the relative fault of the Company and the Indemnified Parties in
connection with the statement or omission that resulted in such damages and
other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement or alleged omission to state a material fact, such statement
or omission relates to information supplied by the Company or the Indemnified
Parties and the party's relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in this paragraph shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending against or appearing as a
third party witness in any such action or claim. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
The Company's agreements with respect to this Warrant or the Shares as
stated in this Section shall continue in effect regardless of the exercise and
surrender of this Warrant.
8. RESERVATION OF SHARES. The Company shall at all times reserve, for
the purpose of issuance on exercise of this Warrant, such number of its duly
authorized and unissued and/or treasury shares of Class A Common Stock or such
class or classes of capital stock or other securities as shall from time to
time be sufficient to comply with this Warrant. If, at any time, the
authorized and unissued and/or treasury shares of Class A Common Stock or such
other class or classes of capital stock or other securities are not sufficient
for the exercise of this Warrant, the Company shall take such corporate action
as may in the opinion of its counsel be necessary to increase its authorized
and unissued and/or treasury shares of Class A Common Stock or such other class
or classes of capital stock or other securities to such number as shall be
sufficient for that purpose.
9. SURVIVAL. All agreements, covenants, representations and
warranties herein shall survive the execution and delivery of this Warrant and
any investigation at any time made by or on behalf of any party hereto and the
exercise, sale and purchase of this Warrant and the Class A Common Stock
issuable on exercise hereof.
10. SHAREHOLDER RIGHTS. This Warrant shall not entitle the Holder, as
such, to any voting rights or other rights as a shareholder of the Company, or
to any other rights except the rights stated herein.
11. NOTICES. All demands, notices, consents and other communications
to be given hereunder shall be in writing and shall be deemed duly given when
delivered personally or three days after being mailed by certified first class
mail, postage prepaid, return receipt requested, properly addressed, if to the
Company at: 400 West Avenue, Rochester, New York 14611, or if to the Holder, at
its address set forth above. The Company and the Holder may change their
respective addresses at any time or times by notice given hereunder to the
other.
12. AMENDMENTS; WAIVERS; TERMINATIONS; GOVERNING LAW; HEADINGS. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change waiver, discharge or termination is sought. The corporation
laws of the State of Delaware shall govern all issues concerning the relative
rights of the Company and its shareholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by and construed and interpreted in accordance with the internal laws
of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule of any jurisdiction. The headings of this
Warrant are for convenience of reference only and are not part of this Warrant.
Dated: July 21, 1995 ACC CORP.
Witness:
By: Michael R. Daley
/s/ Francis D.R. Coleman
Secretary Title: EVP & CFO
<PAGE>
EXHIBIT A
SUBSCRIPTION
(To be completed and signed only on an exercise of the Warrant.)
TO: ACC CORP.:
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______ shares of the Class A Common Stock of ACC CORP. to
which such Holder is entitled thereunder, and herewith makes payment of
$_________ therefor in cash or by certified or official bank check. The
undersigned hereby requests that the Certificate(s) for such shares be issued
in his name and delivered to the following address:
If the foregoing Subscription evidences an exercise of the within Warrant
to purchase fewer than all of the Shares to which the undersigned is entitled
under such Warrant, please issue a new warrant, of like tenor, for the
remaining Shares in his name, and deliver the same to the same address as set
forth above.
Dated: ______________, 19___. ______________________________
(Name of Holder)
______________________________
(Signature of Holder or
Authorized Signatory)
<PAGE>
EXHIBIT B
TO: ACC CORP.
400 West Avenue
Rochester, New York 14611
Gentlemen:
In connection with the issuance to the undersigned of _______ shares of
the Class A Common Stock (the "Shares") of ACC CORP. (the "Company"), I
understand that the Shares have not been registered under the Securities Act of
1933, as amended, (the "Act") by reason of a specific exemption under the
provisions of the Act which depends upon my representations contained in this
letter and that you are relying on such representations as a condition
precedent to permitting the issuance of the Shares to me. I also understand
that any sales made by me publicly under Rule 144 can only be made after I have
held the Shares for two years, and then only in limited quantities and only
under the terms and conditions of said Rule; and that any other public resale
of the Shares may require registration under the Act or compliance with an
exemption from the registration requirements of the Act.
I agree that the Shares may not be transferred unless and until the
Company shall have been informed of the proposed transfer and:
1. A registration statement with respect to the Shares shall be
effective under the Act, and I shall have furnished satisfactory proof of
compliance with any other applicable law; or
2. I have obtained an opinion of counsel, in form and content
satisfactory to the Company and its counsel, that no violation of the Act or
any other applicable law will be involved in such transfer, and/or such other
documentation in connection therewith as counsel for the Company may in its
reasonable discretion require as a condition precedent in order to make a
determination that the transfer will involve no such violation.
I agree that appropriate legends may be placed on any certificates
delivered to me representing the Shares in order to give notice of the transfer
restrictions set forth in this letter and that the Company may cause stop
transfer orders to be placed on my account.
I further acknowledge and agree that neither the Company nor any of its
agents, officers or directors have made any representations concerning the
Company or its prospects and that I have based my decision to acquire the
Company's stock upon information furnished to me by persons other than the
Company, its officers, directors or agents.
In consideration of the transfer of the Shares to me, I hereby agree to
indemnify and hold harmless the Company, its officers, directors, employees and
agents, from and against any and all liability, losses, damages, expenses and
attorneys' fees which any of them may hereafter incur, suffer or be required to
pay by reason of the falsity of, or my failure to comply with, any
representations contained in this letter.
Very truly yours,
______________________________
(Signature of Holder)
______________________________
(Date)
Exhibit 10-1
CREDIT AGREEMENT
dated as of July 21, 1995
by and among
ACC CORP.,
and certain Subsidiaries thereof designated herein,
as Borrowers,
ACC CORP.,
as Guarantor,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Managing Agent and Administrative Agent,
and
SHAWMUT BANK CONNECTICUT, N.A.,
as Managing Agent
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................... 1
SECTION 1.1. DEFINITIONS............................................. 1
SECTION 1.2. GENERAL................................................. 19
SECTION 1.3. OTHER DEFINITIONS AND PROVISIONS........................ 19
ARTICLE II
REVOLVING CREDIT FACILITY........................ 19
SECTION 2.1. REVOLVING CREDIT LOANS.................................. 19
SECTION 2.2. PROCEDURE FOR ADVANCES OF LOANS......................... 20
SECTION 2.3. REPAYMENT OF LOANS...................................... 21
SECTION 2.4. REVOLVING CREDIT NOTES.................................. 22
SECTION 2.5. PERMANENT REDUCTIONS OF THE AGGREGATE COMMITMENT........ 22
SECTION 2.6. TERMINATION OF CREDIT FACILITY.......................... 23
SECTION 2.7. USE OF PROCEEDS......................................... 24
ARTICLE III
GENERAL LOAN PROVISIONS......................... 24
SECTION 3.1 INTEREST................................................. 24
SECTION 3.2 NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS. 27
SECTION 3.3 FEES..................................................... 28
SECTION 3.4 MANNER OF PAYMENT........................................ 28
SECTION 3.5 CREDITING OF PAYMENTS AND PROCEEDS....................... 29
SECTION 3.6 NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF
CREDIT; ASSUMPTION BY ADMINISTRATIVE AGENT...................... 30
SECTION 3.7 MANDATORY REDENOMINATION OF STERLING LOANS............... 31
SECTION 3.8 CURRENCY APPRECIATION; SUBLIMITS; MANDATORY REDUCTIONS... 31
SECTION 3.9 REGULATORY LIMITATION.................................... 31
SECTION 3.10 CHANGED CIRCUMSTANCES................................... 32
SECTION 3.11 INDEMNITY............................................... 34
SECTION 3.12 CAPITAL REQUIREMENTS.................................... 34
SECTION 3.13 TAXES................................................... 35
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING............... 37
SECTION 4.1 CLOSING............................................ 37
SECTION 4.2 CONDITIONS TO CLOSING AND INITIAL EXTENSIONS OF CREDIT
37
SECTION 4.3 CONDITIONS TO ALL LOANS.................................. 41
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS............... 41
SECTION 5.1 REPRESENTATIONS AND WARRANTIES........................... 41
SECTION 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.......... 50
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES.................... 50
SECTION 6.1 FINANCIAL STATEMENTS AND PROJECTIONS..................... 50
SECTION 6.2 OFFICER'S COMPLIANCE CERTIFICATE......................... 51
SECTION 6.3 ACCOUNTANTS' CERTIFICATE................................. 52
SECTION 6.4 OTHER REPORTS............................................ 52
SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS................... 52
SECTION 6.6 ACCURACY OF INFORMATION.................................. 54
SECTION 6.7 REVISIONS OR UPDATES TO SCHEDULES........................ 54
ARTICLE VII
AFFIRMATIVE COVENANTS.......................... 54
SECTION 7.1 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.. 54
SECTION 7.2 MAINTENANCE OF PROPERTY.................................. 54
SECTION 7.3 INSURANCE................................................ 55
SECTION 7.4 ACCOUNTING METHODS AND FINANCIAL RECORDS................. 55
SECTION 7.5 PAYMENT AND PERFORMANCE OF OBLIGATIONS................... 55
SECTION 7.6 COMPLIANCE WITH LAWS AND APPROVALS....................... 55
SECTION 7.7 ENVIRONMENTAL LAWS....................................... 55
SECTION 7.8 COMPLIANCE WITH ERISA.................................... 56
SECTION 7.9 COMPLIANCE WITH AGREEMENTS............................... 56
SECTION 7.10 CONDUCT OF BUSINESS..................................... 56
SECTION 7.11 VISITS AND INSPECTIONS.................................. 56
SECTION 7.12 MATERIAL SUBSIDIARIES; ADDITIONAL COLLATERAL............ 57
SECTION 7.13 HEDGING AGREEMENT....................................... 57
SECTION 7.14 FURTHER ASSURANCES...................................... 58
ARTICLE VIII
FINANCIAL COVENANTS........................... 58
SECTION 8.1 MAXIMUM LEVERAGE RATIO................................... 58
SECTION 8.2 MINIMUM PRO FORMA DEBT SERVICE COVERAGE RATIO............ 59
SECTION 8.3 FIXED CHARGE COVERAGE RATIO.............................. 59
SECTION 8.4 MINIMUM NET WORTH........................................ 60
ARTICLE IX
NEGATIVE COVENANTS............................ 60
SECTION 9.1 LIMITATIONS ON DEBT...................................... 60
SECTION 9.2 LIMITATIONS ON CONTINGENT OBLIGATIONS.................... 61
SECTION 9.3 LIMITATIONS ON LIENS..................................... 61
SECTION 9.4 LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND ACQUISITIONS
62
SECTION 9.5 LIMITATIONS ON MERGERS AND LIQUIDATION................... 63
SECTION 9.6 LIMITATIONS ON SALE OF ASSETS............................ 63
SECTION 9.7 LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS............... 64
SECTION 9.8 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.... 64
SECTION 9.9 TRANSACTIONS WITH AFFILIATES............................. 65
SECTION 9.10 CERTAIN ACCOUNTING CHANGES.............................. 65
SECTION 9.11 AMENDMENTS; PAYMENTS AND PREPAYMENTS OF SUBORDINATED DEBT
65
SECTION 9.12 LICENSES................................................ 65
SECTION 9.13 RESTRICTIVE AGREEMENTS.................................. 65
ARTICLE X
UNCONDITIONAL GUARANTY.......................... 65
SECTION 10.1 GUARANTY OF OBLIGATIONS................................. 65
SECTION 10.2 NATURE OF GUARANTY...................................... 66
SECTION 10.3 DEMAND BY THE ADMINISTRATIVE AGENT...................... 67
SECTION 10.4 WAIVERS................................................. 67
SECTION 10.5 MODIFICATION OF LOAN DOCUMENTS ETC...................... 68
SECTION 10.6 REINSTATEMENT........................................... 68
SECTION 10.7 NO SUBROGATION.......................................... 69
ARTICLE XI
DEFAULT AND REMEDIES........................... 69
SECTION 11.1 EVENTS OF DEFAULT....................................... 69
SECTION 11.2 REMEDIES................................................ 72
SECTION 11.3 RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC......... 73
SECTION 11.4 CONSENTS................................................ 73
SECTION 11.5 JUDGMENT CURRENCY....................................... 74
ARTICLE XII
THE AGENTS................................ 75
SECTION 12.1 APPOINTMENT............................................. 75
SECTION 12.2 DELEGATION OF DUTIES.................................... 75
SECTION 12.3 EXCULPATORY PROVISIONS.................................. 75
SECTION 12.4 RELIANCE BY AGENTS...................................... 76
SECTION 12.5 NOTICE OF DEFAULT....................................... 76
SECTION 12.6 NON-RELIANCE ON SUCH AGENTS AND OTHER LENDERS........... 77
SECTION 12.7 INDEMNIFICATION......................................... 77
SECTION 12.8 EACH OF THE AGENTS IN ITS INDIVIDUAL CAPACITY........... 78
SECTION 12.9 RESIGNATION OF AGENTS; SUCCESSOR AGENTS................. 78
ARTICLE XIII
MISCELLANEOUS.............................. 79
SECTION 13.1 NOTICES................................................. 79
SECTION 13.2 EXPENSES................................................ 80
SECTION 13.3 SET-OFF................................................. 81
SECTION 13.4 GOVERNING LAW........................................... 81
SECTION 13.5 CONSENT TO JURISDICTION................................. 81
SECTION 13.6 WAIVER OF JURY TRIAL. ................................. 82
SECTION 13.7 REVERSAL OF PAYMENTS.................................... 82
SECTION 13.8 INJUNCTIVE RELIEF....................................... 82
SECTION 13.9 ACCOUNTING MATTERS...................................... 82
SECTION 13.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS................. 83
SECTION 13.11 AMENDMENTS, WAIVERS AND CONSENTS; RENEWAL.............. 87
SECTION 13.12 PERFORMANCE OF DUTIES.................................. 87
SECTION 13.13 INDEMNIFICATION........................................ 87
SECTION 13.14 ALL POWERS COUPLED WITH INTEREST....................... 88
SECTION 13.15 SURVIVAL OF INDEMNITIES................................ 88
SECTION 13.16 TITLES AND CAPTIONS.................................... 88
SECTION 13.17 SEVERABILITY OF PROVISIONS............................. 89
SECTION 13.18 COUNTERPARTS........................................... 89
SECTION 13.19ACC AS AGENT FOR OTHER BORROWERS................... 89
SECTION 13.20 TERM OF AGREEMENT...................................... 89
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion/Continuation
Exhibit D - Form of Officer's Certificate
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Pledge Agreement
Exhibit G - Form of Security Agreement
Exhibit H - Form of Landlord Consent
Exhibit I - Form of Mortgage
Exhibit J - Form of Joinder Agreement
Exhibit K - Form of Intercompany Subordination Agreement
SCHEDULES
Schedule 1.1 -Lenders and Commitments
Schedule 1.2 -Sublimits
Schedule 1.3 -Canadian Subsidiary Security Documents
Schedule 5.1(a) -Jurisdictions of Organization and Qualification to
Do Business as Foreign Corporation
Schedule 5.1(b) -Subsidiaries and Capitalization
Schedule 5.1(d) -Required Governmental Approvals
Schedule 5.1(h) -ERISA Plans
Schedule 5.1(l) -Material Contracts
Schedule 5.1(m) -Labor and Collective Bargaining Agreements
Schedule 5.1(r) -Real Property
Schedule 5.1(t) -Debt and Contingent Obligations
Schedule 5.1(u) -Litigation
Schedule 5.1(v) -Communications Licenses and Regulatory Matters
Schedule 9.3 -Existing Liens
Schedule 9.4 -Existing Loans, Advances and Investments
<PAGE>
CREDIT AGREEMENT, dated as of the 21 day of July, 1995, by and among ACC
CORP., a corporation organized under the laws of Delaware ("ACC"), and the
Subsidiaries thereof designated as Borrowers herein, as Borrowers, ACC, as
Guarantor, the Lenders who are or may become a party to this Agreement, FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association, as
Managing Agent and Administrative Agent and SHAWMUT BANK CONNECTICUT, N.A., a
national banking association, as Managing Agent.
STATEMENT OF PURPOSE
The Borrowers have requested and the Lenders have agreed to extend
certain credit facilities to the Borrowers on the terms and conditions of this
Agreement. ACC, as parent of the other Borrowers, will benefit directly and
indirectly from the extension of such credit facilities to such Borrowers. As
a precondition to making any extensions of credit hereunder, the Lenders have
required, and ACC has agreed, to execute this Agreement as Guarantor.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"ACC" means ACC Corp., a corporation organized under the laws of
Delaware, and its successors.
"ACC CORP. PLEDGE AGREEMENT" means the Pledge Agreement executed by ACC
in favor of the Administrative Agent for the benefit of itself and the Lenders
substantially in the form of EXHIBIT F, as amended or modified.
"ACC LEC" means ACC National Telecom Corp., a corporation organized under
the laws of Delaware, and its successors.
"ACC MASS." means ACC Long Distance of Massachusetts Corp., a corporation
organized under the laws of Delaware, and its successors.
"ACC NATIONAL" means ACC National Long Distance Corp., a corporation
organized under the laws of Delaware, and its successors.
"ACC NATIONAL PLEDGE AGREEMENT" means the Pledge Agreement executed by
ACC National in favor of the Administrative Agent for the benefit of itself and
the Lenders substantially in the form of EXHIBIT F, as amended or modified.
"ACC RADIO" means ACC Radio Corp., a corporation organized under the laws
of New York, and its successors.
"ACC U.K." means ACC Long Distance U.K., Ltd., a corporation organized
under the laws of the United Kingdom, and its successors.
"ACC U.K. SECURITY DOCUMENTS" means the collective reference to the
Debenture of even date executed by ACC U.K. in favor of the Administrative
Agent for the benefit of itself and the Lenders and any other agreement or
writing pursuant to which a U.K. Borrower, or any Subsidiary thereof, pledges
or grants a security interest in the Collateral or any such Person guarantees
or otherwise secures the payment and/or performance of the obligations of a
U.K. Borrower under the Loan Documents, in each case as amended or modified.
"ACC U.S." means ACC Long Distance Corp., a corporation organized under
the laws of New York, and its successors.
"ADDITIONAL BORROWER" means any Material Subsidiary which has become a
Borrower hereunder in accordance with Section 7.12.
"ADMINISTRATIVE AGENT" means First Union in its capacity as
administrative agent hereunder, and any successor thereto appointed pursuant to
Section 12.9.
"ADMINISTRATIVE AGENT'S CORRESPONDENT" means the financial institution
designated by the Administrative Agent to act as its correspondent hereunder in
the United Kingdom with respect to distribution and payment of Loans
denominated in Sterling.
"ADMINISTRATIVE AGENT'S OFFICE" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1.
"AFFILIATE" means, with respect to any Person and its Subsidiaries, any
other Person (other than a Subsidiary thereof) which directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such first Person or any of its Subsidiaries. The term
"control" means (a) the power to vote ten percent (10%) or more of the
securities or other equity interests of a Person having ordinary voting power,
or (b) the possession, directly or indirectly, of any other power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
"AGENTS" means the collective reference to the Managing Agents and the
Administrative Agent.
"AGGREGATE COMMITMENT" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced at any time or from time
to time pursuant to this Agreement. On the Closing Date, the Aggregate
Commitment shall be Thirty-five Million Dollars ($35,000,000).
"AGREEMENT" means this Credit Agreement, as amended or modified from time
to time.
"APPLICABLE LAW" means all applicable provisions of constitutions, laws,
statutes, treaties, rules, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"APPLICABLE MARGIN" shall have the meaning assigned thereto in Section
3.1(c).
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned thereto in
Section 13.10.
"BASE RATE" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate as determined by the Administrative Agent PLUS 1/2 of
1%; each change in the Base Rate shall take effect simultaneously with the
corresponding change or changes in the Prime Rate or the Federal Funds Rate.
"BASE RATE LOAN" means any Loan bearing interest at a rate determined
with reference to the Base Rate as provided in Section 3.1(a) hereof.
"BORROWERS" means the collective reference to the Domestic Borrowers and
U.K. Borrowers party hereto on the Closing Date and each Additional Borrower in
their respective capacities as a Borrower hereunder.
"BUSINESS DAY" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and Hartford, Connecticut are open for
the conduct of their domestic and international commercial banking business,
and (b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, any LIBOR Rate Loan, any day (i) that is
a Business Day described in clause (a) and that is also a day for trading by
and between banks in deposits for the applicable Permitted Currency in the
London interbank market and (ii) on which banks are open for the conduct of
their domestic and international banking business in the place where the
Administrative Agent's Correspondent shall make available Loans in such
Permitted Currency.
"CANADIAN NOTE DOCUMENTS" means the promissory note and any other
document evidencing the loans and other advances of ACC Corp. extended in favor
of the Canadian Subsidiaries.
"CANADIAN SUBSIDIARIES" means the collective reference to each Material
Subsidiary of ACC Corp. organized under the laws of Canada or any province
thereof which is a borrower under the Canadian Note Documents.
"CANADIAN SUBSIDIARY SECURITY DOCUMENTS" means the collective reference
to documents set forth on SCHEDULE 1.3 and any other agreement or writing
pursuant to which a Canadian Subsidiary pledges or grants a security interest
in its assets in order to secure the payment and/or performance of its
obligations under the Canadian Note Documents, in each case as amended or
modified.
"CAPITAL ASSET" means, with respect to ACC and its Subsidiaries, any
asset that would, in accordance with GAAP, be required to be classified and
accounted for as a capital asset on a Consolidated balance sheet of ACC and its
Subsidiaries.
"CAPITAL EXPENDITURES" means, with respect to ACC and its Subsidiaries
for any period, the aggregate cost of all Capital Assets acquired by any such
Person during such period, determined in accordance with GAAP.
"CAPITAL LEASE" means, with respect to ACC and its Subsidiaries, any
lease of any property that would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on a Consolidated balance sheet
of ACC and its Subsidiaries.
"CHANGE IN CONTROL" shall have the meaning assigned thereto in Section
11.1(i).
"CLOSING DATE" means the date of this Agreement or such later Business
Day upon which each condition described in Article IV shall be satisfied or
waived in all respects in a manner acceptable to the Agents in their sole
discretion.
"CODE" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"COLLATERAL" means any assets pledged by ACC or any of its Subsidiaries
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders in order to secure the Obligations or a portion thereof.
"COMMITMENT" means, as to any Lender, the obligation of such Lender to
make Loans to the Borrowers hereunder in an aggregate principal amount at any
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 1.1, as the same may be reduced or modified at any time or from
time to time pursuant to Sections 2.5 and 13.10.
"COMMITMENT PERCENTAGE" means, as to any Lender at any time, the ratio of
(a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment
of all of the Lenders.
"COMMUNICATIONS LICENSE" means any long distance telecommunications or
other license, permit, consent, certificate of compliance, franchise, approval,
waiver or authorization granted or issued by the FCC, CRTC or DTI including,
without limitation, any of the foregoing authorizing or permitting the
acquisition, construction or operation of Network Facilities or any other long
distance telecommunications system.
"CONSOLIDATED" means, when used with reference to financial statements or
financial statement items of ACC and its Subsidiaries, such statements or items
on a consolidated basis in accordance with applicable principles of
consolidation under GAAP.
"CONTINGENT INTEREST AGREEMENT" means the Contingent Interest Agreement
of even date between ACC and the Managing Agents substantially in the form of
EXHIBIT F hereto, as amended or modified.
"CONTINGENT OBLIGATION" means, with respect to ACC and its Subsidiaries,
without duplication, any obligation, contingent or otherwise, of any such
Person pursuant to which such Person has directly or indirectly guaranteed any
Debt or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement condition or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); PROVIDED, that the term Contingent Obligation shall not
include endorsements for collection or deposit in the ordinary course of
business.
"CREDIT FACILITY" means the revolving credit facility established
pursuant to Article II hereof.
"CRTC" means the Canadian Radio-Television and Telecommunications
Commission or any successor to Governmental Authority.
"CURRENT DOLLAR EQUIVALENT" means at any date, with respect to any Loan
denominated in Sterling, the amount of Dollars which is equivalent to the then
outstanding principal amount of such Loan at the most favorable spot exchange
rate determined by the Administrative Agent to be available to it for the sale
of Dollars for Sterling at approximately 11:00 A.M. (Charlotte time) two (2)
Business Days after such date. Sterling equivalents of Loans denominated in
Dollars (to the extent used herein) shall be determined by the Administrative
Agent in a manner consistent with this definition.
"DEBT" means, with respect to ACC and its Subsidiaries at any date and
without duplication, the sum of the following calculated in accordance with
GAAP: (a) all liabilities, obligations and indebtedness for borrowed money
including but not limited to obligations evidenced by bonds, debentures, notes
or other similar instruments of any such Person (excluding the Fleet Venture
Notes), (b) all obligations to pay the deferred purchase price of property or
services of any such Person, except trade payables arising in the ordinary
course of business not more than ninety (90) days past due, (c) all obligations
of any such Person as lessee under Capital Leases, (d) all Debt of any other
Person secured by a Lien on any asset of any such Person, (e) all Contingent
Obligations of any such Person, (f) all obligations, contingent or otherwise,
of any such Person relative to the face amount of letters of credit, whether or
not drawn, and banker's acceptances issued for the account of any such Person
and (g) all net obligations incurred by any such Person pursuant to Hedging
Agreements.
"DEFAULT" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"DOLLARS" OR "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"DOLLAR AMOUNT" means (a) with respect to each Loan made or continued (or
to be made or continued) in Dollars, the principal amount thereof and (b) with
respect to each Loan made or continued (or to be made or continued) in
Sterling, the amount of Dollars which is equivalent to the principal amount of
such Loan at the most favorable spot exchange rate determined by the
Administrative Agent to be available to it for the sale of Dollars for Sterling
at approximately 11:00 A.M. (Charlotte time) two (2) Business Days before such
Loan is made or continued (or to be made or continued), as such Dollar Amount
may be adjusted from time to time pursuant to Sections 3.8 or 3.9. When used
with respect to any Sterling portion of a Loan being repaid or remaining
outstanding at any time or with respect to any other sum expressed in Sterling,
"Dollar Amount" shall mean the amount of Dollars which is equivalent to the
principal amount of such Loan, or the amount so expressed in Sterling, at the
most favorable spot exchange rate determined by the Administrative Agent to be
available to it for the sale of Dollars for Sterling at the relevant time.
Sterling amounts of Loans made, continued or denominated in Dollars (to the
extent used herein) shall be determined by the Administrative Agent in a manner
consistent with this definition.
"DOMESTIC BORROWER" means the collective reference to each Borrower which
is organized under the laws of any State of the United States or the District
of Columbia.
"DTI" means the Department of Trade and Industry of the United Kingdom or
any successor Governmental Authority.
"ELIGIBLE ASSIGNEE" means, with respect to any assignment of the rights,
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a finance company, insurance company or other financial
institution which in the ordinary course of business extends credit of the type
extended hereunder and that has total assets in excess of $1,000,000,000, (c)
already a Lender hereunder (whether as an original party to this Agreement or
as the assignee of another Lender), and (d) the successor (whether by transfer
of assets, merger or otherwise) to all or substantially all of the commercial
lending business of the assigning Lender, and, in the case of (a), (b) or any
other Person, has been approved in writing as an Eligible Assignee by ACC and
the Managing Agents.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of ACC
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of ACC or any current or former ERISA
Affiliate.
"ENVIRONMENTAL LAWS" means any and all federal, state, provincial and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities,
relating to the protection of human health or the environment, including, but
not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
"ERISA AFFILIATE" means any Person who together with the ACC is treated
as a single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.
"ESCROW JOINDER AGREEMENT" means the Escrow Joinder Agreement dated July
__, 1995, as amended or modified, executed by the Administrative Agent, ACC,
ACC Canada and The R-M Trust Company, as trustee, with respect to the shares of
ACC Canada pledged pursuant to the ACC Corp. Pledge Agreement.
"EVENT OF DEFAULT" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"EXCESS CASH FLOW" means, for any Fiscal Year of ACC and its Subsidiaries
commencing with Fiscal Year 1996, the following calculated on a Consolidated
basis without duplication for such period in accordance with GAAP: (a)
Operating Cash Flow for such period PLUS Net Working Capital for such period
(if negative), LESS (b) the sum of (i) Fixed Charges for such period, (ii) Net
Working Capital for such period (if positive) and (iii) any payments to the
Managing Agents pursuant to the Contingent Interest Agreement during such
period.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FCC" means the Federal Communications Commission or any successor
Governmental Authority.
"FEDERAL FUNDS RATE" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published at 11:00 a.m. (Charlotte time) for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FIRST UNION" means First Union National Bank of North Carolina, a
national banking association, and its successors.
"FISCAL YEAR" means the fiscal year of ACC and its Subsidiaries ending on
December 31.
"FIXED CHARGES" means, with respect to ACC and its Subsidiaries, for any
period, the following without duplication, each calculated for such period in
accordance with GAAP: (a) all principal payments or similar amounts required to
be paid with respect to Total Debt during such period PLUS (b) Interest Expense
required to be paid during such period PLUS (c) total cash dividends or
distributions paid or payable by ACC during such period (excluding cash
dividends on the Preferred Stock which accrued but were not paid during such
period) PLUS (d) all payments in respect of any retirement, redemption or other
acquisition of the capital stock of ACC and its Subsidiaries consummated during
such period PLUS (e) all Capital Expenditures during such period PLUS (f) all
income and franchise taxes paid or payable in cash during such period.
"FLEET NOTE AND WARRANT PURCHASE AGREEMENT" means the Note and Warrant
Purchase Agreement dated May 22, 1995 by and among ACC, Fleet Venture
Resources, Inc., Fleet Equity Partners VI, L.P., and Chisholm Partners II,
L.P., as in effect on the Closing Date.
"FLEET VENTURE NOTES" means each Convertible Subordinated Promissory Note
issued pursuant to the Fleet Note and Warrant Purchase Agreement.
"FLEET VENTURE SUBORDINATION AGREEMENT" means the Subordination Agreement
of even date executed by the holders of the Fleet Venture Notes in favor of the
Administrative Agent for the benefit of the Lenders, as amended or modified.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for ACC and its Subsidiaries throughout the period indicated.
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities, including without limitation all Communications
Licenses and PUC Authorizations.
"GOVERNMENTAL AUTHORITY" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing, including
without limitation the FCC, CRTC, DTI and any PUC.
"GUARANTEED OBLIGATIONS" shall have the meaning assigned thereto in
Section 10.1.
"GUARANTOR" means ACC in its capacity as guarantor under Article X
hereof.
"GUARANTY" means the unconditional guaranty agreement of ACC set forth in
Article X hereof.
"HAZARDOUS MATERIALS" means any substances or materials (a) which are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (b) which are
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise harmful to human health or the environment and are or
become regulated by any Governmental Authority, (c) the presence of which
require investigation or remediation under any Environmental Law or common law,
(d) the discharge or emission or release of which requires a permit or license
under any Environmental Law or other Governmental Approval, (e) which are
deemed to constitute a nuisance, a trespass or pose a health or safety hazard
to persons or neighboring properties, (f) which are materials consisting of
underground or aboveground storage tanks, whether empty, filled or partially
filled with any substance or (g) which contain, without limitation, asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel,
natural gas or synthetic gas.
"HEDGING AGREEMENT" means any agreement with respect to an interest rate
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate or currency risk exposure executed in
connection with hedging the interest rate or currency exposure of the
Borrowers, and any confirming letter executed pursuant to such hedging
agreement, all as amended or modified.
"INTERCOMPANY SUBORDINATION AGREEMENT" means the Subordination Agreement
of even date substantially in the form of EXHIBIT K, as amended or modified,
executed by the Borrowers and other Subsidiaries party thereto with respect to
the loans by ACC to such Persons under the Canadian Note Documents and as
described on SCHEDULE 9.4.
"INTEREST EXPENSE" means, with respect to ACC and its Subsidiaries for
any period, total interest expense of ACC and its Subsidiaries (including
without limitation, interest expense attributable to Capital Leases and any
other capitalized interest expense) and, to the extent not included therein,
fees and other charges payable with respect to all Debt, (including fees and
charges payable with respect to Hedging Agreements, letters of credit and
similar investments), all determined on a Consolidated basis for such period in
accordance with GAAP.
"INTEREST PERIOD" shall have the meaning assigned thereto in Section
3.1(b).
"JOINDER AGREEMENT" means a Joinder Agreement substantially in the form
of EXHIBIT J executed by each Material Subsidiary in accordance with Section
7.12, as amended or modified.
"LANDLORD CONSENTS" means the Landlord Agreements substantially in the
form of EXHIBIT H or any similar agreement delivered by or on behalf of a
Borrower and executed by the owner of the parcels of real property with respect
to which a Mortgage or other Security Document has been executed in favor of
the Administrative Agent for the benefit of itself and the Lenders, as any such
Agreement may be amended or modified.
"LENDER" means each Person executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter becomes a party to
this Agreement as a Lender pursuant to Section 13.10.
"LENDING OFFICE" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"LEVERAGE RATIO" shall have the meaning assigned thereto in Section 8.1.
"LIBOR" means the rate of interest determined on the basis of the rate
for deposits in Dollars in minimum amounts of at least $5,000,000 (or the
Dollar Amount thereof with respect to a borrowing to be made in Sterling) for a
period equal to the applicable Interest Period appearing on Telerate Page 3750
as of 11:00 a.m. (London time) two Business Days prior to the first day of the
applicable Interest Period. In the event that such rate does not appear on
Telerate Page 3750, "LIBOR" shall be determined by the Administrative Agent to
be the arithmetic average (rounded upward, if necessary, to the nearest one-
sixteenth of one percent (1/16%)) of the rate per annum at which deposits in
the Permitted Currency in which the Loan bearing interest based upon such rate
is denominated would be offered by first class banks in the London interbank
market to the Administrative Agent (or the Administrative Agent's
Correspondent) at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of the applicable Interest Period for a period equal to
such Interest Period and in an amount substantially equal to the amount of the
applicable Loan.
"LIBOR RATE" means (a) LIBOR DIVIDED BY (b) one (1) LESS the Reserve
Percentage.
"LIBOR RATE LOAN" means any Loan bearing interest at a rate determined
with reference to the LIBOR Rate as provided in Section 3.1(a) hereof.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"LOAN" means any revolving loan made to the Borrower pursuant to Section
2.1, and all such Loans collectively as the context requires.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Contingent Interest Agreement, any Joinder Agreement, the Security Documents
and any supplements thereto executed in connection with any Joinder Agreement,
any Hedging Agreement executed by any Lender, the Subordination Agreements, the
Canadian Note Documents and each other document, instrument and agreement
executed and delivered by any Borrower, a Subsidiary thereof or their counsel
in connection with this Agreement or otherwise referred to herein or
contemplated hereby, all as may be amended or modified from time to time.
"MANAGING AGENTS" means First Union and Shawmut in their capacity as
managing agents hereunder, and any successor thereto in each case appointed
pursuant to Section 12.9; each, a "Managing Agent."
"MATERIAL ADVERSE EFFECT" means, with respect to ACC or any of its
Subsidiaries, a material adverse effect on the properties, business, prospects,
operations or condition (financial or otherwise) of any such Person or the
ability of any such Person to perform its obligations under the Loan Documents
to which it is a party.
"MATERIAL CONTRACT" means (a) any contract or other agreement, written or
oral, of a Borrower or any of its Subsidiaries involving monetary liability of
or to any such Person in an amount in excess of $250,000 per annum, or (b) any
other contract or agreement, written or oral, of a Borrower or any of its
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
"MATERIAL SUBSIDIARY" means any direct or indirect Subsidiary of ACC
which Subsidiary has total assets equal to or in excess of $1,000,000 and in
which a Borrower or Subsidiary has made an investment of equal to or in excess
of $1,000,000.
"MORTGAGE" means a Leasehold Mortgage substantially in the form of
EXHIBIT I or any other real property security agreement delivered by a Borrower
pursuant to which a Borrower grants a Lien on its interest in a parcel of real
property to the Administrative Agent for the benefit of itself and the Lenders.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which ACC or any ERISA Affiliate is making, or is
accruing an obligation to make, contributions within the preceding six years.
"NET INCOME" means, with respect to ACC and its Subsidiaries for any
period, the Consolidated net income (or loss) of ACC and its Subsidiaries for
such period determined in accordance with GAAP; PROVIDED, that there shall be
excluded from net income (or loss) (a) if the ability of ACC to receive,
recover or repatriate cash or receive the economic benefits (other than any
increase in value of ACC's stock or ownership interest in a Subsidiary thereof)
from any of its Subsidiaries is materially limited or restricted for a material
period of time at any date of determination by operation of the terms of the
charter of such Subsidiary or any agreement, instrument, or Applicable Law, the
portion of the income of each such Subsidiary so restricted and (b) the effect
of any currency translation adjustments.
"NET CASH PROCEEDS" means, as applicable, (a) with respect to any sale of
assets, the gross cash proceeds received by ACC or any of its Subsidiaries from
such sale LESS the sum of (i) all legal, title, recording, transfer and income
tax expenses, commissions and similar fees and expenses incurred, and all other
federal, state, local and foreign taxes assessed, in connection therewith and
(ii) the principal amount of, premium, if any, and interest on any Debt secured
by a Lien on the asset (or a portion thereof) sold, which Debt is required to
be repaid in connection with such sale of assets, (b) with respect to any
offering of capital stock or Debt securities, the gross cash proceeds received
by ACC or any of its Subsidiaries therefrom LESS all legal, underwriting and
similar fees and expenses incurred in connection therewith and (c) with respect
to any payment under an insurance policy, the amount of cash proceeds received
by ACC or its applicable Subsidiary from the related insurance company.
"NET WORKING CAPITAL" means, with respect to ACC and its Subsidiaries for
any period, (a) Working Capital as of the last day of such period LESS (b)
Working Capital as of the day prior to the first day of such period.
"NET WORTH" means, at any date of determination thereof, the sum of the
capital stock (excluding treasury stock, cumulative translation adjustments and
capital stock subscribed and unissued) and retained earnings (including earned
surplus, capital surplus and the balance of the current profit and loss account
not transferrable to retained earnings) accounts of ACC and its Subsidiaries
appearing on a Consolidated balance sheet of ACC and its Subsidiaries prepared
in accordance with GAAP.
"NETWORK AGREEMENT" means any document or agreement entered into by ACC
or any of its Subsidiaries regarding the use, operation, maintenance or
otherwise concerning any of the Network Facilities.
"NETWORK FACILITIES" means the network of digital or analog facilities
owned or leased by ACC or any of its Subsidiaries.
"NOTES" means the separate Revolving Credit Notes made by the applicable
Borrower or Borrowers payable to the order of each Lender, substantially in the
form of EXHIBIT A-1 hereto with respect to the Domestic Borrowers and EXHIBIT
A-2 hereto with respect to the U.K. Borrowers, evidencing the Credit Facility,
and any amendments and modifications thereto, any substitutes therefor, and any
replacements, restatements, renewals or extension thereof, in whole or in part;
"Note" means any of such Notes.
"NOTICE OF BORROWING" shall have the meaning assigned thereto in Section
2.2(a).
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning assigned
thereto in Section 3.2.
"OBLIGATIONS" means, in each case, whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing
after the filing of any bankruptcy or similar petition) the Loans, (b) all
payment and other net obligations owing by a Borrower to any Lender or Agent
under any Hedging Agreement and (c) all other fees and commissions (including
attorney's fees), charges, indebtedness, loans, liabilities, financial
accommodations, obligations, covenants and duties owing by a Borrower to the
Lenders or to any Agent, of every kind, nature and description, direct or
indirect, absolute or contingent, due or to become due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by any note,
and whether or not for the payment of money under or in respect of this
Agreement, any Note or any of the other Loan Documents.
"OFFICER'S COMPLIANCE CERTIFICATE" shall have the meaning assigned
thereto in Section 6.2.
"OPERATING CASH FLOW" means, with respect to ACC and its Subsidiaries for
any period, the following, each calculated on a Consolidated basis for such
period without duplication in accordance with GAAP: (a) Net Income, PLUS (b)
to the extent deducted in determining Net Income (i) income and franchise
taxes, (ii) Interest Expense and (iii) amortization and depreciation and other
similar non-cash charges LESS (c) the sum of (i) interest income, (ii) non-cash
income, (iii) capitalized costs and expenses and (iv) any items of gain (or
PLUS any non-cash items of loss) which were included in determining Net Income
and were not realized in the ordinary course of business. For purposes of
calculating compliance with Article VIII, Operating Cash Flow shall be adjusted
in a manner reasonably satisfactory to the Managing Agents to include as of the
first day of any calculation period any acquisition consummated during such
period in accordance with this Agreement and exclude as of the first day of any
calculation period any Subsidiary or assets sold in accordance with this
Agreement during such period.
"OTHER TAXES" shall have the meaning assigned thereto in Section 3.13(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of ACC or any
ERISA Affiliates or (b) has at any time within the preceding six years been
maintained for the employees of ACC or any of their current or former ERISA
Affiliates.
"PERMITTED CURRENCY" means Dollars or Sterling, or each such currency, as
the context requires.
"PERSON" means an individual, corporation, partnership, association,
trust, business trust, limited liability company, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group.
"PLEDGE AGREEMENT" means the collective reference to the ACC Pledge
Agreement and ACC National Pledge Agreement, or either such Pledge Agreement,
as the context requires.
"PREFERRED STOCK" means the Series A Preferred Stock of ACC governed by
and issued in accordance with the terms set forth in the Certificate of
Designation attached as EXHIBIT D to the Fleet Note and Warrant Purchase
Agreement.
"PRIME RATE" means, at any time, the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of business
on the day such change in the Prime Rate occurs. The parties hereto
acknowledge that the rate announced publicly by the Administrative Agent as its
Prime Rate is an index or base rate and shall not necessarily be its lowest or
best rate charged to its customers or other banks.
"PRO FORMA DEBT SERVICE" means, with respect to ACC and its Subsidiaries
at any date of determination, the sum of the following calculated without
duplication on a Consolidated PRO FORMA basis for the period of four (4)
consecutive fiscal quarters immediately succeeding such date of determination
in accordance with GAAP: (a) all payments of principal or similar amounts
required to be paid with respect to Total Debt during such period based upon
the aggregate amount of outstanding Debt on such date of determination and (b)
Interest Expense required to be paid during such period based upon rates of
interest in effect on such date of determination.
"PROJECTIONS" shall have the meaning assigned thereto in Section 6.1(c).
"PUC" means any state, provincial or other local regulatory agency or
body that exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Network Facility or long distance
telecommunications systems or over Persons who own, construct or operate a
Network Facility or long distance telecommunications systems, in each case by
reason of the nature or type of the business subject to regulation and not
pursuant to laws and regulations of general applicability to Persons conducting
business in any such jurisdiction.
"PUC AUTHORIZATIONS" means all applications, filings, reports, documents,
recordings and registrations with, and all validations, exemptions, franchises,
waivers, approvals, orders or authorizations, consents, licenses, certificates
and permits from any PUC.
"REGISTER" shall have the meaning assigned thereto in Section 13.10(d).
"REQUIRED LENDERS" means, at any date, any combination of Lenders whose
Commitment Percentages aggregate at least sixty-six and two-thirds percent (66-
2/3%) or, if the Commitments have been terminated, the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate principal amount of
the Notes.
"RESERVE PERCENTAGE" means the maximum daily arithmetic reserve
requirement imposed by the Board of Governors of the Federal Reserve System (or
any successor) under Regulation D on Eurocurrency liabilities (as defined in
Regulation D) for the applicable Interest Period as of the first day of such
Interest Period, but subject to any changes in such reserve requirement
becoming effective during the Interest Period. For purposes of calculating the
Reserve Percentage, the reserve requirement shall be as set forth in Regulation
D without benefit of credit for prorations, exemptions or offsets under
Regulation D, and further without regard to whether or not any Lender elects to
actually fund any Loan or portion thereof with Eurocurrency liabilities. Each
calculation by the Administrative Agent of the LIBOR Rate shall be conclusive
and binding for all purposes, absent manifest error.
"SECURITY AGREEMENT" means the Security Agreement of even date
substantially in the form of EXHIBIT G executed by the Domestic Borrowers in
favor of the Administrative Agent for the benefit of itself and the Lenders, as
amended or modified.
"SECURITY DOCUMENTS" means the collective reference to the Security
Agreement, the Trademark Assignment, the Pledge Agreements, the Landlord
Consents, the Mortgages, the Canadian Subsidiary Security Documents, the ACC
U.K. Security Documents, the Escrow Joinder Agreement and each other agreement
or writing pursuant to which ACC or any Subsidiary thereof pledges or grants a
security interest in the Collateral or such Person guaranties the payment
and/or performance of the Obligations.
"SHAWMUT" means Shawmut Bank Connecticut, N.A., a national banking
association, and its successors.
"SOLVENT" means, as to ACC and its Subsidiaries taken on a Consolidated
basis on a particular date, that such Persons (a) have capital sufficient to
carry on their business and transactions and all business and transactions in
which they are about to engage and are able to pay their debts as they mature,
(b) own property having a value at fair valuation greater than the amount
required to pay their probable liabilities (including contingencies), and (c)
do not believe that they will incur debts or liabilities beyond their ability
to pay such debts or liabilities as they mature.
"STERLING" means pounds sterling in the lawful currency of the United
Kingdom.
"SUBLIMIT" means the maximum aggregate amount of Loans available at any
time to the applicable Borrower or group of Borrowers hereunder as set forth on
SCHEDULE 1.2. If a Sublimit on such Schedule applies to more than one
Borrower, such Sublimit shall be in the aggregate amount available to all such
Borrowers taken together, and not an amount available to each such Borrower
individually.
"SUBORDINATED DEBT" means any Debt designated as Subordinated Debt on
SCHEDULE 5.1(T) hereof and any other Debt of ACC or any Subsidiary subordinated
in right and time of payment to the Obligations on terms reasonably
satisfactory to the Required Lenders.
"SUBORDINATION AGREEMENTS" means the collective reference to the Fleet
Venture Subordination Agreement and the Intercompany Subordination Agreement,
or either such agreement, as the context requires.
"SUBSIDIARY" means as to any Person, any corporation, partnership or
other entity of which more than fifty percent (50%) of the outstanding capital
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity is at the time, directly or indirectly, owned by or
the management is otherwise controlled by such Person (irrespective of whether,
at the time, capital stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency). Unless otherwise qualified, references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of ACC.
"TAXES" shall have the meaning assigned thereto in Section 3.13(a).
"TERMINATION DATE" means the earliest of the dates referred to in Section
2.6.
"TERMINATION EVENT" means: (a) a "Reportable Event" described in Section
4043 of ERISA (other than a Reportable Event as to which the provision of 30
days notice has been waived by the PBGC under applicable regulations); or (b)
the withdrawal of ACC or any ERISA Affiliate from a Pension Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; or (c) the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a distress termination under Section 4041(c) of ERISA; or (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC; or (e) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; or (f) the partial or complete withdrawal of ACC or any ERISA Affiliate
from a Multiemployer Plan; or (g) the imposition of a Lien pursuant to Section
412 of the Code or Section 302 of ERISA; or (h) any event or condition which
results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA; or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"TOTAL DEBT" means, with respect to ACC and its Subsidiaries at any date
of determination and without duplication, all Debt of ACC and its Subsidiaries
on a Consolidated basis.
"TRADEMARK ASSIGNMENT" means the Trademark Assignment of even date
executed by ACC in favor of the Administrative Agent for the benefit of itself
and the Lenders, as amended or modified.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
"U.K. BORROWERS" means the collective reference to each Borrower
organized under the laws of the United Kingdom or any political subdivision
thereof.
"UNITED STATES" means the United States of America.
"WHOLLY-OWNED" means, with respect to a Subsidiary, a Subsidiary all of
the shares of capital stock or other ownership interests of which are, directly
or indirectly, owned or controlled by ACC and/or one or more of its Wholly-
Owned Subsidiaries.
"WORKING CAPITAL" means, with respect to ACC and its Subsidiaries at any
date, the difference between current assets and current liabilities as of such
date determined in accordance with GAAP.
SECTION 1. GENERAL. All terms of an accounting nature not
specifically defined herein shall have the meaning assigned thereto by GAAP.
Unless otherwise specified, a reference in this Agreement to a particular
section, subsection, Schedule or Exhibit is a reference to that section,
subsection, Schedule or Exhibit of this Agreement. Wherever from the context
it appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter. Any
reference herein to "Charlotte time" shall refer to the applicable time of day
in Charlotte, North Carolina.
SECTION 2. OTHER DEFINITIONS AND PROVISIONS.
(a) USE OF CAPITALIZED TERMS. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings
when used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) MISCELLANEOUS. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 1. REVOLVING CREDIT LOANS. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Loans in a
Permitted Currency to the applicable Borrower or Borrowers from time to time
from the Closing Date through the Termination Date as requested by such
Borrower or Borrowers in accordance with the terms of Sections 2.1 and 2.2;
PROVIDED, that, based upon the Dollar Amount of any Loans denominated in
Dollars and the Current Dollar Equivalent of any Loans denominated in Sterling,
(a) the maximum amount of Loans available to each Borrower at any time
hereunder shall not exceed the Sublimit applicable to such Borrower, (b) the
aggregate principal amount of all outstanding Loans (after giving effect to any
amount requested) shall not exceed the Aggregate Commitment and (c) the
principal amount of outstanding Loans from any Lender to the Borrowers shall
not at any time exceed such Lender's Commitment. Each Loan by a Lender shall
be in a principal amount equal to such Lender's Commitment Percentage of the
aggregate principal amount of Loans requested on such occasion. Loans to be
made in Sterling shall be funded in an amount equal to the Dollar Amount of
such Loan. Loans to the Domestic Borrowers shall be denominated in Dollars and
Loans to the U.K. Borrowers shall be denominated in Sterling. Subject to the
terms and conditions hereof, the Borrowers may borrow, repay and reborrow Loans
hereunder until the Termination Date.
SECTION 1.2 PROCEDURE FOR ADVANCES OF LOANS.
(a) REQUESTS FOR BORROWING. The applicable Borrower or Borrowers shall
give the Administrative Agent irrevocable prior written notice in the form
attached hereto as EXHIBIT B (a "Notice of Borrowing") not later than 11:00
a.m. (Charlotte time) (i) on the same Business Day as each Base Rate Loan and
(ii) at least three (3) Business Days before each LIBOR Rate Loan, of its
intention to borrow, specifying (A) the date of such borrowing, which shall be
a Business Day, (B) whether such Loan shall be denominated in Dollars or in
Sterling, (C) the amount of such borrowing, which shall be with respect to
LIBOR Rate Loans denominated in Dollars in an aggregate principal amount of
$2,500,000 or a whole multiple of $1,000,000 in excess thereof (and with
respect to Loans denominated in Sterling, the Dollar Amount in each case
thereof), and with respect to Base Rate Loans in an aggregate principal amount
of $1,000,000 or a whole multiple of $500,000 in excess thereof, (D) if
denominated in Dollars, whether the Loans are to be LIBOR Rate Loans or Base
Rate Loans and (E) in the case of a LIBOR Rate Loan, the duration of the
Interest Period applicable thereto. Notices received after 11:00 a.m.
(Charlotte time) shall be deemed received on the next Business Day. The
Administrative Agent shall promptly notify the Lenders of each Notice of
Borrowing.
(b) DISBURSEMENT OF LOANS DENOMINATED IN DOLLARS. Not later than 1:00
p.m. (Charlotte time) on the proposed borrowing date for any Loan denominated
in Dollars, each Lender will make available to the Administrative Agent, for
the account of the applicable Borrower or Borrowers, at the office of the
Administrative Agent in Dollars in funds immediately available to the
Administrative Agent, such Lender's Commitment Percentage of the requested
borrowing. The Borrowers hereby irrevocably authorize the Administrative Agent
to disburse the proceeds of each borrowing requested pursuant to this Section
2.2(b) in immediately available funds by crediting such proceeds to a deposit
account of the applicable Borrower or Borrowers maintained with the
Administrative Agent or by wire transfer from such deposit account to another
account as may be requested by such Borrower or Borrowers by prior written
notice to the Administrative Agent.
(c) DISBURSEMENT OF LOANS DENOMINATED IN STERLING. Not later than 1:00
p.m. (the time of the Administrative Agent's Correspondent) on the proposed
borrowing date for any Loan denominated in Sterling, each Lender will make
available to the Administrative Agent at the office of the Administrative
Agent's Correspondent in Sterling in funds immediately available to the
Administrative Agent, such Lender's Commitment Percentage of the requested
borrowing to be denominated in Sterling. The Borrowers hereby irrevocably
authorize the Administrative Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 2.2(b) in immediately available funds by
crediting such proceeds to an account of the applicable Borrower maintained
with the Administrative Agent's Correspondent or by wire transfer from such
deposit account to another account as may be requested by such Borrower by
prior written notice to the Administrative Agent.
(d) AVAILABILITY. Subject to Section 3.6 hereof, the Administrative
Agent shall not be obligated to disburse the proceeds of any Loan requested
pursuant to this Section 2.2 until each Lender shall have made available to the
Administrative Agent its Commitment Percentage of such Loan.
SECTION 1.3 REPAYMENT OF LOANS.
(e) REPAYMENT ON TERMINATION DATE. Each Borrower shall repay the
outstanding principal amount of all Loans made to such Borrower in full,
together with all accrued but unpaid interest thereon, on the Termination Date.
(f) MANDATORY REPAYMENT OF EXCESS LOANS. If at any time the
outstanding principal amount of all Loans exceeds the Aggregate Commitment,
such excess shall be repaid by the applicable Borrower or Borrowers in
accordance with Section 3.8.
(g) CERTAIN ASSET SALES. The Net Cash Proceeds received by any
Borrower in connection with any asset sale described in Section 9.6 (other than
Section 9.6(d)) shall be used within three (3) Business Days of receipt thereof
to prepay all outstanding Loans on a PRO RATA basis under each Sublimit.
(h) EQUITY OFFERING. Prior to June 30, 1997, the Net Cash Proceeds
received by any Borrower from any offering of equity securities shall be used
within three (3) Business Days of receipt thereof to prepay all outstanding
Loans on a PRO RATA basis under each Sublimit.
(i) CANADIAN SUBSIDIARIES. ACC Corp. shall prepay the Loans in an
amount equal to the Net Cash Proceeds received by a Canadian Subsidiary (i)
under the business interruption insurance policy of any such Person with
respect to any claim pending on the date hereof and (ii) in connection with any
equity offering described in Section 2.3(d). Each such repayment shall be used
within three (3) Business Days of receipt thereof to prepay all outstanding
Loans on a PRO RATA basis under each Sublimit.
(j) OPTIONAL REPAYMENTS. Any applicable Borrower may at any time and
from time to time repay the Loans made thereto, in whole or in part, upon at
least three (3) Business Days' irrevocable notice to the Administrative Agent
with respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice
with respect to Base Rate Loans, specifying the date and amount of repayment
and whether the repayment is of LIBOR Rate Loans or Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial
repayments shall be in an aggregate amount of $2,500,000 or a whole multiple of
$1,000,000 in excess thereof with respect to LIBOR Rate Loans and $1,000,000 or
a whole multiple of $500,000 in excess thereof with respect to Base Rate Loans.
(k) LIMITATION ON REPAYMENT OF LIBOR RATE LOANS. No Borrower may repay
any LIBOR Rate Loan hereunder on any day other than on the last day of the
Interest Period applicable thereto unless such repayment is accompanied by any
amount required to be paid pursuant to Section 3.11.
(l) NO COMMITMENT REDUCTION. No repayment pursuant to this Section 2.3
shall require a corresponding permanent reduction in the Aggregate Commitment.
SECTION 1.4 REVOLVING CREDIT NOTES. Each Lender's Loans and the
obligation of each Borrower to repay the Loans made thereto shall be evidenced
by the Note executed by such Borrower payable to the order of such Lender
representing such Borrower's obligation to pay such Lender's Commitment
Percentage of the Sublimit of such Borrower or, if less, the aggregate unpaid
principal amount of all Loans made and to be made by such Lender to the
Borrower hereunder, PLUS interest and all other fees, charges and other amounts
due thereon. Each Note shall be dated the date hereof and shall bear interest
on the unpaid principal amount thereof at the applicable interest rate per
annum specified in Section 3.1.
SECTION 1.5 PERMANENT REDUCTIONS OF THE AGGREGATE COMMITMENT.
(m) The Borrowers shall have the right at any time and from time to time,
upon at least five (5) Business Days prior written notice to the Administrative
Agent, to permanently reduce, in whole at any time or in part from time to
time, without premium or penalty, the Aggregate Commitment in an aggregate
principal amount not less than $2,500,000 or any whole multiple of $1,000,000
in excess thereof.
(n) The Aggregate Commitment shall be reduced by (i) the amount of Net
Cash Proceeds received by any Borrower or Canadian Subsidiary (A) in connection
with any asset sale not permitted by Section 9.6, (B) in an amount greater than
$50,000 (or the equivalent thereof in any foreign currency) under any policy of
insurance of any Borrower upon receipt of any such proceeds (other than as set
forth in Section 2.3) and (C) as described in Section 2.3(d) on or after June
30, 1997 upon receipt thereof and (ii) within one hundred twenty (120) days
after each Fiscal Year end commencing with Fiscal Year end 1996, an amount
equal to seventy- five percent (75%) of Excess Cash Flow for such Fiscal Year
as set forth on the Officer's Compliance Certificate for such Fiscal Year.
(o) The Aggregate Commitment shall be permanently reduced by the
following amounts on the corresponding dates as follows:
Amount of Aggregate
DATE REDUCTION COMMITMENT
July 1, 1997 $2,450,000 $32,550,000
Oct. 1, 1997 2,450,000 30,100,000
Jan. 1, 1998 2,450,000 27,650,000
April 1, 1998 2,450,000 25,200,000
July 1, 1998 2,450,000 22,750,000
Oct. 1, 1998 2,450,000 20,300,000
Jan. 1, 1999 2,905,000 17,395,000
April 1, 1999 2,905,000 14,490,000
July 1, 1999 2,905,000 11,585,000
Oct. 1, 1999 2,905,000 8,680,000
Jan. 1, 2000 2,905,000 5,775,000
April 1, 2000 2,905,000 2,870,000
July 1, 2000 2,870,000 -0-
(p) Each permanent reduction permitted or required pursuant to this
Section 2.5 shall be accompanied by a payment of principal sufficient to reduce
the aggregate outstanding Loans of the Lenders after such reduction to the
Sublimits and Aggregate Commitment as so reduced and by payment of accrued
interest on the amount of such repaid principal. The amount of each partial
permanent reduction under this Section 2.5 shall be applied PRO RATA to reduce
each Sublimit and the remaining mandatory reduction amounts required under
Section 2.5(b). Any permanent reduction of the Aggregate Commitment to zero
shall be accompanied by payment of all outstanding Obligations and termination
of the Commitments and Credit Facility. If the reduction of the Aggregate
Commitment requires the repayment of any LIBOR Rate Loan, such reduction may be
made only on the last day of the then current Interest Period applicable
thereto unless such repayment is accompanied by any amount required to be paid
pursuant to Section 3.11.
SECTION 2. TERMINATION OF CREDIT FACILITY. The Credit Facility shall
terminate on the earliest of (a) July 1, 2000, (b) the date of termination by
the Borrower pursuant to Section 2.5(a) and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a).
SECTION 3. USE OF PROCEEDS. The Borrowers shall use the proceeds of
the Loans (a) to finance the acquisition of Capital Assets, (b) to finance
loans, advances, acquisitions and investments permitted by Section 9.4, (c)
repay on the Closing Date existing Debt of the Borrowers and (d) for working
capital and general corporate requirements of the Borrowers, including the
payment of certain fees and expenses incurred in connection with the
transactions contemplated hereby.
SECTION 4. NATURE OF OBLIGATIONS; SECURITY. The obligations of the
Domestic Borrowers under their Note and the other obligations of such Borrowers
hereunder (other than the obligations of ACC as Guarantor) shall be joint and
several among such Borrowers. The obligations of the U.K. Borrowers under
their Note and the Obligations of such Borrowers hereunder shall be joint and
several among such Borrowers, but in relation to the Domestic Borrowers, shall
be several and not joint and several. The obligations of each Borrower shall
be secured in accordance with the terms of the applicable Security Documents.
ARTICLE III
GENERAL LOAN PROVISIONS
SECTION 3.1 INTEREST.
(a) INTEREST RATE OPTIONS. Subject to the provisions of this Section
3.1, at the election of the applicable Borrower or Borrowers, Loans denominated
in Dollars shall bear interest at the Base Rate or the LIBOR Rate PLUS, in each
case, the Applicable Margin as set forth below and Loans denominated in
Sterling shall bear interest at the LIBOR Rate PLUS the Applicable Margin as
set forth below. The applicable Borrower or Borrowers shall select the rate of
interest and Interest Period, if any, applicable to any Loan at the time a
Notice of Borrowing is given pursuant to Section 2.2 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 3.2. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate Loan",
and each Loan or portion thereof bearing interest based on the LIBOR Rate shall
be a "LIBOR Rate Loan". Any Loan or any portion thereof to be denominated in
Dollars as to which the applicable Borrower or Borrowers have not duly
specified an interest rate as provided herein shall be deemed a Base Rate Loan.
(b) INTEREST PERIODS. In connection with each LIBOR Rate Loan, the
applicable Borrower or Borrowers, by giving notice at the times described in
Section 3.1(a), shall elect an interest period (each, an "Interest Period") to
be applicable to such Loan, which Interest Period shall be a period of one,
two, three, or six months; PROVIDED that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; PROVIDED, that if any Interest Period would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the
next preceding Business Day;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Termination Date
and no Interest Period shall be selected by the Borrower which, in connection
with mandatory reductions of the Aggregate Commitment pursuant to Section
2.5(b), would cause the early termination of such Interest Period; and
(v) with respect to Loans denominated in Dollars, there shall be
no more than three (3) Interest Periods outstanding at any time and with
respect to Loans denominated in Sterling, there shall be no more than one (1)
Interest Period for each such currency.
(c) APPLICABLE MARGIN. The Applicable Margin provided for in Section
3.1(a) with respect to the Loans (the "Applicable Margin") shall (i) on the
Closing Date equal the percentages set forth in the certificate delivered
pursuant to Section 4.2(e)(ii) and (ii) for each fiscal quarter thereafter be
determined by reference to the Leverage Ratio as of the end of the fiscal
quarter immediately preceding the delivery of the applicable Officer's
Compliance Certificate as follows:
Applicable Margin Per Annum
LEVERAGE RATIO BASE RATE + LIBOR RATE +
Greater than 3.5 1.50% 2.95%
to 1.0.
Greater than 3.0 to 1.0 1.25% 2.75%
but less than or equal to
3.5 to 1.0.
Greater than 2.5 to 1.0 but0.75% 2.25%
less than or equal to 3.0 to 1.0
Less than or equal to -0- 1.50%
2.5 to 1.0
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent upon receipt by the Administrative Agent of quarterly
financial statements for ACC and its Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the Leverage Ratio of ACC
and its Subsidiaries as of the most recent fiscal quarter end. Subject to
Section 3.1(d), in the event the Borrower fails to deliver such financial
statements and certificate within the time required by Section 6.2(c)
hereof, the Applicable Margin shall be the highest Applicable Margin set
forth above until the delivery of such financial statements and
certificate.
(d) DEFAULT RATE. Upon the occurrence and during the continuance of
an Event of Default, (i) the Borrower shall no longer have the option to
request LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear
interest at a rate per annum two percent (2%) in excess of the rate then
applicable to LIBOR Rate Loans until the end of the applicable Interest
Period and convert on such date to a Base Rate Loan and bear interest
thereafter at a rate equal to two percent (2%) in excess of the rate then
applicable to Base Rate Loans and (iii) all outstanding Base Rate Loans
shall bear interest at a rate per annum equal to two percent (2%) in excess
of the rate then applicable to Base Rate Loans. Interest shall continue to
accrue on the Notes after the filing by or against any Borrower of any
petition seeking any relief in bankruptcy or under any act or law
pertaining to insolvency or debtor relief, whether state, federal or
foreign.
(e) INTEREST PAYMENT AND COMPUTATION. Interest on each Base Rate
Loan shall be payable in arrears on the last Business Day of each calendar
quarter commencing September 30, 1995, and interest on each LIBOR Rate Loan
shall be payable on the last day of each Interest Period applicable
thereto, and if such Interest Period extends over three (3) months, at the
end of each three month interval during such Interest Period. All interest
rates, fees and commissions provided hereunder shall be computed on the
basis of a 360-day year and assessed for the actual number of days elapsed,
except that interest with respect to each Base Rate Loan and the commitment
fee referenced in Section 3.3(a) shall be computed on the basis of a 365-
day year.
(f) MAXIMUM RATE. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the
Notes charged or collected pursuant to the terms of this Agreement or
pursuant to any of the Notes exceed the highest rate permissible under any
Applicable Law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court
determines that the Lenders have charged or received interest hereunder in
excess of the highest applicable rate, the rate in effect hereunder shall
automatically be reduced to the maximum rate permitted by Applicable Law
and the Lenders shall at the Administrative Agent's option promptly refund
to the applicable Borrower or Borrowers any interest received by Lenders in
excess of the maximum lawful rate or shall apply such excess to the
principal balance of the Obligations. It is the intent hereof that the
Borrowers not pay or contract to pay, and that no Agent or any Lender
receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Borrowers
under Applicable Law.
SECTION 3.2 NOTICE AND MANNER OF CONVERSION OR CONTINUATION OF LOANS.
Provided that no Default or Event of Default has occurred and is then
continuing, the Borrower shall have the option to (a) convert at any time
all or any portion of its outstanding Base Rate Loans in a principal amount
equal to $2,500,000 or any whole multiple of $1,000,000 in excess thereof
into one or more LIBOR Rate Loans denominated in Dollars, (b) upon the
expiration of any Interest Period, convert all or any part of its
outstanding LIBOR Rate Loans denominated in Dollars in a principal amount
equal to $1,000,000 or a whole multiple of $500,000 in excess thereof into
Base Rate Loans or (c) upon the expiration of any Interest Period, continue
any LIBOR Rate Loan in a principal amount of $2,500,000 or any whole
multiple of $1,000,000 in excess thereof (or with respect to Loans
denominated in Sterling, the Dollar Amount in each case thereof) as a LIBOR
Rate Loan denominated in the same Permitted Currency. Whenever the
Borrower desires to convert or continue Loans as provided above, the
Borrower shall give the Administrative Agent irrevocable prior written
notice in the form attached as EXHIBIT C (a "Notice of
Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three
(3) Business Days before the day on which a proposed conversion or
continuation of such Loan is to be effective specifying (i) the Loans to be
converted or continued, and, in the case of a LIBOR Rate Loan to be
converted or continued, the Permitted Currency in which such Loan is
denominated and the last day of the Interest Period therefor, (ii) the
effective date of such conversion or continuation (which shall be a
Business Day), (iii) the principal amount of such Loans to be converted or
continued and (iv) the Interest Period to be applicable to such converted
or continued LIBOR Rate Loan. The Administrative Agent shall promptly
notify the Lenders of such Notice of Conversion/Continuation.
SECTION 3.3 FEES.
(a) COMMITMENT FEE. The Borrowers shall pay to the Administrative
Agent, for the account of the Lenders, a non-refundable commitment fee at a
rate per annum equal to .50% on the average daily unused portion of the
Aggregate Commitment; PROVIDED, that (i) if the Leverage Ratio as set forth
in the Officer's Compliance Certificate for any fiscal quarter is less than
or equal to 2.5 to 1.0, the commitment fee payable with respect to such
amount on the immediately succeeding payment date shall be .375% and (ii)
until December 31, 1995, if any amount is unavailable to be borrowed
hereunder solely because such borrowing would cause a violation of Section
8.1, the commitment fee payable with respect to such unavailable amount for
the period of such unavailability shall be .250%. The commitment fee shall
be payable in arrears on the last Business Day of each calendar quarter
during the term of this Agreement commencing September 30, 1995, and on the
Termination Date. Such commitment fee shall be distributed by the
Administrative Agent to the Lenders PRO RATA in accordance with the
Lenders' respective Commitment Percentages.
(b) STRUCTURING AND UP-FRONT FEES. The Borrowers shall pay to the
Administrative Agent, for the account of the Lenders, a non-refundable up-
front fee and the unpaid portion of the structuring fee in accordance with
the term sheet referred to in paragraph (c) of this Section.
(c) ADMINISTRATIVE AGENT'S FEES. In order to compensate the
Administrative Agent for its obligations hereunder, the Borrowers agree to
pay to the Administrative Agent for its own account the administrative fee
set forth in the term sheet executed by ACC dated June 6, 1995, which fee
shall be payable in advance on the Closing Date and on each anniversary of
such date.
SECTION 3.4 MANNER OF PAYMENT.
(a) LOANS DENOMINATED IN DOLLARS. Each payment (including repayments
described in Article II) by any Borrower on account of the principal of or
interest on the Loans denominated in Dollars or of any fee, commission or
other amounts payable to the Lenders under this Agreement or any Note
(except as set forth in Section 3.4(b)) shall be made in Dollars not later
than 1:00 p.m. (Charlotte time) on the date specified for payment under
this Agreement to the Administrative Agent for the account of the Lenders
PRO RATA in accordance with their respective Commitment Percentages at the
Administrative Agent's Office, in immediately available funds, and shall be
made without any set-off, counterclaim or deduction whatsoever. Any
payment received after such time but before 2:00 p.m. (Charlotte time) on
such day shall be deemed a payment on such date for the purposes of Section
11.1, but for all other purposes shall be deemed to have been made on the
next succeeding Business Day. Any payment received after 2:00 p.m.
(Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes.
(b) LOANS DENOMINATED IN STERLING. Each payment (including
repayments described in Article II) by any Borrower on account of the
principal of or interest on the Loans denominated in Sterling shall be made
in Sterling not later than 1:00 p.m. (the time of the Administrative
Agent's Correspondent) on the date specified for payment under this
Agreement to the Administrative Agent's account with the applicable
Administrative Agent's Correspondent for the account of the Lenders PRO
RATA in accordance with their respective Commitment Percentages, in
immediately available funds, and shall be made without any set-off,
counterclaim or deduction whatsoever. Any payment received after such time
but before 2:00 P.M. (the time of the Administrative Agent's Correspondent)
on such day shall be deemed a payment on such date for the purposes of
Section 11.1, but for all other purposes shall be deemed to have been made
on the next succeeding Business Day. Any payment received after 2:00 P.M.
(the time of the Administrative Agent's Correspondent) shall be deemed to
have been made on the next succeeding Business Day for all purposes.
(c) PRO RATA TREATMENT. Upon receipt by the Administrative Agent of
each such payment, the Administrative Agent shall credit each Lender's
account with its PRO RATA share of such payment in accordance with such
Lender's Commitment Percentage and shall wire advice of the amount of such
credit to each Lender. Each payment to the Administrative Agent of its
fees shall be made in like manner, but for the account of the
Administrative Agent. Subject to Section 3.1(b)(ii), if any payment under
this Agreement or any Note shall be specified to be made upon a day which
is not a Business Day, it shall be made on the next succeeding day which is
a Business Day and such extension of time shall in such case be included in
computing any interest if payable along with such payment.
SECTION 3.5 CREDITING OF PAYMENTS AND PROCEEDS. Unless otherwise
provided in the Security Agreement, in the event that any Borrower shall
fail to pay any of the Obligations when due and the Obligations have been
accelerated pursuant to Section 11.2, all payments received by the Lenders
upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all Administrative
Agent's fees and expenses then due and payable, then to all other expenses
then due and payable by the Borrowers hereunder, then to all indemnity
obligations then due and payable by the Borrowers hereunder, then to all
commitment and other fees and commissions then due and payable, then to
accrued and unpaid interest on the Notes and any termination payments due
in respect of a Hedging Agreement with any Lender (PRO RATA in accordance
with all such amounts due), then to the principal amount of the Notes, in
that order.
SECTION 3.6 NATURE OF OBLIGATIONS OF LENDERS REGARDING EXTENSIONS OF
CREDIT; ASSUMPTION BY ADMINISTRATIVE AGENT. The obligations of the Lenders
under this Agreement to make the Loans are several and are not joint or
joint and several. Unless the Administrative Agent shall have received
notice from a Lender prior to a proposed borrowing date that such Lender
will not make available to the Administrative Agent such Lender's ratable
portion of the amount to be borrowed on such date (which notice shall not
release such Lender of its obligations hereunder), the Administrative Agent
may assume that such Lender has made such portion available to the
Administrative Agent on the proposed borrowing date in accordance with
Section 2.2 and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If such amount is made available to the Administrative Agent on a
date after such borrowing date, such Lender shall pay to the Administrative
Agent on demand an amount, until paid, equal to (a) with respect to a Loan
denominated in Dollars the amount of such Lender's Commitment Percentage of
such borrowing and interest thereon at a rate per annum equal to the daily
average Federal Funds Rate during such period as determined by the
Administrative Agent and (b) with respect to a Loan denominated in
Sterling, such Lender's Commitment Percentage of such borrowing at a rate
per annum equal to the Administrative Agent's aggregate marginal cost
(including the cost of maintaining any required reserves or deposit
insurance and of any fees, penalties, overdraft charges or other costs or
expenses incurred by the Administrative Agent as a result of the failure to
deliver funds hereunder) of carrying such amount. A certificate of the
Administrative Agent with respect to any amounts owing under this Section
shall be conclusive, absent manifest error. If such Lender's Commitment
Percentage of such borrowing is not made available to the Administrative
Agent by such Lender within three (3) Business Days of such borrowing date,
the Administrative Agent shall be entitled to recover such amount made
available by the Administrative Agent with interest thereon at the rate per
annum then applicable to such Loan hereunder, on demand, from the
applicable Borrower or Borrowers. The failure of any Lender to make its
Commitment Percentage of any Loan available shall not relieve it or any
other Lender of its obligation, if any, hereunder to make its Commitment
Percentage of such Loan available on such borrowing date, but no Lender
shall be responsible for the failure of any other Lender to make its
Commitment Percentage of such Loan available on the borrowing date.
SECTION 3.7 MANDATORY REDENOMINATION OF STERLING LOANS. If any LIBOR
Rate Loan denominated in Sterling is required to be converted to a Base
Rate Loan pursuant to Sections 3.1(d), 3.10 or any other applicable
provision hereof, such Base Rate Loan shall be funded in Dollars under the
Sublimit of the Domestic Borrowers (excluding ACC LEC) in an amount equal
to the Dollar Amount of such LIBOR Rate Loan, all subject to the provisions
of Section 3.8. The applicable Borrower or Borrowers shall reimburse the
Lenders upon any such conversion for any amounts required to be paid under
Section 3.11.
SECTION 3.8 CURRENCY APPRECIATION; SUBLIMITS; MANDATORY REDUCTIONS.
(a) AGGREGATE COMMITMENTS. If at any time and for any reason, the
aggregate principal amount of all Loans denominated in Dollars and the
aggregate Current Dollar Equivalent of all Loans denominated in Sterling as
of such time exceeds the Aggregate Commitment, the applicable Borrower or
Borrowers shall (i) if (and to the extent) necessary to eliminate such
excess, immediately repay outstanding Base Rate Loans, if any, by the
Dollar Amount of such excess, and/or reduce any pending request for a Base
Rate Loan on such day by the Dollar Amount of such excess, to the extent
thereof and (ii) if (and to the extent) necessary to eliminate such excess,
immediately repay LIBOR Rate Loans and/or reduce any pending requests for a
borrowing or continuation or conversion of such Loans submitted in respect
of such Loans on such day, by the Dollar Amount of such excess, to the
extent thereof.
(b) SUBLIMITS. If at any time and for any reason the aggregate
principal amount of all Loans denominated in Dollars or the aggregate
Current Dollar Equivalent of all Loans denominated in Sterling as of such
time, exceeds the Sublimit applicable to any Borrower or Borrowers, such
Borrower or Borrowers shall (i) immediately repay Base Rate Loans
outstanding to such Borrower or Borrowers, if any, by the Dollar Amount of
any such excess and/or reduce on such day any pending request for a Base
Rate Loan submitted by such Borrower or Borrowers by the Dollar Amount of
such excess, to the extent thereof and (ii) immediately repay LIBOR Rate
Loans and/or reduce any pending requests for a borrowing or continuation or
conversion submitted in respect of such Loans on such day, by the Dollar
Amount of any remaining excess, to the extent thereof.
(c) COMPLIANCE AND PAYMENTS. Each Borrower's compliance with this
Section 3.8 shall be tested on each day an interest payment is due under
Section 3.1(e). All payments pursuant to this Section 3.8 shall be
accompanied by any amount required to be repaid under Section 3.11.
SECTION 3.9 REGULATORY LIMITATION. In the event, as a result of
increases in the value of Sterling against the Dollar or for any other
reason, the obligation of any of the Lenders to make Loans (taking into
account the Dollar Amount of the Obligations and all other indebtedness
required to be aggregated under 12 USCA 84, as amended, the regulations
promulgated thereunder and any other Applicable Law) is determined by such
Lender to exceed its then applicable legal lending limit under 12 USCA 84,
as amended, and the regulations promulgated thereunder, or any other
Applicable Law, the amount of additional Loans such Lender shall be
obligated to make hereunder shall immediately be reduced to the maximum
amount which such Lender may legally advance (as determined by such
Lender), the obligation of each of the remaining Lenders hereunder shall be
proportionately reduced, based on their applicable Commitment Percentages,
and, to the extent necessary under such laws and regulations (as determined
by each of the Lenders, with respect to the applicability of such laws and
regulations to itself), the Borrowers shall reduce, or cause to be reduced,
complying to the extent practicable with the remaining provisions hereof,
the Obligations outstanding hereunder by an amount sufficient to comply
with such maximum amounts.
SECTION 3.10 CHANGED CIRCUMSTANCES.
(a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY. If with respect
to any Interest Period the Administrative Agent or any Lender (after
consultation with Administrative Agent) shall determine that (i) by reason
of circumstances affecting the foreign exchange and interbank markets
generally, deposits in eurodollars or Sterling, in the applicable amounts
are not being quoted via Telerate Page 3750 or offered to the
Administrative Agent or such Lender for such Interest Period, (ii) a
fundamental change has occurred in the foreign exchange or interbank
markets with respect to Sterling (including, without limitation, changes in
national or international financial, political or economic conditions or
currency exchange rates or exchange controls) or (iii) it has become
otherwise materially impractical for the Administrative Agent or the
Lenders, as applicable, to make such Loan in Sterling, then the
Administrative Agent shall forthwith give notice thereof to the Borrowers.
Thereafter, until the Administrative Agent notifies the Borrowers that such
circumstances no longer exist, the obligation of the Lenders to make LIBOR
Rate Loans, and the right of the Borrowers to convert any Loan to or
continue any Loan as a LIBOR Rate Loan, shall be suspended, and the
applicable Borrower or Borrowers shall repay in full (or cause to be repaid
in full) the then outstanding principal amount of each such LIBOR Rate
Loan, together with accrued interest thereon, on the last day of the then
current Interest Period applicable to such LIBOR Rate Loan or convert the
then outstanding principal amount of each such LIBOR Rate Loan to a Base
Rate Loan as of the last day of such Interest Period.
(b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date
hereof, the introduction of, or any change in, any Applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or
any of their respective Lending Offices) with any request or directive
(whether or not having the force of law) of any such Authority, central
bank or comparable agency, shall make it unlawful or impossible for any of
the Lenders (or any of their respective Lending Offices) to honor its
obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender
shall promptly give notice thereof to the Administrative Agent and the
Administrative Agent shall promptly give notice to the Borrowers and the
other Lenders. Thereafter, until Administrative Agent notifies the
Borrowers that such circumstances no longer exist (which notification shall
be given as soon as practicable, but in any event not later than thirty
(30) days after the Administrative Agent obtains actual knowledge that such
circumstances no longer exist), (i) the obligations of the Lenders to make
LIBOR Rate Loans and the right of the Borrower to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter
the Borrower may select only Base Rate Loans hereunder, and (ii) if any of
the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the
end of the then current Interest Period applicable thereto as a LIBOR Rate
Loan, the applicable LIBOR Rate Loan shall immediately be converted to a
Base Rate Loan for the remainder of such Interest Period.
(c) INCREASED COSTS. If, after the date hereof, the introduction of,
or any change in, any Applicable Law, or in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any of the Lenders (or any of their respective
Lending Offices) with any request or directive (whether or not having the
force of law) of such Authority, central bank or comparable agency:
(i) shall subject any of the Lenders (or any of their respective
Lending Offices) to any tax, duty or other charge with respect to any LIBOR
Rate Loan or any Note or shall change the basis of taxation of payments to
any of the Lenders (or any of their respective Lending Offices) of the
principal of or interest on any LIBOR Rate Loan or any Note or any other
amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of any of the Lenders or any of
their respective Lending Offices imposed by the jurisdiction in which such
Lender is organized or is or should be qualified to do business or such
Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System), special deposit, insurance or capital or
similar requirement against assets of, deposits with or for the account of,
or credit extended by any of the Lenders (or any of their respective
Lending Offices) or shall impose on any of the Lenders (or any of their
respective Lending Offices) or the foreign exchange and interbank markets
any other condition affecting any LIBOR Rate Loan or any Note;
and the result of any of the foregoing is to increase the costs to any of
the Lenders of maintaining any LIBOR Rate Loan or to reduce the yield or
amount of any sum received or receivable by any of the Lenders under this
Agreement or under the Notes in respect of a LIBOR Rate Loan, then such
Lender shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify the Borrower of such fact and
demand compensation therefor and, within fifteen (15) days after such
notice by Administrative Agent, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or Lenders for
such increased cost or reduction. The Administrative Agent will promptly
notify the Borrower of any event of which it has knowledge which will
entitle such Lender to compensation pursuant to this Section 3.10(c);
PROVIDED, that the Administrative Agent shall incur no liability whatsoever
to the Lenders or the Borrower in the event it fails to do so. A
certificate of the Administrative Agent setting forth the basis for
determining such additional amount or amounts necessary to compensate such
Lender or Lenders shall be conclusively presumed to be correct save for
manifest error.
SECTION 3.11 INDEMNITY. The Borrower hereby indemnifies each of the
Lenders against any loss or expense (including without limitation any
foreign exchange costs) which may arise or be attributable to each Lender's
obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain the Loans (a) as a consequence of any failure by
the Borrower to make any payment when due of any amount due hereunder in
connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower
to borrow on a date specified therefor in a Notice of Borrowing or Notice
of Continuation/Conversion with respect to any LIBOR Rate Loan or (c) due
to any payment, prepayment or conversion of any LIBOR Rate Loan on a date
other than the last day of the Interest Period therefor. Each Lender's
calculations of any such loss or expense shall be furnished to the Borrower
and shall be conclusive, absent manifest error.
SECTION 3.12 CAPITAL REQUIREMENTS. If either (a) the introduction
of, or any change in, or in the interpretation of, any Applicable Law or
(b) compliance with any guideline or request from any central bank or
comparable agency or other Governmental Authority (whether or not having
the force of law), has or would have the effect of reducing the rate of
return on the capital of, or has affected or would affect the amount of
capital required to be maintained by, any Lender or any corporation
controlling such Lender as a consequence of, or with reference to the
Commitments and other commitments of this type, below the rate which the
Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrowers shall pay to such
Lender from time to time as specified by such Lender additional amounts
sufficient to compensate such Lender or other corporation for such
reduction. A certificate as to such amounts submitted to the Borrowers and
the Administrative Agent by such Lender, shall, in the absence of manifest
error, be presumed to be correct and binding for all purposes.
SECTION 3.13 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by the Borrowers
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and each Agent, income
and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or Agent (as the case may be) is organized or is or should be
qualified to do business or any political subdivision of such jurisdiction
or country which includes such jurisdiction and (ii) in the case of each
Lender, income and franchise taxes imposed by the jurisdiction of such
Lender's Lending Office or any political subdivision of such jurisdiction
or country which includes such jurisdiction (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or
under any Note to any Lender or any Agent, (A) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 3.13) such Lender or Agent (as the case may be) receives an amount
equal to the amount such party would have received had no such deductions
been made, (B) such Borrower shall make such deductions, (C) such Borrower
shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law, and (D) such Borrower
shall deliver to the Administrative Agent evidence of such payment to the
relevant taxing authority or other authority in the manner provided in
Section 3.13(d).
(b) STAMP AND OTHER TAXES. In addition, the Borrowers shall pay any
present or future stamp, registration, recordation or documentary taxes or
any other similar fees or charges or excise or property taxes, levies of
the United States or any state or political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the Loans, the other Loan Documents, or the
perfection of any rights or security interest in respect thereto
(hereinafter referred to as "Other Taxes").
(c) INDEMNITY. The Borrowers shall indemnify each Lender and each
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 3.13) paid by such Lender or Agent (as
the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Such
indemnification shall be made within thirty (30) days from the date such
Lender or Agent (as the case may be) makes written demand therefor.
(d) EVIDENCE OF PAYMENT. Within thirty (30) days after the date of
any payment of Taxes or Other Taxes, the affected Borrower shall furnish to
the Administrative Agent, at its address referred to in Section 13.1, the
original or a certified copy of a receipt evidencing payment thereof or
other evidence of payment satisfactory to the Administrative Agent.
(e) DELIVERY OF TAX FORMS. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall
deliver to the Borrower, with a copy to the Administrative Agent, on the
Closing Date or concurrently with the delivery of the relevant Assignment
and Acceptance, as applicable, (i) two United States Internal Revenue
Service Forms 4224 or Forms 1001, as applicable (or successor forms)
properly completed and certifying in each case that such Lender is entitled
to a complete exemption from withholding or deduction for or on account of
any United States federal income taxes, and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding taxes.
Each such Lender further agrees to deliver to the Borrower, with a copy to
the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
form previously delivered by it to the Borrower, certifying in the case of
a Form 1001 or 4224 that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States
federal income taxes (unless in any such case an event (including without
limitation any change in treaty, law or regulation) has occurred prior to
the date on which any such delivery would otherwise be required which
renders such forms inapplicable or the exemption to which such forms relate
unavailable and such Lender notifies the Borrower and the Administrative
Agent that it is not entitled to receive payments without deduction or
withholding of United States federal income taxes) and, in the case of a
Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(f) SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 3.13 shall survive the payment in full
of the Obligations and the termination of the Commitments.
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 4.1 CLOSING. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, Suite
4200, Charlotte, North Carolina 28202 at 10:00 a.m. on July __, 1995, or on
such other date as the parties hereto shall mutually agree.
SECTION 4.2 CONDITIONS TO CLOSING AND INITIAL EXTENSIONS OF CREDIT.
The obligation of the Lenders to close this Agreement and to make the
initial Loan is subject to the satisfaction of each of the following
conditions:
(a) EXECUTED LOAN DOCUMENTS. (i) This Agreement, (ii) the Notes,
(iii) the Security Agreement, (iv) the Trademark Assignment, (v) the Pledge
Agreements, (vi) the Mortgages, (vii) the Landlord Consents, (viii) the
Contingent Interest Agreement, (ix) the Canadian Subsidiary Security
Documents and Canadian Note Documents, (x) the ACC U.K. Security Documents,
(xi) the Subordination Agreements and (xii) the Escrow Joinder Agreement
shall have been duly authorized, executed and delivered to the Agents in
form and substance satisfactory thereto by the parties thereto, shall be in
full force and effect and no default shall exist thereunder, and the
Borrower shall have delivered original counterparts thereof to the
Administrative Agent.
(b) CLOSING CERTIFICATES; ETC.
(i) COMPLIANCE CERTIFICATE OF THE BORROWERS. The Administrative
Agent shall have received a certificate from the chief executive officer or
chief financial officer of ACC, in form and substance reasonably
satisfactory to the Administrative Agent, to the effect that all
representations and warranties of the Borrowers contained in this Agreement
and the other Loan Documents are true, correct and complete; that the
Borrowers are not in violation of any of the covenants contained in this
Agreement and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of Default
has occurred and is continuing; that the Borrowers have satisfied each of
the closing conditions to be satisfied thereby; and that the Borrowers have
filed all required tax returns and owe no delinquent taxes.
(ii) CERTIFICATE OF SECRETARY OF EACH BORROWER. The
Administrative Agent shall have received a certificate of the secretary or
assistant secretary (or director with respect to ACC U.K.) of each Borrower
certifying, as applicable, that attached thereto is a true and complete
copy of the articles of incorporation or other charter documents of such
Borrower and all amendments thereto, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of incorporation;
that attached thereto is a true and complete copy of the bylaws of such
Borrower as in effect on the date of such certification; that attached
thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of such Borrower, authorizing the borrowings
contemplated hereunder and the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party; and as to
the incumbency and genuineness of the signature of each officer of such
Borrower executing Loan Documents to which such Person is a party.
(iii) CERTIFICATES OF GOOD STANDING. The Administrative Agent
shall have received long-form certificates as of a recent date of the good
standing of each Borrower under the laws of their respective jurisdictions
of organization and such other jurisdictions requested by the Agents.
(iv) OPINIONS OF COUNSEL. The Administrative Agent shall have
received favorable opinions of United States, Canadian and United Kingdom
counsel to the Borrowers addressed to the Agents and Lenders with respect
to such Persons, the Loan Documents and regulatory matters (including
without limitation Communications Licenses and PUC Authorizations)
reasonably satisfactory in form and substance to the Agents and Lenders.
(v) TAX FORMS. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by
Section 3.13 hereof.
(c) COLLATERAL.
(i) FILINGS AND RECORDINGS. All filings that are necessary to
perfect the Liens of the Administrative Agent and the Lenders in the
Collateral described in the Security Documents shall have been filed in all
appropriate locations and the Administrative Agent shall have received
evidence satisfactory to the Administrative Agent that such security
interests constitute valid and perfected first priority Liens therein,
subject to Liens permitted by Section 9.3.
(ii) PLEDGED STOCK. The Administrative Agent shall have received
original stock certificates evidencing the capital stock pledged pursuant
to the Pledge Agreements, together with an appropriate undated stock power
for each certificate duly executed in blank by the registered owner
thereof.
(iii) LIEN SEARCHES. The Administrative Agent shall have received
the results of a Lien search of all filings made against such Borrowers
under the Uniform Commercial Code as in effect in any jurisdiction in which
any of their assets are located, indicating among other things that their
assets are free and clear of any Lien except for the Liens permitted by
Section 9.3.
(iv) MORTGAGE DOCUMENTS. The Administrative Agent shall have
received such mortgagee title and hazard insurance policies, title
searches, property surveys, appraisals and environmental assessments with
respect to each property covered by a Mortgage as it shall reasonably
request in writing from the applicable Borrower.
(v) INSURANCE. The Administrative Agent shall have received
certificates of insurance and copies (certified by the applicable Borrower)
of insurance policies in the form required under Section 7.3 and the
Security Documents and otherwise in form and substance reasonably
satisfactory to the Administrative Agent.
(d) CONSENTS; NO ADVERSE CHANGE.
(i) GOVERNMENTAL AND THIRD PARTY APPROVALS. All necessary
approvals, authorizations and consents, if any be required, of any Person
and of all Governmental Authorities and courts having jurisdiction with
respect to the execution and delivery of this Agreement and the other Loan
Documents shall have been obtained and copies thereof delivered to the
Administrative Agent.
(ii) PERMITS AND LICENSES. All permits and licenses, including
permits and licenses required under Applicable Laws, necessary to the
current conduct of business by the Borrowers and their Subsidiaries shall
have been obtained.
(iii) NO INJUNCTION, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby, or
which, in the Managing Agents' reasonable discretion, would make it
inadvisable to consummate the transactions contemplated by this Agreement
and such other Loan Documents.
(iv) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
any material adverse change in the condition (financial or otherwise),
operations, properties, business or prospects of the Borrowers and their
Subsidiaries, or any event or condition that has had or could be reasonably
expected to have a Material Adverse Effect.
(v) NO EVENT OF DEFAULT. No Default or Event of Default shall
have occurred and be continuing.
(e) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Agents shall have received the
most recent audited Consolidated financial statements of ACC and its
Subsidiaries.
(ii) FINANCIAL CONDITION CERTIFICATE. ACC shall have delivered
to the Administrative Agent a certificate, in form and substance reasonably
satisfactory to such Agent, and certified as accurate in all material
respects by the chief executive officer or chief financial officer of ACC,
that (A) attached thereto is a PRO FORMA balance sheet of ACC and its
Subsidiaries setting forth on a PRO FORMA basis the financial condition of
ACC and its Subsidiaries on a Consolidated basis as of that date,
reflecting on a PRO FORMA basis the effect of the transactions contemplated
herein, including all material fees and expenses in connection therewith,
and evidencing compliance on a PRO FORMA basis with the covenants contained
in Articles VIII and IX hereof, (B) the financial projections previously
delivered to the Managing Agents represent the good faith opinions of the
Borrowers and senior management thereof as to the projected results
contained therein, and (C) attached thereto is a calculation of the
Applicable Margin in accordance with Section 3.1(c) as of March 31, 1995.
(iii) EQUITY PROCEEDS. The Borrower shall deliver evidence
reasonably satisfactory to the Administrative Agent of receipt by ACC of
Net Cash Proceeds in an amount equal to at least $11,000,000 from its
offering of equity securities from March 29, 1995 to April 15, 1995,
pursuant to Regulation S of the Securities Act of 1933, as amended.
(iv) FLEET VENTURE INVESTMENT. The Fleet Note and Warrant
Purchase Agreement shall have been executed upon terms satisfactory to the
Managing Agents and ACC shall have received Net Cash Proceeds from the
offering of the Fleet Venture Notes thereunder in an amount not less than
$8,700,000.
(v) PAYMENT AT CLOSING. There shall have been paid by the
Borrowers to the Agents and the Lenders the fees set forth or referenced in
Section 3.3 and any other accrued and unpaid fees or commissions due
hereunder (including, without limitation, legal fees and expenses), and to
any other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other
charges in connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents. The Administrative Agent shall
have received duly authorized and executed copies of the term sheet
referred to in Section 3.3(c).
(f) MISCELLANEOUS.
(i) NOTICE OF BORROWING. The Administrative Agent shall have
received written instructions from the applicable Borrower to the
Administrative Agent directing the payment of any proceeds of Loans made
under this Agreement that are to be paid on the Closing Date.
(ii) PROCEEDINGS AND DOCUMENTS. All opinions, certificates and
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to the Lenders. The Lenders shall have received copies of all
other instruments and other evidence as the Lender may reasonably request,
in form and substance reasonably satisfactory to the Lenders, with respect
to the transactions contemplated by this Agreement and the taking of all
actions in connection therewith.
(iii) DUE DILIGENCE AND OTHER DOCUMENTS. The Borrower shall have
delivered to the Administrative Agent such other documents, certificates
and opinions as the Agents reasonably request, including without limitation
copies of each document evidencing or governing the Subordinated Debt,
certified by a secretary or assistant secretary of the applicable Borrower
as a true and correct copy thereof.
SECTION 4.3 CONDITIONS TO ALL LOANS. The obligations of the Lenders
to make any Loan is subject to the satisfaction of the following conditions
precedent on the relevant borrowing or issue date, as applicable:
(i) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in Article V shall be true and
correct on and as of such borrowing or issuance date with the same effect
as if made on and as of such date.
(ii) NO EXISTING DEFAULT. No Default or Event of Default shall
have occurred and be continuing hereunder on the borrowing date with
respect to such Loan or after giving effect to the Loans to be made on such
date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWERS
SECTION 5.1 REPRESENTATIONS AND WARRANTIES. To induce the Agents to
enter into this Agreement and the Lenders to make the Loans, the Borrowers
hereby represent and warrant to the Agents and Lenders that:
(a) ORGANIZATION; POWER; QUALIFICATION. Each of ACC and its
Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation, has the
power and authority to own its properties and to carry on its business as
now being conducted and is duly qualified and authorized to do business in
each jurisdiction where its business requires such qualification and
authorization. The jurisdictions in which ACC and its Subsidiaries are
organized and qualified to do business are described on SCHEDULE 5.1(A).
(b) OWNERSHIP. Each Material Subsidiary and other Subsidiary of ACC
is listed on SCHEDULE 5.1(B). The capitalization of ACC and its
Subsidiaries consists of the number of shares, authorized, issued and
outstanding, of such classes and series, with or without par value,
described on SCHEDULE 5.1(B). All outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. The
shareholders of the Subsidiaries of ACC and the number of shares owned by
each are described on SCHEDULE 5.1(B). There are no outstanding stock
purchase warrants, subscriptions, options, securities, instruments or other
rights of any type or nature whatsoever, which are convertible into,
exchangeable for or otherwise provide for or permit the issuance of capital
stock of ACC or its Subsidiaries, except as described on SCHEDULE 5.1(B).
(c) AUTHORIZATION OF AGREEMENT, LOAN DOCUMENTS AND BORROWING. Each of
ACC and its Subsidiaries has the right, power and authority and has taken
all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party in accordance with their respective terms.
This Agreement and each of the other Loan Documents have been duly executed
and delivered by the duly authorized officers of ACC and each of its
Subsidiaries party thereto and each such document constitutes the legal,
valid and binding obligation of ACC or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
state or federal debtor relief laws from time to time in effect which
affect the enforcement of creditors' rights in general and the availability
of equitable remedies.
(d) COMPLIANCE OF AGREEMENT, LOAN DOCUMENTS AND BORROWING WITH LAWS,
ETC. The execution, delivery and performance by ACC and its Subsidiaries
of the Loan Documents to which each such Person is a party, in accordance
with their respective terms, the borrowings hereunder and the transactions
contemplated hereby do not and will not, by the passage of time, the giving
of notice or otherwise, (i) except as set forth on SCHEDULE 5.1(D) hereto,
require any Governmental Approval or violate any Applicable Law relating to
ACC or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute a default under the articles of incorporation, bylaws or
other organizational documents of ACC or any of its Subsidiaries or any
material indenture, agreement or other instrument to which such Person is a
party or by which any of its properties may be bound or any Governmental
Approval relating to such Person or (iii) result in or require the creation
or imposition of any Lien upon or with respect to any material property now
owned or hereafter acquired by such Person other than Liens arising under
the Loan Documents.
(e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Each of ACC and its
Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business. Each such Governmental Approval is in
full force and effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the best of its knowledge, threatened
attack by direct or collateral proceeding and (ii) is in compliance with
each Governmental Approval applicable to it and in compliance with all
other Applicable Laws relating to it or any of its respective properties.
(f) TAX RETURNS AND PAYMENTS. Each of ACC and its Subsidiaries has
duly filed or caused to be filed all federal, state, local and other tax
returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all federal, state, local and other
taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets which are due and payable, except
where the payment of such tax is being disputed in good faith and adequate
reserves have been established in accordance with GAAP. No Governmental
Authority has asserted any Lien or other claim against ACC or Subsidiary
thereof with respect to material unpaid taxes which has not been discharged
or resolved or is not being contested in good faith. The charges, accruals
and reserves on the books of ACC and any of its Subsidiaries in respect of
federal, state, local and other taxes for all Fiscal Years and portions
thereof are in the judgment of ACC adequate, and ACC does not anticipate
any additional material taxes or assessments for any of such years.
(g) ENVIRONMENTAL MATTERS. (i) The properties of ACC and its
Subsidiaries do not contain, and to the best knowledge of the Borrowers,
have not previously contained, any Hazardous Materials in amounts or
concentrations which (A) constitute or constituted a violation of, or (B)
could give rise to material liability under, applicable Environmental Laws;
(ii) Such properties and all operations conducted in connection
therewith are in material compliance, and have been in material compliance,
with all applicable Environmental Laws, and to the best knowledge of the
Borrowers, there is no contamination at or under such properties or such
operations in violation of applicable Environmental Laws or which could
materially interfere with the continued operation of such properties or, if
such properties are owned by any such Person, materially impair the fair
saleable value thereof;
(iii) Neither ACC nor any Subsidiary thereof has received any
notice of material violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the operations
conducted in connection therewith, nor does ACC or any Subsidiary thereof
have knowledge or reason to believe that any such notice will be received
or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of
from the properties of ACC and its Subsidiaries in violation of, or in a
manner or to a location which could give rise to material liability under,
Environmental Laws, nor to the best knowledge of the Borrowers, have any
Hazardous Materials been generated, treated, stored or disposed of at, on
or under any of such properties in material violation of, or in a manner
that could give rise to material liability under, any applicable
Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending, or to the best knowledge of the Borrowers, threatened,
under any Environmental Law to which ACC or any Subsidiary thereof is or
will be named as a party with respect to such properties or operations
conducted in connection therewith, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to such properties or such operations; and
(vi) There has been no release, or to the best knowledge of the
Borrowers, threat of release, of Hazardous Materials at or from such
properties, in violation of or in amounts or in a manner that could give
rise to material liability under Environmental Laws.
(h) ERISA.
(i) Neither ACC nor any ERISA Affiliate maintains or contributes
to, or has any obligation under, any Employee Benefit Plans other than
those identified on SCHEDULE 5.1(H);
(ii) ACC and each ERISA Affiliate is in material compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans
except for any required amendments for which the remedial amendment period
as defined in Section 401(b) of the Code has not yet expired. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability has been incurred by
ACC or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor
has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has ACC or any ERISA
Affiliate failed to make any contributions or to pay any amounts due and
owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan prior to the due dates of such contributions
under Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a)
of ERISA with respect to any Pension Plan;
(iv) Neither ACC nor any ERISA Affiliate has: (A) engaged in a
nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code; (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid; (C) failed to make a required
contribution or payment to a Multiemployer Plan; or (D) failed to make a
required installment or other required payment under Section 412 of the
Code;
(v) No Termination Event has occurred or is reasonably expected
to occur; and
(vi) No material proceeding, claim, lawsuit and/or investigation
is existing or, to the best knowledge of ACC after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined
in Section 3(1) of ERISA) currently maintained or contributed to by ACC or
any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(i) MARGIN STOCK. Neither ACC nor any Subsidiary thereof is engaged
principally or as one of its activities in the business of extending credit
for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulations G and U of the Board of
Governors of the Federal Reserve System). No part of the proceeds of any
of the Loans will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the
provisions of Regulation G, T, U or X of such Board of Governors.
(j) GOVERNMENT REGULATION. Neither ACC nor any Subsidiary thereof is
an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company
Act of 1940, as amended) and neither ACC nor any Subsidiary thereof is, or
after giving effect to any Loan will be a "Holding Company" or a
"Subsidiary Company" of a "Holding Company" or an "Affiliate" of a "Holding
Company" within the respective meanings of each of the quoted terms of the
Public Utility Holding Company Act of 1935 as amended, or any other
Applicable Law which materially limits its ability to incur or consummate
the transactions contemplated hereby.
(k) PATENTS, COPYRIGHTS AND TRADEMARKS. Each of ACC and its
Subsidiaries owns or possesses all patent, copyright and trademark rights
which are required to conduct its business without infringing upon any
validly asserted rights of others. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or
termination of any such rights. Neither ACC nor any of its Subsidiaries
have been threatened with any litigation regarding patents, copyrights or
trademarks that would present a material impediment to the business of any
such Person.
(l) MATERIAL CONTRACTS. SCHEDULE 5.1(L) sets forth a complete and
accurate list of all Material Contracts of ACC and its Subsidiaries in
effect as of the Closing Date not listed on any other Schedule hereto;
other than as set forth in SCHEDULE 5.1(L), each of ACC and any Subsidiary
thereof party thereto has performed all of its obligations under such
Material Contracts and, to the best knowledge of the Borrowers, each other
party thereto is in compliance with each such Material Contract, and each
such Material Contract is, and after giving effect to the consummation of
the transactions contemplated by the Loan Documents will be, in full force
and effect in accordance with the terms thereof. ACC and its Subsidiaries
have delivered to the Administrative Agent a true and complete copy of each
Material Contract required to be listed on SCHEDULE 5.1(M).
(m) EMPLOYEE RELATIONS. Each of ACC and its Subsidiaries is not,
except as set forth on SCHEDULE 5.1(M), party to any collective bargaining
agreement nor has any labor union been recognized as the representative of
its employees. ACC knows of no pending, threatened or contemplated
strikes, work stoppage or other collective labor disputes involving its
employees or those of its Subsidiaries.
(n) BURDENSOME PROVISIONS. Neither ACC nor any Subsidiary thereof is
a party to any indenture, agreement, lease or other instrument, or subject
to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable
future could be reasonably expected to have a Material Adverse Effect. ACC
and its Subsidiaries do not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations
of a Governmental Authority will be so burdensome as to have a Material
Adverse Effect.
(o) FINANCIAL STATEMENTS. The (i) Consolidated balance sheets of ACC
and its Subsidiaries as of December 31, 1994, and the related statements of
income and retained earnings and cash flows for the Fiscal Year then ended
and (ii) unaudited Consolidated balance sheet of ACC and its Subsidiaries
as of March 31, 1995, and related unaudited interim statements of income
and cash flows, copies of which have been furnished to the Administrative
Agent and each Lender, are complete and correct and fairly present the
assets, liabilities and financial position of ACC and its Subsidiaries, as
at such dates, and the results of the operations and changes of financial
position for the periods then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP. ACC and its Subsidiaries have no material Debt,
obligation or other unusual forward or long-term commitment which is not
disclosed in the foregoing financial statements or in the notes thereto.
(p) NO MATERIAL ADVERSE CHANGE. Since December 31, 1994, there has
been no material adverse change in the condition (financial or otherwise),
operations, properties, business or prospects of the Borrowers and their
Subsidiaries, including any event or condition that has had or is
reasonably likely to have a Material Adverse Effect.
(q) SOLVENCY. As of the Closing Date and after giving effect to each
Loan made hereunder, ACC and its Subsidiaries taken as a whole will be
Solvent.
(r) TITLES TO PROPERTIES. Each of ACC and its Subsidiaries has such
title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and good and marketable title to
all of its personal property sufficient to carry on its business as
presently conducted, except such property as has been disposed of by ACC or
its Subsidiaries subsequent to such date which dispositions have been in
the ordinary course of business or as otherwise expressly permitted
hereunder. SCHEDULE 5.1(R) hereto sets forth the address of all real
property owned or leased by a Borrower and its Subsidiaries (and if leased,
the record owner thereof).
(s) LIENS. None of the properties and assets of ACC or any
Subsidiary thereof is subject to any Lien, except in each case Liens
permitted pursuant to Section 9.3. No financing statement under the
Uniform Commercial Code of any state which names ACC or any Subsidiary
thereof or any of their respective trade names or divisions as debtor and
which has not been terminated, has been filed in any state or other
jurisdiction and neither ACC nor any Subsidiary thereof has signed any such
financing statement or any security agreement authorizing any secured party
thereunder to file any such financing statement, except to perfect those
Liens permitted by Section 9.3 hereof.
(t) DEBT AND CONTINGENT OBLIGATIONS. SCHEDULE 5.1(T) is a complete
and correct listing of all Debt and Contingent Obligations of ACC and its
Subsidiaries in excess of $250,000. ACC and its Subsidiaries have
performed and are in material compliance with all of the terms of such Debt
and Contingent Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which
with notice or lapse of time or both would constitute such a default or
event of default on the part of ACC or its Subsidiaries exists with respect
to any such Debt or Contingent Obligation.
(u) LITIGATION. Except as set forth on SCHEDULE 5.1(U), there are no
actions, suits or proceedings pending nor, to the knowledge of ACC,
threatened against or in any other way relating adversely to or affecting
ACC or any Subsidiary thereof or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority.
(v) COMMUNICATIONS REGULATORY MATTERS.
(i) Each Network Agreement has been duly executed and delivered
by the respective parties thereto, is in full force and effect and neither
the Borrowers, any Subsidiary thereof nor, to the best knowledge of the
Borrowers, any of the other parties thereto, is in default of any of the
provisions thereof in any material respect.
(ii) SCHEDULE 5.1(V) hereto sets forth, as of the date hereof, a
true and complete list of the following information for each Communications
License or PUC Authorization issued to ACC or any its Subsidiaries: (A)
for all Communications Licenses, the name of the licensee, the type of
service and the expiration dates; and (B) for each PUC Authorization, the
geographic area covered by such PUC Authorization, the services that may be
provided thereunder and the expiration date, if any.
(iii) The Communications Licenses and PUC Authorizations specified
on SCHEDULE 5.1(V) hereto are valid and in full force and effect without
conditions except for such conditions as are generally applicable to
holders of such Communications Licenses and PUC Authorizations. No event
has occurred and is continuing which could reasonably be expected to (A)
result in the imposition of a material forfeiture or the revocation,
termination or adverse modification of any such Communications License or
PUC Authorization or (B) materially and adversely affect any rights of ACC
or any of its Subsidiaries thereunder. ACC has no reason to believe and
has no knowledge that Communications Licenses and PUC Authorizations will
not be renewed in the ordinary course.
(iv) All of the material properties, equipment and systems owned,
leased or managed by ACC and its Subsidiaries are, and (to the best
knowledge of ACC) all such property, equipment and systems to be acquired
or added in connection with any contemplated system expansion or
construction will be, in good repair, working order and condition
(reasonable wear and tear excepted) and are and will be in compliance with
all terms and conditions of the Communications Licenses and PUC
Authorizations and all standards or rules imposed by any Governmental
Authority or as imposed under any agreements with telephone companies and
customers.
(v) ACC and each of its Subsidiaries have paid all franchise,
license or other fees and charges which have become due pursuant to any
Governmental Approval in respect of its business and has made appropriate
provision as is required by GAAP for any such fees and charges which have
accrued.
(w) ABSENCE OF DEFAULTS. No event has occurred and is continuing
which constitutes a Default or an Event of Default, or which constitutes,
or which with the passage of time or giving of notice or both would
constitute, a default or event of default by ACC or any Subsidiary thereof
under any Material Contract or judgment, decree or order to which ACC or
its Subsidiaries is a party or by which ACC or its Subsidiaries or any of
their respective properties may be bound or which would require ACC or its
Subsidiaries to make any payment thereunder prior to the scheduled maturity
date therefor.
(x) SENIOR DEBT. All of the Obligations of ACC and its Subsidiaries
under the Loan Documents are entitled to the benefits of the subordination
provisions of the documents evidencing any Subordinated Debt. ACC
acknowledges that the Agents and Lenders are entering into this Agreement
and the Lenders are making Loans hereunder in reliance upon such
subordination provisions.
(y) ACCURACY AND COMPLETENESS OF INFORMATION. All written
information, reports and other papers and data produced by or on behalf of
ACC or any Subsidiary thereof and furnished to the Lenders were, at the
time the same were so furnished, complete and correct in all material
respects. No document furnished or written statement made to the Agents or
the Lenders by ACC or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material
to the creditworthiness of ACC or its Subsidiaries or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading. ACC is not aware of any facts which it has not
disclosed in writing to the Agents having a Material Adverse Effect, or
insofar as ACC can now foresee, could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this Article V and all
representations and warranties contained in any certificate, or any of the
Loan Documents (including but not limited to any such representation or
warranty made in or in connection with any amendment thereto) shall
constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or
deemed to be made at and as of the Closing Date, shall survive the Closing
Date and shall not be waived by the execution and delivery of this
Agreement, any investigation made by or on behalf of the Lenders or any
borrowing hereunder.
ARTICLE VI
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.11 hereof, the Borrowers
will furnish or cause to be furnished to the Administrative Agent at the
Administrative Agent's Office (with copies for each Managing Agent) and the
Administrative Agent at its address set forth in Section 13.1 hereof, or
such other office as may be designated by such Agent from time to time:
SECTION 6.1 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in
any event within forty-five (45) days after the end of each fiscal quarter,
an unaudited Consolidated and consolidating balance sheet of ACC and its
Subsidiaries as of the close of such fiscal quarter and unaudited
Consolidated and consolidating statements of income, retained earnings and
cash flows for the fiscal quarter then ended and that portion of the Fiscal
Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and prepared by ACC in accordance with GAAP, and
certified by the chief financial officer of ACC to present fairly in all
material respects the financial condition of ACC and its Subsidiaries as of
their respective dates and the results of operations of ACC and its
Subsidiaries for the respective periods then ended, subject to normal year
end adjustments. The Lenders agree that so long as ACC has a class of
equity securities registered under section 12 of the Securities Exchange
Act of 1934, as amended, the Lenders will accept the report on Form 10-Q
filed by ACC with the Securities and Exchange Commission.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any
event within one hundred and twenty (120) days after the end of each Fiscal
Year, an unaudited consolidating balance sheet and income statement of ACC
and its Subsidiaries and an audited Consolidated balance sheet of ACC and
its Subsidiaries as of the close of such Fiscal Year and audited
Consolidated statements of income, retained earnings and cash flows for the
Fiscal Year then ended, including the notes thereto, all in reasonable
detail setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and audited by an independent certified public
accounting firm of nationally recognized standing in accordance with GAAP,
and accompanied by a report thereon by such certified public accountants
that is not qualified with respect to scope limitations imposed by ACC or
any of its Subsidiaries or with respect to accounting principles followed
by ACC or any of its Subsidiaries not in accordance with GAAP. The Lenders
agree that so long as ACC has a class of equity securities registered under
section 12 of the Securities Exchange Act of 1934, as amended, the Lenders
will accept the report on Form 10-K filed by ACC with the Securities and
Exchange Commission.
(c) ANNUAL BUSINESS PLAN AND FINANCIAL PROJECTIONS. As soon as
practicable and in any event within thirty (30) days prior to the beginning
of each Fiscal Year, a business plan of ACC and its Subsidiaries for the
ensuing four fiscal quarters, such plan to include, on a quarterly basis,
the following: a quarterly operating and capital budget, a projected
income statement, statement of cash flows and balance sheet, each prepared
on a basis consistent with GAAP, and a report containing management's
discussion and analysis of such projections (such business plan and
projections, the "Projections"), accompanied by a certificate from the
chief financial officer of ACC to the effect that, to the best of such
officer's knowledge, the Projections are good faith estimates of the
anticipated financial condition and operations of ACC and its Subsidiaries
for such four quarter period based on the then current business plan.
SECTION 6.2 OFFICER'S COMPLIANCE CERTIFICATE. At each time financial
statements are delivered pursuant to Sections 6.1(a) or (b), a certificate
of the chief executive officer or chief financial officer of ACC in the
form of EXHIBIT D attached hereto (an "Officer's Compliance Certificate"):
(a) stating that such officer has reviewed such financial statements
and such statements fairly present the financial condition of the Borrowers
as of the dates indicated and the results of their operations and cash
flows for the periods indicated;
(b) stating that to such officer's knowledge, based on a reasonable
examination, no Default or Event of Default exists, or, if such is not the
case, specifying such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the
Borrowers with respect to such Default or Event of Default; and
(c) setting forth as at the end of such fiscal quarter or Fiscal
Year, as the case may be, the calculations required to establish whether or
not ACC and its Subsidiaries were in compliance with the financial
covenants set forth in Article VIII hereof as at the end of each respective
period, the calculation of Excess Cash Flow for such Fiscal Year and the
calculation of the Applicable Margin pursuant to Section 3.1(c) as at the
end of each respective period.
SECTION 6.3 ACCOUNTANTS' CERTIFICATE. At each time financial
statements are delivered pursuant to Section 6.1(b), a certificate of the
independent public accountants certifying such financial statements
addressed to the Managing Agents for the benefit of the Lenders stating
that in making the examination necessary for the certification of such
financial statements, they obtained no knowledge of any Default or Event of
Default or, if such is not the case, specifying such Default or Event of
Default and its nature and period of existence.
SECTION 6.4 OTHER REPORTS.
(a) Promptly upon receipt thereof, copies of any management report
and any management responses thereto submitted to any Borrower or its Board
of Directors by its independent public accountants in connection with their
auditing function;
(b) Within ten (10) Business Days after the receipt by ACC or any of
its Subsidiaries of notice that any Communications License or material PUC
Authorization has been lost or canceled, copies of any such notice
accompanied by a report describing the measures undertaken by ACC or any of
its Subsidiaries to prevent such loss or cancellation (and the anticipated
impact, if any, that such loss or cancellation will have upon the business
of ACC and its Subsidiaries); and
(c) Such other information regarding the operations, business affairs
and financial condition of ACC or any of its Subsidiaries as the Agents or
any Lender may reasonably request.
SECTION 6.5 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in
no event later than three (3) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
(a) the commencement of all material proceedings and investigations
by or before any Governmental Authority and all actions and proceedings in
any court or before any arbitrator against or involving ACC or any
Subsidiary thereof or any of their respective properties, assets or
businesses;
(b) any notice of any material violation received by ACC or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of a material violation of Environmental Laws;
(c) any labor controversy that has resulted in, or could reasonably
be expected to result in, a strike or other work action against ACC or any
Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding $250,000
that may be assessed against or threatened against ACC or any Subsidiary
thereof;
(e) any Default or Event of Default, or any event which constitutes
or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Subordinated Debt or
other Material Contract to which ACC or any of its Subsidiaries is a party
or by which ACC or any Subsidiary thereof or any of their respective
properties may be bound;
(f) (i) the failure of ACC or any ERISA Affiliate to make a required
installment or payment under Section 302 of ERISA or Section 412 of the
Code by the due date, (ii) any Termination Event or "prohibited
transaction", as such term is defined in Section 406 of ERISA or Section
4975 of the Code, in connection with any Employee Benefit Plan or any trust
created thereunder, along with a description of the nature thereof, what
action ACC has taken, is taking or proposes to take with respect thereto
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto, (iii)
all notices received by ACC or any ERISA Affiliate of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (iv) all notices received by ACC or any ERISA Affiliate from
a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA and (v) any Borrower
obtaining knowledge or reason to know that ACC or any ERISA Affiliate has
filed or intends to file a notice of intent to terminate any Pension Plan
under a distress termination within the meaning of Section 4041(c) of
ERISA;
(g) the enactment or promulgation after the date hereof of any
federal, state or local statute, regulation or ordinance or judicial or
administrative decision or order (or, to the extent that any Borrower has
knowledge thereof, any such proposed statute, regulation, ordinance,
decision or order, whether by the introduction of legislation or the
commencement of rulemaking or similar proceedings or otherwise) having a
material effect or relating to the operation of the Network Facilities by
ACC or any of its Subsidiaries (including, without limitation, any
statutes, decisions or orders affecting long distance telecommunication
resellers generally and not directed against ACC or any of its Subsidiaries
specifically) which have been issued or adopted (or which have been
proposed) and which could reasonably be expected to have a Material Adverse
Effect; or
(h) any event which makes any of the representations set forth in
Section 5.1 inaccurate in any material respect.
SECTION 6.6 ACCURACY OF INFORMATION. All written information,
reports, statements and other papers and data furnished by or on behalf of
any Borrower to any Agent or Lender whether pursuant to this Article VI or
any other provision of this Agreement, or any of the Security Documents,
shall be, at the time the same is so furnished, complete and correct in all
material respects based on the applicable Borrower's knowledge thereof.
SECTION 6.7 REVISIONS OR UPDATES TO SCHEDULES. Should any of the
information or disclosures provided on any of the Schedules originally
attached hereto become outdated or incorrect in any material respect during
any fiscal quarter, the Borrowers shall provide promptly to the
Administrative Agent (with copies for each Managing Agent) such revisions
or updates to such Schedule(s) as may be necessary or appropriate to update
or correct such Schedule(s) within forty-five (45) days after the end of
such fiscal quarter; PROVIDED that subsequent disclosures shall not
constitute a cure or waiver of any Default or Event of Default resulting
from the matters disclosed.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has
been obtained in the manner provided for in Section 13.11, each Borrower
will, and will cause each of its Subsidiaries to:
SECTION 7.1 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS.
Except as permitted by Section 9.5, preserve and maintain its separate
corporate existence and all rights, franchises, licenses and privileges
necessary to the conduct of its business; and qualify and remain qualified
as a foreign corporation and authorized to do business in each jurisdiction
where its business requires such qualification and authorization.
SECTION 7.2 MAINTENANCE OF PROPERTY. Protect and preserve all
properties useful in and material to its business, including material
copyrights, patents, trade names and trademarks; maintain in good working
order and condition all buildings (reasonable wear and tear excepted),
equipment and other tangible real and personal property; and from time to
time make or cause to be made all renewals, replacements and additions to
such property necessary in the reasonable judgement of the Borrowers for
the conduct of its business, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
SECTION 7.3 INSURANCE. In addition to the requirements set forth in
the Security Documents, maintain insurance with financially sound and
reputable insurance companies against such risks and in such amounts as are
customarily maintained by similar businesses and as may be required by
Applicable Law, and on the Closing Date and from time to time thereafter
deliver to the Administrative Agent upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and
the properties and risks covered thereby.
SECTION 7.4 ACCOUNTING METHODS AND FINANCIAL RECORDS. Maintain a
system of accounting, and keep such books, records and accounts (which
shall be true and complete in all material respects) as may be required or
as may be necessary to permit the preparation of financial statements in
accordance with GAAP (or generally accepted accounting principles as in
effect in Canada and the United Kingdom with respect to the U.K. Borrowers)
and in compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 7.5 PAYMENT AND PERFORMANCE OF OBLIGATIONS. Pay and perform
all Obligations under this Agreement and the other Loan Documents and pay
or perform (a) all taxes, assessments and other governmental charges that
may be levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary
trade practices; PROVIDED, that ACC or such Subsidiary may contest any item
described in clauses (a) and (b) hereof in good faith so long as adequate
reserves are maintained with respect thereto in accordance with GAAP.
SECTION 7.6 COMPLIANCE WITH LAWS AND APPROVALS. Observe and remain
in material compliance with all Applicable Laws and maintain in full force
and effect all material Governmental Approvals, in each case applicable or
necessary to the conduct of its business.
SECTION 7.7 ENVIRONMENTAL LAWS. In addition to and without limiting
the generality of Section 7.6, (a) comply in all material respects with,
and use its best efforts to ensure such compliance by all of its tenants
and subtenants, if any, with, all applicable Environmental Laws and obtain
and comply with and maintain, and use its best efforts to ensure that all
of its tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws; (b) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws, and timely comply with
all lawful orders and directives of any Governmental Authority regarding
Environmental Laws; and (c) defend, indemnify and hold harmless the Agents
and the Lenders, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under any Environmental Laws applicable to
the operations of ACC or such Subsidiary, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultant's fees, investigation and
laboratory fees, response costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of or relate to
the gross negligence or willful misconduct of the party seeking
indemnification therefor.
SECTION 7.8 COMPLIANCE WITH ERISA. If applicable thereto, in
addition to and without limiting the generality of Section 7.6, make timely
payment of contributions required to meet the minimum funding standards set
forth in ERISA with respect to any Employee Benefit Plan; not take any
action or fail to take action the result of which could be a liability to
the PBGC or to a Multiemployer Plan; not participate in any prohibited
transaction that could result in any civil penalty under ERISA or tax under
the Code; furnish to the Administrative Agent upon the Administrative
Agent's request such additional information about any Employee Benefit Plan
as may be reasonably requested by the Administrative Agent; and operate
each Employee Benefit Plan in such a manner that will not incur any tax
liability under Section 4980B of the Code or any liability to any qualified
beneficiary as defined in Section 4980B of the Code.
SECTION 7.9 COMPLIANCE WITH AGREEMENTS. Comply in all material
respects with each term, condition and provision of all leases, agreements
and other instruments entered into in the conduct of its business
including, without limitation, any Material Contract; PROVIDED, that ACC or
such Subsidiary may contest any such lease, agreement or other instrument
in good faith so long as adequate reserves are maintained in accordance
with GAAP.
SECTION 7.10 CONDUCT OF BUSINESS. Engage only in businesses in
substantially the same fields as the businesses conducted on the Closing
Date and, to the extent permitted by Section 9.4(c), in lines of business
reasonably related thereto.
SECTION 7.11 VISITS AND INSPECTIONS. Upon reasonable notice
therefrom and during normal business hours, permit representatives of any
of the Agents, from time to time, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition,
results of operations and business prospects.
SECTION 7.12 MATERIAL SUBSIDIARIES; ADDITIONAL COLLATERAL. (a) Upon
the creation of any Material Subsidiary permitted by this Agreement, cause
to be executed and delivered to the Administrative Agent: (i) a Joinder
Agreement and the documents referred to therein, (ii) the supplement
substantially in the form attached to the Security Agreement, (iii) the
supplement substantially in the form attached to the applicable Pledge
Agreement, or if the owner of such Subsidiary is not ACC or ACC National, a
pledge agreement substantially in the form of the Pledge Agreement executed
by such owner with such modifications thereto as requested by the Required
Lenders, (iv) a Mortgage and Landlord Consent with respect to any real
property owned or leased by such Subsidiary if reasonably requested by the
Required Lenders, (v) if such Material Subsidiary is a Subsidiary of a
Canadian Subsidiary, such joinder agreements as reasonably requested by the
Required Lenders in order that such Subsidiary become a party to the
Canadian Note Documents, and if such Material Subsidiary is a Subsidiary of
ACC U.K. or a Canadian Subsidiary, supplements to the Security Documents
executed by such Borrowers or additional documents substantially in the
form of such Security Documents, in each case as requested by the Required
Lenders, (vi) such other documents reasonably requested by the Required
Lenders consistent with the terms of this Agreement which provide that such
Subsidiary shall become a Borrower bound by all of the terms, covenants and
agreements contained in the Loan Documents and that the assets of such
Material Subsidiary shall become Collateral for the Obligations and (vii)
such other documents as the Required Lenders shall reasonably request,
including without limitation, officers' certificates, financial statements,
opinions of counsel, board resolutions, charter documents, certificates of
existence and authority to do business and any other closing certificates
and documents described in Section 4.2.
(b) Promptly upon receipt thereof, ACC National shall deliver to the
Administrative Agent copies of each Governmental Approval required in
connection with the pledge by ACC National of the capital stock of ACC
Mass. under the ACC National Pledge Agreement.
(c) ACC shall, and cause its Material Subsidiaries to, promptly
deliver from time to time such additional Security Documents to the
Administrative Agent upon the request of the Required Lenders with respect
to any assets of any such Person not subject to an existing Lien in favor
of the Administrative Agent for the benefit of the Lenders.
SECTION 7.13 HEDGING AGREEMENT. (a) Not later than thirty (30) days
after the date hereof, cause the Borrowers to execute Hedging Agreements
with respect to interest rate exposure under the Credit Agreement with
durations of at least two years and an aggregate notional principal amount
thereunder equal to at least $10,000,000 at interest rates not to exceed
two percent (2%) over the then current three month LIBOR Rate at the time
of execution of such Hedging Agreements with respect to the applicable
Permitted Currency and otherwise in form and substance reasonably
satisfactory to the Managing Agents, (b) not later than one-hundred and
eighty (180) days after the date hereof execute additional Hedging
Agreements in the form described in clause (a) such that the notional
principal amount covered by all such Hedging Agreements equals fifty
percent (50) of the Aggregate Commitment and (c) maintain at all times
Hedging Agreements with respect to currency risk in form and substance
reasonably satisfactory to the Managing Agents.
SECTION 7.14 FURTHER ASSURANCES. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as any Agent or
Lender may reasonably require to document and consummate the transactions
contemplated hereby and to vest completely in and insure each Agent and the
Lenders their respective rights under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has
been obtained in the manner set forth in Section 13.11 hereof, ACC and its
Subsidiaries on a Consolidated basis will not:
SECTION 8.1 MAXIMUM LEVERAGE RATIO. As of any date of determination,
permit the ratio (the "Leverage Ratio") of (a) Total Debt as of such date
to (b), for any calculation period during calendar year 1995, Operating
Cash flow for the two (2) consecutive fiscal quarters ending on or
immediately prior to such date TIMES two (2), and for any calculation
period thereafter, Operating Cash Flow for the period of four (4)
consecutive fiscal quarters ending on or immediately prior to such date, to
exceed the corresponding ratio set forth below:
PERIOD RATIO
Closing Date through
September 30, 1995 3.75 to 1.00
October 1, 1995 through
June 30, 1996 3.50 to 1.00
July 1, 1996 through
December 31, 1996 2.75 to 1.00
January 1, 1997 and
thereafter 2.00 to 1.00;
SECTION 8.2 MINIMUM PRO FORMA DEBT SERVICE COVERAGE RATIO. As of any
date of determination, permit the ratio of (a), for any calculation period
during calendar year 1995, Operating Cash Flow for the two (2) consecutive
fiscal quarters ending on or immediately prior to such date TIMES two (2),
and for any calculation period thereafter, Operating Cash Flow for the
period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date, to (b) Pro Forma Debt Service on such date, to be less
than the corresponding ratio set forth below:
PERIOD RATIO
Closing Date through
September 30, 1995 1.75 to 1.00
October 1, 1995 through
December 31, 1995 2.00 to 1.00
January 1, 1996 and
thereafter 2.50 to 1.00
SECTION 8.3 FIXED CHARGE COVERAGE RATIO. As of any date of
determination, permit the ratio of (a) (i), for any calculation period
during calendar year 1995, Operating Cash Flow for the two (2) consecutive
fiscal quarters ending on or immediately prior to such date TIMES two (2),
and for any calculation period thereafter, Operating Cash Flow for the
period of four (4) consecutive fiscal quarters ending on or immediately
prior to such date to (b) Fixed Charges for such period, to be less than
the corresponding ratio set forth below:
PERIOD RATIO
Closing date through
September 30, 1995 .30 to 1.0
October 1, 1995 through
June 29, 1996 .70 to 1.0
June 30, 1996 through
September 29, 1996 1.00 to 1.0
September 30, 1996 and
thereafter 1.15 to 1.0
SECTION 8.4 MINIMUM NET WORTH. Permit Consolidated Net Worth at any
time to be less than (a) $21,500,000 PLUS (b) fifty percent (50%) of
Consolidated Net Income of ACC and its Subsidiaries (LESS total debits for
such period with respect to accrued and unpaid (i) interest payments
recorded by ACC for the Fleet Venture Notes and (ii) dividends recorded by
ACC for the Preferred Stock, not to exceed $1,200,000 in the aggregate) as
of each fiscal quarter end occurring after the Closing Date PLUS (c) one
hundred percent (100%) of the aggregate Net Cash Proceeds of any offering
of capital stock of ACC or any of its Wholly-Owned Subsidiaries received
thereby after the Closing Date. For the purposes of this Section 8.4, the
minimum required Consolidated Net Worth (i) shall be adjusted in a manner
satisfactory to the Managing Agents for any payment required under the
Contingent Interest Agreement and (ii) shall not be reduced if Consolidated
Net Income as of any fiscal quarter end is less than zero.
ARTICLE IX
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has
been obtained in the manner set forth in Section 13.11 hereof, ACC will not
and will not permit any of its Subsidiaries to:
SECTION 9.1 LIMITATIONS ON DEBT. Create, incur, assume or suffer to
exist any Debt except (a) the Obligations, (b) Debt incurred in connection
with a Hedging Agreement with a counterparty and upon terms and conditions
reasonably satisfactory to the Managing Agents, (c) Subordinated Debt, the
Net Cash Proceeds of which are utilized to repay the Obligations and, with
respect to any such Net Cash Proceeds received after June 30, 1997,
permanently reduce the Aggregate Commitment by the amount of such Net Cash
Proceeds, (d) existing Debt set forth on SCHEDULE 5.1(T) and the renewal
and refinancing (but not the increase) thereof, (e) Debt consisting of
Contingent Obligations permitted by Section 9.2, (f) Debt of ACC and its
Subsidiaries incurred in connection with Capitalized Leases, (g) purchase
money Debt of ACC and its Subsidiaries and (h) unsecured Debt of ACC and
its Subsidiaries; PROVIDED, that (i) the aggregate amount of the Debt
permitted pursuant to clauses (f), (g) and (h) PLUS the aggregate amount of
Debt constituting Contingent Obligations permitted by Sections 9.2(c), (d)
and (e) shall not at any time exceed $10,000,000 and (ii) no Subsidiary of
ACC shall be a party to any agreement which shall restrict, limit or
otherwise encumber (by covenant or otherwise) the ability of such
Subsidiary to make any payment to ACC, in the form of dividends,
intercompany advances or otherwise.
SECTION 9.2 LIMITATIONS ON CONTINGENT OBLIGATIONS. Create, incur,
assume or suffer to exist any Contingent Obligations except (a) Contingent
Obligations in favor of the Administrative Agent for the benefit of the
Agents and the Lenders, (b) Contingent Obligations in respect of Network
Agreements and Network Facilities incurred in the ordinary course of
business, (c) Contingent Obligations to secure payment or performance of
customer service contracts incurred in the ordinary course of business, (d)
Contingent Obligations incurred as a general or joint venture partner in
connection with any investment in a partnership or joint venture permitted
pursuant to Section 10.4 and (e) Contingent Obligations not covered by
clauses (b), (c) or (d) of this Section; PROVIDED, that the aggregate
principal amount at any time outstanding of all Contingent Obligations
permitted by Sections 9.2(c), (d) and (e) PLUS the aggregate outstanding
principal amount of all Debt outstanding under clauses (f), (g) and (h) of
Section 9.1 shall not exceed $10,000,000.
SECTION 9.3 LIMITATIONS ON LIENS. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties
(including shares of capital stock), real or personal, whether now owned or
hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of
ERISA or Environmental Laws) not yet due or as to which the period of grace
(not to exceed thirty (30) days), if any, related thereto has not expired
or which are being contested in good faith and by appropriate proceedings
if adequate reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred
in the ordinary course of business, (i) which are not overdue for a period
of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers' compensation, unemployment insurance or similar legislation
or obligations (not to exceed $2,000,000) under customer service contracts;
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of
real property, which in the aggregate are not substantial in amount and
which do not, in any case, materially detract from the value of such
property or impair the use thereof in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the Agents
and the Lenders;
(f) Existing liens described on SCHEDULE 9.3;
(g) Liens securing Debt permitted under Section 9.1(f); and
(h) Liens securing Debt permitted under Section 9.1(g); PROVIDED that
(i) such Liens shall be created substantially simultaneously with the
acquisition of the related Capital Asset, (ii) such Liens do not at any
time encumber any property other than the property financed by such Debt
and (iii) the principal amount of Debt secured by any such Lien shall at no
time exceed 100% of the original purchase price of such property at the
time it was acquired.
SECTION 9.4 LIMITATIONS ON LOANS, ADVANCES, INVESTMENTS AND
ACQUISITIONS. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint
venture, evidence of Debt or other obligation or security, substantially
all or a material portion of the business or assets of any other Person or
any other investment or interest whatsoever in any other Person; or make or
permit to exist, directly or indirectly, any loans, advances or extensions
of credit to, or any investment in cash or by delivery of property in, any
Person; or enter into, directly or indirectly, any commitment or option in
respect of the foregoing except:
(a) (i) loans or advances by any Subsidiary to a Borrower, (ii) loans
from ACC Corp. to the Canadian Subsidiaries in an aggregate principal
amount not to exceed $29,000,000 pursuant to the Canadian Note Documents
and secured by the Canadian Subsidiary Security Documents, each as in
effect on the Closing Date (or as amended or modified pursuant to Section
7.12 or with the prior written consent of the Required Lenders); PROVIDED,
that the amount of such loans funded with proceeds of Loans hereunder shall
not at any time exceed $10,000,000 in aggregate principal amount, and (iii)
the other existing loans, advances and investments described on SCHEDULE
9.4;
(b) investments by any Domestic Borrower or Subsidiary thereof in (i)
marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof maturing within one (1) year
from the date of acquisition thereof, (ii) commercial paper maturing no
more than 120 days from the date of creation thereof and currently having
the highest rating obtainable from either Standard & Poor's Corporation or
Moody's Investors Service, Inc., (iii) certificates of deposit maturing no
more than 120 days from the date of creation thereof issued by commercial
banks incorporated under the laws of the United States of America, each
having combined capital, surplus and undivided profits of not less than
$500,000,000 and having a rating of "A" or better by a nationally
recognized rating agency; PROVIDED, that the aggregate amount invested in
such certificates of deposit shall not at any time exceed $5,000,000 for
any one such certificate of deposit and $10,000,000 for any one such bank,
or (iv) time deposits maturing no more than 30 days from the date of
creation thereof with commercial banks or savings banks or savings and loan
associations each having membership either in the Federal Deposit Insurance
Corporation ("FDIC") or the deposits of which are insured by the FDIC and
in amounts not exceeding the maximum amounts of insurance thereunder, and
investments by any Canadian Subsidiary or by ACC U.K. or any Subsidiary
thereof in any corresponding government securities or cash equivalents
reasonably satisfactory to the Required Lenders;
(c) investments by ACC or any Subsidiary in the form of acquisitions
of all or substantially all of the business or a line of business (whether
by the acquisition of capital stock, assets or any combination thereof) of
any other Person if a description of the acquisition and the governing
documentation shall have been delivered to the Managing Agents at least
fifteen (15) Business Days prior to the consummation of the acquisition and
the Required Lenders shall have consented in writing thereto prior to such
consummation;
(d) investments by ACC or any Subsidiary thereof in joint venture and
other partnership interests in an aggregate amount not to exceed $1,000,000
during the term of this Agreement, unless the Required Lenders have
consented in writing to any such investment prior to the consummation
thereof; and
(e) loans to employees in the ordinary course of business for travel
and other advanced expenses not to exceed $20,000 with respect to any
individual employee or $200,000 in the aggregate.
SECTION 9.5 LIMITATIONS ON MERGERS AND LIQUIDATION. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) except (a) any Wholly-Owned Subsidiary of ACC which is not a
Material Subsidiary may be liquidated, wound-up or dissolved, (b) any
Wholly-Owned Subsidiary of ACC may merge with ACC or any other Wholly-Owned
Subsidiary of ACC and (c) any Wholly-Owned Subsidiary may merge into the
Person such Wholly-Owned Subsidiary was formed to acquire in connection
with an acquisition permitted by Section 9.4(c).
SECTION 9.6 LIMITATIONS ON SALE OF ASSETS. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, the sale of any receivables and
leasehold interests and any sale-leaseback or similar transaction), whether
now owned or hereafter acquired except:
(a) the sale of inventory in the ordinary course of business;
(b) the sale of obsolete assets no longer used or usable in the
business of ACC or any of its Subsidiaries;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(d) the transfer by any Subsidiary of any of its property to a
Wholly-Owned Subsidiary, ACC or the Borrower;
(e) the disposition by ACC of a percentage of its equity ownership
interest in ACC U.K. not to exceed 20% of such interest in connection with
any joint venture investments permitted hereunder; and
(f) the disposition by ACC of its entire equity ownership interest in
ACC LEC as long as ACC demonstrates to the satisfaction of the Lenders that
the purchase price therefor exceeds the cash value of the assets of ACC LEC
and $1,500,000 of such purchase price is paid in cash in immediately
available funds on the closing date of such sale.
SECTION 9.7 LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS. Declare or
pay any dividends upon any of its capital stock; purchase, redeem, retire
or otherwise acquire, directly or indirectly, any shares of its capital
stock, or make any distribution of cash, property or assets among the
holders of shares of its capital stock; or make any material change in its
capital structure that could reasonably be expected to have a Material
Adverse Effect; PROVIDED that (a) any Borrower may pay dividends in shares
of its own capital stock, (b) any Subsidiary of a Borrower may pay
dividends or make other distributions in respect of its capital stock to
such Borrower, (c) any Subsidiary of a Borrower may make payments on any
Debt or other obligation owed to such Borrower which Debt or other
obligation and such payment are permitted hereunder and any other
applicable Loan Document and (d) as long as no Default or Event of Default
has occurred and is continuing or would be created thereby, ACC may pay
cash dividends on the Preferred Stock in accordance with the terms thereof
on the Closing Date.
SECTION 9.8 LIMITATIONS ON EXCHANGE AND ISSUANCE OF CAPITAL STOCK.
Issue, sell or otherwise dispose of any class or series of capital stock
that, by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of an event or
passage of time would be, (a) convertible or exchangeable into Debt or (b)
required to be redeemed or repurchased, including at the option of the
holder, in whole or in part, or has, or upon the happening of an event or
passage of time would have, a redemption or similar payment due, in any
such case prior to ninety (90) days after the Termination Date.
SECTION 9.9 TRANSACTIONS WITH AFFILIATES. Directly or indirectly:
(a) make any loan or advance to, or purchase or assume any note or other
obligation to or from, any of its officers, directors, shareholders or
other Affiliates, or to or from any member of the immediate family of any
of its officers, directors, shareholders or other Affiliates, or
subcontract any operations to any of its Affiliates, or (b) enter into, or
be a party to, any transaction with any of its Affiliates, except pursuant
to the reasonable requirements of its business and upon fair and reasonable
terms that are fully disclosed to the Required Lenders and are no less
favorable to it than would obtain in a comparable arm's length transaction
with a Person not its Affiliate.
SECTION 9.10 CERTAIN ACCOUNTING CHANGES. Change its Fiscal Year end,
or make any material change in its accounting treatment and reporting
practices except as required by GAAP.
SECTION 9.11 AMENDMENTS; PAYMENTS AND PREPAYMENTS OF SUBORDINATED
DEBT. Amend or modify (or permit the modification or amendment of) any of
the terms or provisions of any Subordinated Debt; or cancel or forgive,
make any voluntary or optional payment or prepayment on, or redeem or
acquire for value (including without limitation by way of depositing with
any trustee with respect thereto money or securities before due for the
purpose of paying when due) any Subordinated Debt.
SECTION 9.12 LICENSES. Terminate any Communications License, PUC
Authorization or other Governmental Approval or any Material Contract
without the prior written consent of the Required Lenders if in the
reasonable opinion of the Required Lenders such termination would have a
Material Adverse Effect.
SECTION 9.13 RESTRICTIVE AGREEMENTS. Enter into any Debt which
contains any negative pledge on assets or any covenants materially more
restrictive than the provisions of Articles VIII, IX and X hereof, or which
restricts, limits or otherwise encumbers its ability to incur Liens on or
with respect to any of its assets or properties other than the assets or
properties securing such Debt.
ARTICLE X
UNCONDITIONAL GUARANTY
SECTION 10.1 GUARANTY OF OBLIGATIONS. The Guarantor hereby
unconditionally guarantees to the Administrative Agent for the ratable
benefit of the Agents and the Lenders, and their respective successors,
endorsees, transferees and assigns, the prompt payment and performance of
all Obligations of the Borrowers (other than ACC), whether primary or
secondary (whether by way of endorsement or otherwise), whether now
existing or hereafter arising, whether or not from time to time reduced or
extinguished (except by payment thereof) or hereafter increased or
incurred, whether or not recovery may be or hereafter become barred by the
statute of limitations, whether enforceable or unenforceable as against any
such Borrower, whether or not discharged, stayed or otherwise affected by
any bankruptcy, insolvency or other similar law or proceeding, whether
created directly with any Agent or Lender or acquired by any Agent or
Lender through assignment, endorsement or otherwise, whether matured or
unmatured, whether joint or several, as and when the same become due and
payable (whether at maturity or earlier, by reason of acceleration,
mandatory repayment or otherwise), in accordance with the terms of any such
instruments evidencing any such obligations, including all renewals,
extensions or modifications thereof (all Obligations of each such Borrower
to any Agent or Lender, including all of the foregoing, being hereinafter
collectively referred to as the "Guaranteed Obligations").
SECTION 10.2 NATURE OF GUARANTY. The Guarantor agrees that this
Guaranty is a continuing, unconditional guaranty of payment and performance
and not of collection, and that its obligations under this Guaranty shall
be primary, absolute and unconditional, irrespective of, and unaffected by
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement or any other Loan Document or
any other agreement, document or instrument to which any such Borrower is
or may become a party, (b) the absence of any action to enforce this
Guaranty, this Agreement or any other Loan Document or the waiver or
consent by the Administrative Agent or any Lender with respect to any of
the provisions of this Guaranty, this Agreement or any other Loan Document,
(c) the existence, value or condition of, or failure to perfect its Lien
against, any security for or other guaranty of the Guaranteed Obligations
or any action, or the absence of any action, by the Administrative Agent or
any Lender in respect of such security or guaranty (including, without
limitation, the release of any such security or guaranty) or (d) any other
action or circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor; it being agreed by
the Guarantor that its obligations under this Guaranty shall not be
discharged until the final and indefeasible payment and performance, in
full, of the Guaranteed Obligations and the termination of the Commitments.
The Guarantor expressly waives all rights it may now or in the future have
under any statute (including without limitation North Carolina General
Statutes Section 26-7, ET SEQ. or similar law), or at law or in equity, or
otherwise, to compel the Administrative Agent or any Lender to proceed in
respect of the Guaranteed Obligations against any such Borrower or any
other party or against any security for or other guaranty of the payment
and performance of the Guaranteed Obligations before proceeding against, or
as a condition to proceeding against, the Guarantor. The Guarantor further
expressly waives and agrees not to assert or take advantage of any defense
based upon the failure of the Administrative Agent or any Lender to
commence an action in respect of the Guaranteed Obligations against any
such Borrower, the Guarantor or any other party or any security for the
payment and performance of the Guaranteed Obligations. The Guarantor
agrees that any notice or directive given at any time to the Administrative
Agent or any Lender which is inconsistent with the waivers in the preceding
two sentences shall be null and void and may be ignored by the
Administrative Agent or Lender, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the
written terms of this Guaranty, unless the Administrative Agent and the
Required Lenders have specifically agreed otherwise in writing. The
foregoing waivers are of the essence of the transaction contemplated by the
Loan Documents and, but for this Guaranty and such waivers, the Agents and
Lenders would decline to enter into this Agreement.
SECTION 10.3 DEMAND BY THE ADMINISTRATIVE AGENT. In addition to the
terms set forth in Section 10.2, and in no manner imposing any limitation
on such terms, if all or any portion of the then outstanding Guaranteed
Obligations under this Agreement are declared to be immediately due and
payable, then the Guarantor shall, upon demand in writing therefor by the
Administrative Agent to the Guarantor, pay all or such portion of the
outstanding Guaranteed Obligations then declared due and payable. Payment
by the Guarantor shall be made to the Administrative Agent, to be credited
and applied upon the Guaranteed Obligations, in immediately available funds
in the Permitted Currency in which the relevant Guaranteed Obligations are
denominated to an account designated by the Administrative Agent or at the
Administrative Agent's office or at any other address that may be specified
in writing from time to time by the Administrative Agent.
SECTION 10.4 WAIVERS. In addition to the waivers contained in
Section 10.2, the Guarantor waives, and agrees that it shall not at any
time insist upon, plead or in any manner whatever claim or take the benefit
or advantage of, any appraisal, valuation, stay, extension, marshalling of
assets or redemption laws, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the
performance by the Guarantor of its obligations under, or the enforcement
by the Administrative Agent or the Lenders of, this Guaranty. The
Guarantor further hereby waives diligence, presentment, demand, protest and
notice of whatever kind or nature with respect to any of the Guaranteed
Obligations and waives the benefit of all provisions of law which are or
might be in conflict with the terms of this Guaranty. The Guarantor
represents, warrants and agrees that its obligations under this Guaranty
are not and shall not be subject to any counterclaims, offsets or defenses
of any kind against the Administrative Agent, the Lenders or any such
Borrower whether now existing or which may arise in the future.
SECTION 10.5 MODIFICATION OF LOAN DOCUMENTS ETC. If the
Administrative Agent or the Lenders shall at any time or from time to time,
with or without the consent of, or notice to, the Guarantor (a) change or
extend the manner, place or terms of payment of, or renew or alter all or
any portion of, the Guaranteed Obligations, (b) take any action under or in
respect of the Loan Documents in the exercise of any remedy, power or
privilege contained therein or available to it at law, in equity or
otherwise, or waive or refrain from exercising any such remedies, powers or
privileges, (c) amend or modify, in any manner whatsoever, the Loan
Documents, (d) extend or waive the time for performance by the Guarantor,
any such Borrower or any other Person of, or compliance with, any term,
covenant or agreement on its part to be performed or observed under a Loan
Document (other than this Guaranty), or waive such performance or
compliance or consent to a failure of, or departure from, such performance
or compliance, (e) take and hold security or collateral for the payment of
the Guaranteed Obligations or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged or conveyed, or in
which the Administrative Agent or the Lenders have been granted a Lien, to
secure any Debt of the Guarantor or any such Borrower to any Agent or the
Lenders, (f) release anyone who may be liable in any manner for the payment
of any amounts owed by the Guarantor or any such Borrower to any Agent or
Lender, (g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of the
Guarantor or any such Borrower are subordinated to the claims of any Agent
or Lender or (h) apply any sums by whomever paid or however realized to any
amounts owing by the Guarantor or any such Borrower to any Agent or Lender
on account of the Obligations in such manner as the Administrative Agent or
any Lender shall determine in its reasonable discretion; then neither the
Administrative Agent nor any Lender shall incur any liability to the
Guarantor as a result thereof, and no such action shall impair or release
the obligations of the Guarantor under this Guaranty.
SECTION 10.6 REINSTATEMENT. The Guarantor agrees that, if any
payment made by any such Borrower or any other Person applied to the
Obligations is at any time annulled, set aside, rescinded, invalidated,
declared to be fraudulent or preferential or otherwise required to be
refunded or repaid, or the proceeds of Collateral are required to be
returned by any Agent or Lender to any such Borrower, its estate, trustee,
receiver or any other party, including, without limitation, the Guarantor,
under any Applicable Law or equitable cause, then, to the extent of such
payment or repayment, the Guarantor's liability hereunder (and any Lien or
Collateral securing such liability) shall be and remain in full force and
effect, as fully as if such payment had never been made, and, if prior
thereto, this Guaranty shall have been canceled or surrendered (and if any
Lien or Collateral securing the Guarantor's liability hereunder shall have
been released or terminated by virtue of such cancellation or surrender),
this Guaranty (and such Lien or Collateral) shall be reinstated in full
force and effect, and such prior cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect the obligations of
the Guarantor in respect of the amount of such payment (or any Lien or
Collateral securing such obligation).
SECTION 10.7 NO SUBROGATION. Until all amounts owing to the Agents
and Lenders on account of the Obligations are paid in full and the
Commitments are terminated, the Guarantor hereby waives any claims or other
rights which it may now or hereafter acquire against any such Borrower that
arise from the existence or performance of the Guarantor's obligations
under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, any right to
participate in any claim or remedy of the Administrative Agent or the
Lenders against any such Borrower or any Collateral which the
Administrative Agent or the Lenders now have or may hereafter acquire,
whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, by any payment made hereunder or
otherwise, including without limitation, the right to take or receive from
any such Borrower, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to the Guarantor on
account of such rights at any time when all of the Obligations shall not
have been paid in full, such amount shall be held by the Guarantor in trust
for the Administrative Agent, segregated from other funds of the Guarantor,
and shall, forthwith upon receipt by the Guarantor, be turned over to the
Administrative Agent in the exact form received by the Guarantor (duly
indorsed by the Guarantor to the Administrative Agent, if required) to be
applied against the Obligations, whether matured or unmatured, in such
order as set forth herein.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1 EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule or
regulation of any Governmental Authority or otherwise:
(a) DEFAULT IN PAYMENT OF PRINCIPAL OF LOANS. Any Borrower shall
default in any payment of principal of any Loan or Note when and as due
(whether at maturity, by reason of acceleration or otherwise).
(b) OTHER PAYMENT DEFAULT. Any Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or
otherwise) of interest on any Loan or Note or the payment of any other
Obligation, and such default shall continue unremedied for five (5)
Business Days.
(c) MISREPRESENTATION. Any representation or warranty made or deemed
to be made by any Borrower or any of its Subsidiaries under this Agreement,
any Loan Document or any amendment hereto or thereto, shall at any time
prove to have been incorrect or misleading in any material respect when
made or deemed made.
(d) DEFAULT IN PERFORMANCE OF CERTAIN COVENANTS. Any Borrower shall
default in the performance or observance of any covenant or agreement
contained in Sections 6.5(e) or 7.12 or Articles VIII or IX of this
Agreement.
(e) DEFAULT IN PERFORMANCE OF OTHER COVENANTS AND CONDITIONS. Any
Borrower or Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this
Section 11.1) or any other Loan Document and such default shall continue
for a period of thirty (30) days after written notice thereof has been
given to such Borrower by the Administrative Agent.
(f) HEDGING AGREEMENT. Any termination payment shall be due by a
Borrower under any Hedging Agreement and such amount is not paid within ten
(10) Business Days of the due date thereof.
(g) DEBT CROSS-DEFAULT. ACC or any of its Subsidiaries shall (i)
default in the payment of any Debt (other than the Notes) the aggregate
outstanding amount of which is in excess of $250,000 (or the equivalent
thereof in any foreign currency) beyond the period of grace if any,
provided in the instrument or agreement under which such Debt was created;
or (ii) default in the observance or performance of any other agreement or
condition relating to any Debt (other than the Notes) the aggregate
outstanding amount of which is in excess of $250,000 (or the equivalent
thereof in any foreign currency) or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt (or
a trustee or agent on behalf of such holder or holders) to cause, with the
giving of notice if required, any such Debt to become due prior to its
stated maturity (any applicable grace period having expired).
(h) OTHER CROSS-DEFAULTS. ACC or any of its Subsidiaries shall
default in the payment when due, or in the performance or observance, of
any obligation or condition of any Material Contract the breach of which
could reasonably be expected to have a Material Adverse Effect unless, but
only as long as, the existence of any such default is being contested by
ACC or such Subsidiary in good faith by appropriate proceedings and
adequate reserves in respect thereof have been established on the books of
ACC or such Subsidiary to the extent required by GAAP.
(i) CHANGE IN CONTROL. Any person or group of persons (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended) other than current management thereof, shall obtain ownership or
control in one or more series of transactions of more than twenty percent
(20%) of the common stock and twenty percent (20%) of the voting power of
ACC entitled to vote in the election of members of the board of directors
of ACC or there shall have occurred under any indenture or other instrument
evidencing any Debt in excess of $250,000 (or the equivalent thereof in any
foreign currency) any "change in control" (as defined in such indenture or
other evidence of Debt) obligating ACC to repurchase, redeem or repay all
or any part of the Debt or capital stock provided for therein (any such
event, a "Change in Control").
(j) VOLUNTARY BANKRUPTCY PROCEEDING. Any Borrower or Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect); (ii) file a petition seeking to take
advantage of any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for adjustment of
debts; (iii) consent to or fail to contest within sixty (60) days of the
filing thereof any petition filed against it in an involuntary case under
such bankruptcy laws or other laws; (iv) apply for or consent to, or fail
to contest in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee, or liquidator of
itself or of a substantial part of its property, domestic or foreign; (v)
admit in writing its inability to pay its debts as they become due; (vi)
make a general assignment for the benefit of creditors; or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(k) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding
shall be commenced against any Borrower or Subsidiary thereof in any court
of competent jurisdiction seeking (i) relief under the federal bankruptcy
laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or
adjustment of debts; or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for any Borrower or Subsidiary thereof or
for all or any substantial part of their respective assets, domestic or
foreign, and such case or proceeding shall continue undismissed or unstayed
for a period of sixty (60) consecutive calendar days, or an order granting
the relief requested in such case or proceeding (including, but not limited
to, an order for relief under such federal bankruptcy laws) shall be
entered.
(l) FAILURE OF AGREEMENTS. Any material provision of this Agreement
or of any other Loan Document shall for any reason cease to be valid and
binding on any Borrower or Subsidiary thereof or any such Person shall so
state in writing, or this Agreement or any other Loan Document shall for
any reason cease to create a valid and perfected first priority Lien on, or
security interest in, any of the Collateral purported to be covered
thereby, in each case other than in accordance with the express terms
hereof or thereof.
(m) TERMINATION EVENT. The occurrence of any of the following
events: (i) ACC or any ERISA Affiliate fails to make full payment when due
of all amounts which, under the provisions of any Pension Plan or Section
412 of the Code, ACC or any ERISA Affiliate is required to pay as
contributions thereto; (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any
Pension Plan; (iii) a Termination Event; or (iv) ACC or any ERISA Affiliate
as employers under one or more Multiemployer Plan makes a complete or
partial withdrawal from any such Multiemployer Plan and the plan sponsor of
such Multiemployer Plans notifies such withdrawing employer that such
employer has incurred a withdrawal liability requiring payments in an
amount exceeding $250,000.
(n) JUDGMENT. A judgment or order for the payment of money which
exceeds $250,000 in amount shall be entered against the ACC or any of its
Subsidiaries by any court and such judgment or order shall continue
undischarged or unstayed for a period of thirty (30) days.
(o) LOSS OF LICENSE. Any Communications License or PUC Authorization
of ACC or any Subsidiary thereof shall expire, terminate, be canceled or
otherwise lost or any application therefor be rejected, which event could
reasonably be expected to have a Material Adverse Effect.
(p) CONVERSION. The Fleet Venture Notes shall not convert into the
Preferred Stock in accordance with the terms thereof prior to August 1,
1995.
(q) GOVERNMENTAL APPROVALS. Each Governmental Approval referred to
in Section 7.12(b) shall not have been delivered to the Administrative
Agent within one hundred and eighty (180) days of the date hereof.
SECTION 11.2 REMEDIES. Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall,
by notice to the Borrowers:
(a) ACCELERATION; TERMINATION OF FACILITIES. Declare the principal
of and interest on the Loans and the Notes at the time outstanding, and
all other amounts owed to the Lenders and to the Agents under this
Agreement or any of the other Loan Documents and all other Obligations, to
be forthwith due and payable, whereupon the same shall immediately become
due and payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or the
other Loan Documents to the contrary notwithstanding, and terminate the
Credit Facility and any right of the Borrower to request borrowings or
Letters of Credit thereunder; PROVIDED, that upon the occurrence of an
Event of Default specified in Section 11.1(j) or (k), the Credit Facility
shall be automatically terminated and all Obligations shall automatically
become due and payable.
(b) RIGHTS OF COLLECTION. Exercise on behalf of the Lenders all of
its other rights and remedies under this Agreement, the other Loan
Documents and Applicable Law, in order to satisfy all of the Borrower's
Obligations.
SECTION 11.3 RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The
enumeration of the rights and remedies of the Agents and the Lenders set
forth in this Agreement is not intended to be exhaustive and the exercise
by the Agents and the Lenders of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative,
and shall be in addition to any other right or remedy given hereunder or
under the Loan Documents or that may now or hereafter exist in law or in
equity or by suit or otherwise. No delay or failure to take action on the
part of any Agent or Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or privilege preclude other or further exercise
thereof or the exercise of any other right, power or privilege or shall be
construed to be a waiver of any Event of Default. No course of dealing
between the Borrowers, the Agents and the Lenders or their respective
agents or employees shall be effective to change, modify or discharge any
provision of this Agreement or any of the other Loan Documents or to
constitute a waiver of any Event of Default. In addition, any election of
remedies which results in the denial or impairment of the right of the
Administrative Agent to seek a deficiency judgment against any Borrower
referred to in Section 10.1 shall not impair the Guarantor's obligation to
pay the full amount of the Guaranteed Obligations.
SECTION 11.4 CONSENTS. The Borrowers acknowledge that certain
transactions contemplated by this Agreement and the other Loan Documents
and certain actions which may be taken by the Agents or the Lenders in the
exercise of their respective rights under this Agreement and the other Loan
Documents may require the consent of a Governmental Authority. If counsel
to any Agent reasonably determines that the consent of a Governmental
Authority is required in connection with the execution, delivery and
performance of any of the aforesaid documents or any documents delivered to
the Agents or the Lenders in connection therewith or as a result of any
action which may be taken pursuant thereto, then the Borrowers, at their
sole cost and expense, agree to use their best efforts to secure such
consent and to cooperate with the Agents and the Lenders in any action
commenced by any Agent or Lender to secure such consent.
SECTION 11.5 JUDGMENT CURRENCY. The obligation of the Borrowers to
make payments of the principal of and interest on the Notes and any other
amounts payable hereunder in the currency specified for such payment herein
or in the Notes shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment, which is expressed in or converted into
any other currency, except to the extent that such tender or recovery shall
result in the actual receipt by each of the Administrative Agent and
Lenders of the full amount of the particular Permitted Currency expressed
to be payable herein or in the Notes. The Administrative Agent shall,
using all amounts obtained or received from the Borrowers pursuant to any
such tender or recovery in payment of principal of and interest on the
Notes, promptly purchase the applicable Permitted Currency at the most
favorable spot exchange rate determined by the Administrative Agent to be
available to it. The obligation of the Borrowers to make payments in the
applicable Permitted Currency shall be enforceable as an alternative or
additional cause of action solely for the purpose of recovering in the
applicable Permitted Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Permitted Currency
expressed to be payable herein or in the Notes.
SECTION 11.6 ADJUSTMENTS. If any Lender (a "Benefitted Lender")
shall at any time receive any payment of all or part of its Loans, or
interest thereon, or if any Lender shall at any time receive any Collateral
in respect to its Loans (whether voluntarily or involuntarily, by set-off
or otherwise) in a greater proportion than any such payment to and
Collateral received by any other Lender, if any, in respect of such other
Lender's Loans, or interest thereon, such Benefitted Lender shall purchase
for cash from the other Lenders such portion of each such other Lender's
Loans, or shall provide such other Lenders with the benefits of any such
Collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the Lenders; PROVIDED, that if
all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded,
and the purchase price and benefits returned to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such
portion.
ARTICLE XII
THE AGENTS
SECTION 12.1 APPOINTMENT. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent and Managing
Agent of such Lender and Shawmut Bank Connecticut, N.A. as Managing Agent
of such Lender under this Agreement and the other Loan Documents and each
such Lender irrevocably authorizes First Union as Administrative Agent, and
Shawmut Bank Connecticut, N.A. as Managing Agent, respectively, for such
Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to each such Agent by the
terms of this Agreement and such other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or such other Loan
Documents, none of the Agents shall have any duties or responsibilities,
except those expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Agreement or the other Loan Documents or otherwise exist against such
Agent. To the extent any provision of this Agreement permits action by any
Agent, such Agent shall, subject to the provisions of Section 13.11 hereof
and of this Article XII, take such action if directed in writing to do so
by the Required Lenders.
SECTION 12.2 DELEGATION OF DUTIES. Each of the Agents may execute
any of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. No
Agent shall be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by such Agent with reasonable care.
SECTION 12.3 EXCULPATORY PROVISIONS. Neither any Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries
or Affiliates shall be (a) liable for any action lawfully taken or omitted
to be taken by it or such Person under or in connection with this Agreement
or the other Loan Documents (except for its or such Person's own gross
negligence or willful misconduct), or (b) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by the Borrowers or any of their Subsidiaries or any officer thereof
contained in this Agreement or the other Loan Documents or in any
certificate, report, statement or other document referred to or provided
for in, or received by such Agent under or in connection with, this
Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
or the other Loan Documents or for any failure of the Borrowers or any of
their Subsidiaries to perform its obligations hereunder or thereunder. No
Agent shall be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrowers or any of their Subsidiaries.
SECTION 12.4 RELIANCE BY AGENTS. Each of the Agents shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrowers), independent accountants and other experts
selected by any Agent. Each of the Agents may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have
been transferred in accordance with Section 13.10 hereof. Each of the
Agents shall be fully justified in failing or refusing to take any action
under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders (or, when
expressly required hereby or by the relevant other Loan Document, all the
Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action except for its own gross negligence or willful misconduct. Each of
the Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Notes in accordance
with a request of the Required Lenders (or, when expressly required hereby,
all the Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
SECTION 12.5 NOTICE OF DEFAULT. None of the Agents shall be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that
any Agent receives such a notice, it shall promptly give notice thereof to
the Administrative Agent who shall promptly give notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the
Required Lenders; PROVIDED that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
SECTION 12.6 NON-RELIANCE ON SUCH AGENTS AND OTHER LENDERS. Each
Lender expressly acknowledges that none of the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it
and that no act by any Agent hereinafter taken, including any review of the
affairs of the Borrowers or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by such Agent to any Lender.
Each Lender represents to the Agents that it has, independently and without
reliance upon the Agents or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and their Subsidiaries and
made its own decision to make its Loans and issue or participate in Letters
of Credit hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent
or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the
Borrowers and their Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by any Agent
hereunder or by the other Loan Documents, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrowers or any of their Subsidiaries
which may come into the possession of such Agent or any of its respective
officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates.
SECTION 12.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent and the Managing Agents in their capacities as such
and (to the extent not reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so), ratably according to the respective
amounts of their Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment
of the Notes) be imposed on, incurred by or asserted against any such Agent
in any way relating to or arising out of this Agreement or the other Loan
Documents, or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action
taken or omitted by such Agent under or in connection with any of the
foregoing; PROVIDED that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting
solely from such Agent's bad faith, gross negligence or willful misconduct.
The agreements in this Section 13.7 shall survive the payment of the Notes
and all other amounts payable hereunder and the termination of this
Agreement.
SECTION 12.8 EACH OF THE AGENTS IN ITS INDIVIDUAL CAPACITY. Each
Agent and its respective Subsidiaries and Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with each
Borrower as though such Agent were not an Agent hereunder. With respect to
any Loans made or renewed by it and any Note issued to it, each Agent shall
have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agents and the Managing Agents in their individual capacity.
SECTION 12.9 RESIGNATION OF AGENTS; SUCCESSOR AGENTS. Each Managing
Agent may resign as such Agent at any time by giving notice thereof to the
Lenders and the Borrowers. If both Managing Agents have resigned, the
Administrative Agent shall serve as a Managing Agent hereunder. Subject to
the appointment and acceptance of a successor as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the
Lenders and the Borrowers. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Administrative Agent which
successor shall have minimum capital and surplus of at least $500,000,000
and be consented to by the Borrowers, such consent not to be unreasonably
withheld. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which
successor shall have minimum capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by
a successor Administrative Agent such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent the provisions of this Section
12.9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative
Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or
by telephone subsequently confirmed in writing. Any notice shall be
effective if delivered by hand delivery or sent via telecopy, recognized
overnight courier service or certified mail, return receipt requested, and
shall be presumed to be received by a party hereto (i) on the date of
delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on
the third Business Day following the date sent by certified mail, return
receipt requested. A telephonic notice to any Agent as understood by such
Agent will be deemed to be the controlling and proper notice in the event
of a discrepancy with or failure to receive a confirming written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it
at the following addresses, or any other address as to which all the other
parties are notified in writing.
If to any Borrower: ACC Corp.
400 West Avenue
Rochester, New York 14611
Attention: Michael R. Daley,
Executive Vice President
and Chief Financial Officer
Telephone No.: (716) 987-3175
Telecopy No.: (716) 987-3335
With copies to: Underberg & Kessler
1800 Chase Square
Rochester, New York 14604
Attention: Stephen H. Waite, Esq.
Telephone No.: (716) 258-2826
Telecopy No.: (716) 258-2821
If to First Union as First Union National Bank of
Administrative Agent North Carolina
or Managing Agent: One First Union Center, TW-19
301 S. College Street
Charlotte, North Carolina 28288-0735
Attention: John Butler
Telephone No.: (704) 374-6471
Telecopy No.: (704) 374-4092
If to Shawmut Bank Shawmut Bank Connecticut, N.A.
Connecticut, N.A. 777 Main Street, MSN 397
as Managing Agent: Hartford, Connecticut 06115
Attention: Wendy Klepper
Telephone No.: (203) 986-1128
Telecopy No.: (203) 986-5637
If to any Lender: The Address set forth on SCHEDULE 1.1
(c) ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent hereby
designates its office located at the address set forth above, or any
subsequent office which shall have been specified for such purpose by
written notice to the Borrowers and Lenders, as the Administrative Agent's
Office referred to herein, to which payments due are to be made and at
which Loans will be disbursed and Letters of Credit issued.
SECTION 13.2 EXPENSES. (a) The Borrowers will pay all reasonable
out-of-pocket expenses of (i) the Managing Agents in connection with the
preparation, execution and delivery of this Agreement and each of the other
Loan Documents, whenever the same shall be executed and delivered,
including all out-of-pocket syndication and due diligence expenses,
appraiser's fees, search fees, title insurance premiums, recording fees,
taxes and reasonable fees and disbursements of counsel for the Managing
Agents; (ii) the Managing Agents in connection with the preparation,
execution and delivery of any waiver, amendment or consent by the Agents or
the Lenders relating to this Agreement or any of the other Loan Documents
including reasonable fees and disbursements of counsel for the Agents,
search fees, appraiser's fees, recording fees and taxes imposed in
connection therewith; and (iii) the Managing Agents in connection with
administering and enforcing their respective rights under the Credit
Facility, including consulting with one or more Persons, including
appraisers, accountants, engineers and attorneys, concerning or related to
the nature, scope or value of any right or remedy of any Agent or any of
the Lenders hereunder or under any of the other Loan Documents, including
any review of factual matters in connection therewith, which expenses shall
include the reasonable fees and disbursements of such Persons.
(b) The Guarantor agrees that it will reimburse each Agent and Lender
for all expenses (including reasonable attorneys fees and expenses)
incurred by each Agent or Lender in connection with the obligations of the
Guarantor under the Guaranty and any other Loan Documents and all expenses
(including reasonable attorneys fees and expenses) incurred by the
Administrative Agent, any Agent or any Lender in connection with the
enforcement of the Guaranty.
SECTION 13.3 SET-OFF. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such
rights, upon and after the occurrence of any Event of Default and during
the continuance thereof, the Lenders and any assignee or participant of a
Lender in accordance with Section 13.10 are hereby authorized by the
Borrowers at any time or from time to time, without notice to the Borrowers
or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and to apply any and all deposits (general or
special, time or demand, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured,
excluding government securities required by Applicable Law to be held as
security for worker's compensation and similar claims) and any other
indebtedness at any time held or owing by the Lenders, or any such assignee
or participant to or for the credit or the account of a Borrower against
and on account of the Obligations of such Borrower irrespective of whether
or not (a) the Lenders shall have made any demand under this Agreement or
any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted
by Section 11.2 and although such Obligations shall be contingent or
unmatured.
SECTION 13.4 GOVERNING LAW. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be
governed by, construed and enforced in accordance with the laws of the
State of North Carolina, without reference to the conflicts or choice of
law principles thereof.
SECTION 13.5 CONSENT TO JURISDICTION. The Borrowers hereby
irrevocably consent to the personal jurisdiction of the state and federal
courts located in Mecklenburg County, North Carolina, in any action, claim
or other proceeding arising out of any dispute in connection with this
Agreement, the Notes and the other Loan Documents, any rights or
obligations hereunder or thereunder, or the performance of such rights and
obligations. The Borrowers hereby irrevocably consent to the service of a
summons and complaint and other process in any action, claim or proceeding
brought by any Agent or Lender in connection with this Agreement, the Notes
or the other Loan Documents, any rights or obligations hereunder or
thereunder, or the performance of such rights and obligations, on behalf of
itself or its property, in the manner specified in Section 13.1. Nothing
in this Section 13.5 shall affect the right of any Agent or Lender to serve
legal process in any other manner permitted by Applicable Law or affect the
right of any Agent or Lender to bring any action or proceeding against any
Borrower or its properties in the courts of any other jurisdictions.
SECTION 13.6 WAIVER OF JURY TRIAL. EACH AGENT, LENDER AND EACH
BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 13.7 REVERSAL OF PAYMENTS. To the extent any Borrower makes
a payment or payments to the Administrative Agent or other Agent for the
ratable benefit of the Lenders (or the other Agents) or the Administrative
Agent or other Agent receives any payment or proceeds of the Collateral
which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or proceeds repaid, the Obligations or part
thereof intended to be satisfied shall be revived and continued in full
force and effect as if such payment or proceeds had not been received by
any Agent.
SECTION 13.8 INJUNCTIVE RELIEF. The Borrowers recognize that, in the
event the Borrowers fail to perform, observe or discharge any of their
obligations or liabilities under this Agreement, any remedy of law may
prove to be inadequate relief to the Lenders. Therefore, the Borrowers
agree that the Lenders, at the Lenders' option, shall be entitled to
temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
SECTION 13.9 ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating
to this Agreement, including, without limitation, all computations utilized
by ACC or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby
or unless there is an express written direction by the Administrative Agent
to the contrary agreed to by the Borrowers, be performed in accordance with
GAAP. In the event that changes in GAAP shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by ACC's certified public accountants, to
the extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Credit and
the Lenders shall have amended this Agreement to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.
SECTION 13.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, each Agent and the Lenders, all
future holders of the Notes, and their respective successors and assigns,
except that no Borrower shall assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender. Nothing set forth in the Guaranty shall impair, as between the
Borrowers, the Agents and the Lenders, the obligations of the Borrowers
hereunder and under the other Loan Documents.
(b) ASSIGNMENT BY LENDERS. Each Lender may, with the consent of the
Agents and ACC, which consents shall not be unreasonably withheld, assign
to one or more Eligible Assignees all or a portion of its interests, rights
and obligations under this Agreement (including, without limitation, all or
a portion of the Loans at the time owing to it and the Notes held by it);
PROVIDED that:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) the Commitment so assigned shall not be less than
$5,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance in the form of EXHIBIT E
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of the
applicable Borrower, require such Borrower to file a registration
statement with the Securities and Exchange Commission or apply to or
qualify the Loans or the Notes under the blue sky laws of any state;
and
(v) the assigning Lender shall pay to the Administrative Agent
an assignment fee of $2,500 upon the execution by such Lender of the
Assignment and Acceptance; PROVIDED that no such fee shall be payable
upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least five (5) Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations
of a Lender hereby and (B) the Lender thereunder shall, to the extent
provided in such assignment, be released from its obligations under this
Agreement.
(c) RIGHTS AND DUTIES UPON ASSIGNMENT. By executing and delivering
an Assignment and Acceptance, the assigning Lender thereunder and the
assignee thereunder confirm to and agree with each other and the other
parties hereto as follows:
(i) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrowers or their Subsidiaries or the performance or
observance by the Borrowers and their Subsidiaries of any of their
obligations under this Agreement or any other instrument or document
furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred
to in Section 5.1(o) and the most recent financial statements
delivered to the Assignor pursuant to Section 6.1 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(iv) such assignee will, independently and without reliance upon
any Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement;
(v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to such
Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) REGISTER. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders and the amount of the
Extensions of Credit with respect to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrowers, the Agents and the Lenders
may treat each person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) ISSUANCE OF NEW NOTES. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee
together with any Note or Notes subject to such assignment and the written
consent to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is substantially in the
form of EXHIBIT E:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the Borrowers;
and
(iv) promptly deliver a copy of such Assignment and Acceptance to
ACC.
Within five (5) Business Days after receipt of notice, ACC shall execute
and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee
in amounts equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes,
shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the assigned Notes
delivered to the assigning Lender. Each surrendered Note or Notes shall be
canceled and returned to ACC.
(f) PARTICIPATIONS. Each Lender may, with the consent of the Agents
and ACC, which consents shall not be unreasonably withheld, sell
participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and its Extensions of Credit
and the Notes held by it); PROVIDED that:
(i) each such participation shall be in an amount not less than
$5,000,000;
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement;
(v) the Borrowers, the Agents and the other Lenders shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this
Agreement or any other Loan Document other than waivers, amendments or
modifications which would reduce the principal of or the interest rate
on any Loan, extend the term or increase the amount of the Commitment
of such participant, reduce the amount of any fees to which such
participant is entitled, extend any scheduled payment date for
principal or, except as expressly contemplated hereby or thereby,
release any Collateral or Security Document; and
(vii) any such disposition shall not, without the consent of the
applicable Borrower, require such Borrower to file a registration
statement with the Securities and Exchange Commission to apply to
qualify the Loans or the Notes under the blue sky law of any state.
(g) DISCLOSURE OF INFORMATION; CONFIDENTIALITY. The Agents and the
Lenders shall hold all non-public information obtained pursuant to the Loan
Documents in accordance with their customary procedures for handling
confidential information. Any Lender may, in connection with any
assignment, proposed assignment, participation or proposed participation
pursuant to this Section 13.10, disclose to the assignee, participant,
proposed assignee or proposed participant, any information relating to the
Borrowers furnished to such Lender by or on behalf of the Borrowers;
PROVIDED, that prior to any such disclosure, each such assignee, proposed
assignee, participant or proposed participant shall agree with the
Borrowers or such Lender (which in the case of an agreement with only such
Lender, the Borrowers shall be recognized as third party beneficiaries
thereof) to preserve the confidentiality of any confidential information
relating to the Borrowers received from such Lender.
(h) CERTAIN PLEDGES OR ASSIGNMENTS. Nothing herein shall prohibit
any Lender from pledging or assigning any Note to any Federal Reserve Bank
in accordance with Applicable Law.
SECTION 13.11 AMENDMENTS, WAIVERS AND CONSENTS; RENEWAL.
(a) Except as set forth below, any term, covenant, agreement or
condition of this Agreement or any of the other Loan Documents may be
amended or waived by the Lenders, and any consent given by the Lenders, if,
but only if, such amendment, waiver or consent is in writing signed by the
Required Lenders (or by the Administrative Agent with the consent of the
Required Lenders) and delivered to the Administrative Agent and, in the
case of an amendment, signed by the Borrowers; PROVIDED, that no amendment,
waiver or consent shall (i) increase the amount or extend the time of the
obligation of the Lenders to make Loans, (ii) extend the originally
scheduled time or times of payment of the principal of any Loan or the time
or times of payment of interest on any Loan, (iii) reduce the rate of
interest or fees payable on any Loan, (iv) permit any subordination of the
principal or interest on any Loan, (v) release any Collateral or Security
Document (other than as specifically permitted in this Agreement or the
applicable Security Document) or (vi) amend the provisions of this Section
13.11 or the definition of Required Lenders, without the prior written
consent of each Lender. In addition, no amendment, waiver or consent to
the provisions of Article XIII shall be made without the written consent of
the affected Agents.
SECTION 13.12 PERFORMANCE OF DUTIES. The Borrowers' obligations
under this Agreement and each of the Loan Documents shall be performed by
the applicable Borrower at its sole cost and expense.
SECTION 13.13 INDEMNIFICATION. The Borrowers agree to reimburse each
Agent and the Lenders for all reasonable costs and expenses, including
reasonable counsel, appraisal, or other expert or consultant fees and
disbursements incurred, and to indemnify and hold each Agent and the
Lenders harmless from and against all losses suffered by such Agent and the
Lenders in connection with (a) the exercise by the Agents or the Lenders of
any right or remedy granted to them under this Agreement or any of the
other Loan Documents, (b) any claim, and the prosecution or defense
thereof, arising out of or in any way connected with this Agreement or any
of the other Loan Documents and (c) the collection or enforcement of the
Obligations or any of them; PROVIDED, that the indemnity contained herein
shall not apply to the extent that such losses, claims, damages,
liabilities or other expenses result from the gross negligence or willful
misconduct of such indemnified person; and further provided that, promptly
after the receipt by an indemnified person of notice of any pending or
threatened action with respect to which the indemnified person may claim
indemnification under this Agreement (an "Action"), the indemnified person
shall provide written notice thereof to ACC and ACC shall then be entitled,
at its sole and reasonable discretion, to assume the defense of any such
Action, with counsel reasonably satisfactory to the indemnified person.
After written notice to the indemnified person from ACC of its election to
assume the defense of such Action, ACC shall not be liable to such
indemnified person for any legal expenses or fees of other counsel or any
other expense incurred by such indemnified person in connection with the
defense thereof after such date, except as provided below. The indemnified
person shall cooperate with all reasonable requests of ACC regarding the
defense of any such Action. Notwithstanding ACC's election to assume the
defense thereof, however, the indemnified person shall have the right to
employ separate counsel and to participate in, but not control, the defense
of such action, and ACC shall pay the reasonable fees and expenses of such
separate counsel (provided that with respect to any single Action, ACC
shall not be required to bear the fees and expenses of more than one such
counsel in any single jurisdiction) if (a) the use of counsel chosen by ACC
to represent the indemnified person would present a conflict-of-interest in
the reasonable determination of the indemnified person or such counsel, or
(b) the defendants in or target of any such Action include both the
indemnified person and ACC, and the indemnified person reasonably concluded
that there may be legal defenses available to it that differ from or are in
addition to those available to ACC. ACC shall not be liable for any
settlement of any action effected by an indemnified person without ACC's
prior written consent (which shall not be unreasonably withheld).
SECTION 13.14 ALL POWERS COUPLED WITH INTEREST. All powers of
attorney and other authorizations granted to the Lenders, each Agent and
any Persons designated by such Agent or Lenders pursuant to any provisions
of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not
been terminated.
SECTION 13.15 SURVIVAL OF INDEMNITIES. Notwithstanding any
termination of this Agreement, the indemnities to which the Agents and the
Lenders are entitled under the provisions of this Article XIII and any
other provision of this Agreement and the Loan Documents shall continue in
full force and effect and shall protect the Agents and the Lenders against
events arising after such termination as well as before.
SECTION 13.16 TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
SECTION 13.17 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 13.18 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and shall be binding upon all parties, their successors and
assigns, and all of which taken together shall constitute one and the same
agreement.
SECTION 13.19 ACC AS AGENT FOR OTHER BORROWERS. Each Borrower hereby
appoints and authorizes ACC (a) to provide the Administrative Agent with
all notices with respect to Loans for the benefit of any other Borrower and
all other notices and instructions under this Agreement and (b) to take
such action on behalf of such Borrowers as ACC deems appropriate to obtain
Loans and to exercise such other powers as are reasonably incidental to
carry out the purposes of this Agreement (including without limitation
acceptance of service of process for each other Borrower and Subsidiary
under Section 13.5). This appointment shall be irrevocable and coupled
with an interest.
SECTION 13.20 TERM OF AGREEMENT. This Agreement shall remain in
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied
in full. No termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such termination.
C:\TPY\ACC\CRA.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, all as of the day and year
first written above.
[CORPORATE SEAL] ACC CORP.
By: /s/ John J. Zimmer
Name:Jphn J. Zimmer
Title: VP-Finance
[CORPORATE SEAL] ACC LONG DISTANCE CORP.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title:Controller
[CORPORATE SEAL] ACC NATIONAL TELECOM CORP.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title:Controller
[CORPORATE SEAL] ACC LONG DISTANCE OF MASSACHUSETTS CORP.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title:Controller
[CORPORATE SEAL] ACC RADIO CORP.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title:Controller
[CORPORATE SEAL] ACC NATIONAL LONG DISTANCE CORP.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title:Controller
[CORPORATE SEAL] ACC LONG DISTANCE U.K., LTD.
By: /s/ John J. Zimmer
Name: John J. Zimmer
Title: Attorney
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Administrative Agent, Managing Agent and
Lender
By: /s/ Jim F. Redman
Name: Jim F. Redman
Title: Sr. VP
SHAWMUT BANK CONNECTICUT, N.A., as Managing
Agent and Lender
By: /s/ Robert F. West
Name: Robert F. West
Title: Director
C:\TPY\ACC\CRA.
<PAGE>
SCHEDULE 1.1: LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
Commitment
LENDER COMMITMENT PERCENTAGE
First Union National Bank $17,500,000 50%
of North Carolina
One First Union Center, TW-19
301 S. College Street
Charlotte, North Carolina 28288-0735
Attention: John Butler
Telephone No.: (704) 3374-6471
Telecopy No.: (704) 374-4092
<S> <C> <C>
Shawmut Bank Connecticut, N.A.
777 main Street, MSN 397
Hartford, Connecticut 06115 $17,500,00 50%
Attention: Wendy Klepper
Telephone No.: (203) 986-1128
Telecopy No.: (203) 986-5637
</TABLE>
C:\TPY\ACC\CRA.
<PAGE>
SCHEDULE 1.2 : SUBLIMITS
<TABLE>
<CAPTION>
BORROWER SUBLIMIT
<S> <C>
ACC U.K. and any Additional Borrower which is a $5,000,000
U.K. Borrower
ACC LEC $2,000,000
ACC, ACC U.S., ACC Mass., ACC Radio, ACC National $35,000,000 LESS outstandings to all other
and any Additional Borrower who is a Domestic Borrowers
Borrower
</TABLE>
<PAGE>
SCHEDULE 1.3: CANADIAN SUBSIDIARY SECURITY DOCUMENTS
(a) Quebec Security Documents
(i) Hypothec by Canadian Subsidiaries
(ii) Landlord Agreement
(b) Ontario Security Documents
(i) Security Agreement
(ii) Notice of Security Interest in Fixtures
(Toronto Street Property)
(iii)Leasehold Mortgage (Dundas Street)
(iv) Landlord Agreement (Dundas Street)
(v) Acknowledgement of Standard Charges (Dundas Street)
(vi)Leasehold Mortgage (Toronto Street)
(vii)Landlord Agreement (Toronto Street)
(viii)Acknowledgement of Standard Charges
(Toronto Street)
(ix) Share Pledge by ACC Canada
(x)Share Transfer Power of Attorney by ACC Canada
(xi)Confirmation and Consent by ACC Ltd. to Share Pledge
by ACC Canada
(xii)Resolutions of directors of ACC Ltd. authorizing
pledge
(xiii)Share Pledge by ACC Ltd.
(xiv) Share Transfer Power of Attorney By ACC Ltd.
(xv)Confirmation and Consent by ACC Inc. to Share Pledge
by ACC Ltd.
(xvi)Resolutions of directors of ACC Inc. authorizing
Pledge
(xvii)Currency Indemnity Agreement
(c) British Columbia Security Documents
(i) Security Agreement
(ii) Leasehold Mortgage
(iii)Equitable Mortgage
(iv) Landlord Agreement
(v) Statutory Declaration by ACC (re: Leasehold Mortgage)
(vi)Notice of Security Interest in Fixtures
(vii)Acknowledgement of Mortgage Terms
Note: The Registrant agrees to furnish supplementally to the Commission a copy
of any omitted schedules or exhibits to this Agreement upon request.
Exhibit 10-2
EMPLOYMENT AGREEMENT
AGREEMENT made by and between ACC CORP., 400 West Avenue, Rochester, New
York 14611 ("ACC") and David K. Laniak, residing at 10 Harvest Lane, Rush, New
York 14543 ("Employee").
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
(a) "ACQUIRING ENTITY" shall mean any entity, whether a corporation,
partnership, joint venture, etc., that, as a result of a Change In Control,
either directly or indirectly has effective control over the business plans,
direction and operations of ACC Corp. This term shall also include any
subsidiaries or related entities over which the Acquiring Entity has control,
and shall also include any entity that, within one year following a Change In
Control of ACC Corp., acquires control over the entity that acquired control of
ACC Corp.
(b) "BENEFITS" shall mean all benefits described in Paragraph 4 hereof.
The term "Benefits" does not include any amounts deemed Compensation, nor the
continuation of any disability, health, dental or life insurance coverage
beyond the terms of the policies for such insurance as the same may exist on
the effective date of an Event of Termination.
(c) "CHANGE IN RESPONSIBILITIES" shall mean that the Company's Board of
Directors, in circumstances NOT involving a Change in Control, takes action so
as to significantly reduce the nature or scope of Employee's authority, power,
functions or duties contemplated in Paragraph 2 hereof.
(d) "CHANGE IN CONTROL" shall mean a change in control of ACC Corp. of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect on the date of this Agreement or, if in the future Item 6(e)
is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes; provided that, without limitation, a Change In Control shall be
deemed to have occurred if and when: (x) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
the Employee, is or becomes a beneficial owner, directly or indirectly, of
securities of ACC Corp. representing a majority of the combined voting power of
ACC Corp.'s then outstanding securities (excluding, however, the transfer of
any shares beneficially owned by the Employee); or (y) individuals who were
members of the Board of Directors of ACC Corp. immediately prior to a meeting
of the shareholders of ACC Corp. involving a contest for the election of
Directors shall not constitute a majority of the Board of Directors following
such election. The effective date of any such Change in Control shall be the
closing date of the transaction that results in the Change in Control. The
terms of this subparagraph (c) shall also apply to any change in control of any
entity that acquires control of an Acquiring Entity within one year following
the acquisition by the Acquiring Entity of control of ACC Corp.
(e) "COMMITTEE" shall mean the Executive Compensation Committee of the
ACC Corp. Board of Directors.
(f) "COMPANY" shall mean ACC Corp. and/or any of its subsidiaries
and/or affiliates incorporated under the laws of any state of the United States
as the same may exist from time to time; EXCEPT that, for purposes of
Paragraphs 13 and 14 hereof, "Company" shall mean ACC Corp. and/or any of its
subsidiaries and/or affiliates as the same may exist from time to time anywhere
in the world, regardless of the laws under which incorporated.
(g) "COMPENSATION" shall mean the Employee's salary, accrued bonuses,
if any, and any stock options held by or awards granted to Employee under the
Company's Employee Long Term Incentive Plan or other stock option or similar
Company plan in effect from time to time, and shall expressly include the items
described in Paragraph 3 hereof, but shall exclude any Benefits.
(h) "DISABILITY" shall mean the Employee's total inability, due to a
mental or physical illness, incapacity or injury, to render his full-time
services to the Company for any period of 60 consecutive days or, if longer,
such period of time as is necessary for the Employee to be deemed "totally
disabled" or the equivalent thereof within the meaning of any long-term
disability insurance provided by the Company and covering the Employee.
(i) "EVENT OF TERMINATION" shall mean the termination of Employee's
employment, whether due to a Termination For Cause, a Termination Without
Cause, a Change In Control, a Change in Responsibilities or a Voluntary
Termination of Employment by Employee, such that Employee is no longer employed
by the Company.
(j) "TERMINATION FOR CAUSE" shall mean that the Company, in its sole
discretion, terminates Employee's employment due to Employee's personal
dishonesty, incompetence, willful misconduct, breach of a fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation or final cease and desist order,
the penalty for which constitutes a felony under applicable law; or any breach
of Paragraphs 13 or 14 of this Agreement. For purposes of this subparagraph
1(j), no act or failure to act on Employee's part shall be considered
"intentionally done" or "willfully done" unless done or omitted to be done by
Employee in bad faith and without reasonable belief that such act or omission
was in the best interests of the Company. Notwithstanding the foregoing,
Employee shall not be deemed to have been Terminated For Cause unless and until
there shall have been delivered to him/her a copy of a resolution duly adopted
by the affirmative vote of a majority of the entire Board of Directors (or, in
the event that Employee is a Director, then by the affirmative vote of a
majority of the non-employee Directors then in office) at a Board meeting duly
called and held for that purpose (after reasonable notice to Employee and an
opportunity for Employee, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Employee was
guilty of conduct set forth in this subparagraph 1(j) and specifying the
particulars thereof in reasonable detail.
(k) "TERMINATION WITHOUT CAUSE" shall mean that the Company, in its
sole discretion, terminates the Employee's employment not for any reason that
would constitute a Termination For Cause, nor as a result of any Change In
Control, nor as a result of a Voluntary Termination of Employment by the
Employee.
(l) "VOLUNTARY TERMINATION OF EMPLOYMENT BY EMPLOYEE" shall mean that
Employee, at his volition, leaves his employment with the Company under
circumstances not involving a Termination Without Cause, a Termination For
Cause, a Change In Control or a Change in Responsibilities.
2. EMPLOYMENT AND DUTIES. The Company hereby employs Employee, and
Employee hereby accepts such employment and agrees to perform the duties as
hereinafter set forth. Employee shall serve as the Chief Executive Officer of
the Company responsible for the overall business and strategic planning,
management and control of the Company, and as an officer of any of the
Company's subsidiaries or affiliates as the same may exist from time to time
during the "Term" of this Agreement, as defined below. Employee shall devote
his entire working time and attention to the business of the Company, and shall
perform his duties in a diligent, effective and loyal manner.
3. COMPENSATION. The Company shall compensate Employee for all
services to be rendered by him pursuant to this Agreement in the following
manner:
(a) A base salary of $300,000 per year, to be paid on a weekly
basis during the Term of this Agreement.
(b) A bonus payable annually in addition to Employee's base
salary, the amount of which shall be determined by the Company's Board of
Directors, on the recommendation of the Committee, based upon the
Company's Annual Incentive Plan.
(c) As additional consideration for entering into this
Agreement, the Committee shall grant Employee options to purchase a total
of 68,000 shares of the Company's Class A Common Stock all with an
exercise price equal to $17.25 per share (the closing price for the
Company's Common Stock in Nasdaq trading on October 4, 1995) under its
Employee Long Term Incentive Plan. Of this total, (i) 17,391 shall be
Incentive Stock Options, one-third of which shall vest immediately upon
their date of grant, an additional one-third of which shall vest on the
first anniversary of their date of grant, and the last one-third of which
shall vest on the second anniversary of their date of grant; and (ii)
50,609 options shall be non-qualified stock options, one-half of which
shall become exercisable in full at such time as the closing price for
the Company's stock in Nasdaq trading is at or above a level that
represents a 25% increase over the exercise price of such options for a
period of 15 consecutive trading days, and the balance of which shall
become exercisable in full at such time as the closing price for the
Company's stock in Nasdaq trading is at or above a level that represents
a 50% increase over the exercise price of such options for a period of 15
consecutive trading days.
4. BENEFITS. During the Term of this Agreement as defined below,
Employee shall be entitled to receive the following benefits:
(a) Four weeks of paid vacation per year, or such greater period
as may be approved from time to time by the Committee;
(b) paid holidays as customarily provided to the Company's other
employees;
(c) coverage in accordance with their terms of any pension or
profit-sharing plans now existing or hereafter established by the
Company;
(d) life insurance coverage in such amounts and on such terms as
are provided from time to time to the Company's senior executives;
(e) reimbursement of miscellaneous medical, legal, and financial
planning expenses, up to $4,000 per year;
(f) payment of Employee's business and professional dues as
reasonably requested by Employee, plus the initiation fees and membership
dues and expenses related to membership at the Genesee Valley Club; and
(g) reimbursement of reasonable and customary business expenses
incurred on the Company's behalf, upon presentation of documentation of
such expenses reasonably acceptable to the Company.
5. TERM. This Agreement shall be effective for a period of two years
from the execution date hereof (the "Term").
6. TERMINATION OF EMPLOYMENT FOR CAUSE. In the event that the
Employee's employment is Terminated For Cause, he shall not be entitled to
receive any payments hereunder. Under these circumstances, the Employee shall
only be entitled to receive his accrued but unpaid salary and any other
nonforfeitable Compensation and Benefits accrued as of the effective date of
such Event of Termination.
7. TERMINATION OF EMPLOYMENT WITHOUT CAUSE. In the event that the
Company terminates Employee's employment Without Cause, the Employee shall be
entitled to receive his then-current Compensation and Benefits for the
remainder of the Term of this Agreement; PROVIDED, however, that the Employee
is and at all times hereunder remains in compliance with Paragraphs 13 and 14
hereof. For purposes of this Paragraph, the term "Compensation" shall also
include the payment (in a lump sum at the end of such year or in equal monthly
installments over the course of the next succeeding year, at the Company's
election and in either case without interest) of the pro-rated amount of the
bonus, if any, that Employee would receive for the calendar year in which this
Event of Termination occurs as determined under the Company's Annual Incentive
Plan as established by the Committee in advance for that calendar year; such
amount to be pro-rated by multiplying the amount of such bonus for the full
year by a fraction the numerator of which is the number of months worked by the
Employee during that calendar year through the effective date of this Event of
Termination and the denominator of which is 12. Such payments shall be made on
the Company's normal payroll schedule, EXCEPT THAT at any time during such
period, Employee may give notice to the Company or an Acquiring Entity, as the
case may be, requesting payment of the remaining amount of his Compensation and
Benefits in a lump sum payment, which request the Company or the Acquiring
Entity may, at their sole discretion, agree to or reject. If this request is
agreed to by the Company or the Acquiring Entity, as the case may be, then such
lump sum payment shall be paid to Employee within 30 days following receipt of
such notice, subject to the Company's receipt of an executed release from
Employee, substantially in the form attached as Exhibit A hereto, prior to the
payment of any such lump sum payment. In any event, should Employee commence
other employment within such period, he shall promptly notify the Company or
the Acquiring Entity of such event and the Company or the Acquiring Entity may
at its option, within 30 days following receipt of such notice, pay the
Employee the remaining amount of his Compensation and Benefits in a lump sum
payment. If Employee's employment is Terminated Without Cause at any time
within one year following a Change in Control, such termination shall
automatically be deemed to be a Termination in the Event of a Change in
Control, and Employee shall be entitled to all rights set forth in Paragraph 10
hereof. If Employee should commence other employment with an entity that the
Company deems a competitor as described in subparagraph 13(c) below, then the
Company shall have the right to stop further payment of any and all
Compensation and Benefits that may be payable to Employee hereunder.
8. VOLUNTARY TERMINATION OF EMPLOYMENT BY EMPLOYEE. In the event of
a Voluntary Termination of Employment by the Employee, he shall not be entitled
to receive any payments hereunder. Under such circumstances, the Employee
shall only be entitled to receive his accrued but unpaid salary and any other
nonforfeitable Compensation and Benefits accrued as of the effective date of
such Event of Termination.
9. TERMINATION BY EMPLOYEE DUE TO CHANGE IN RESPONSIBILITIES.
Employee may elect to terminate his employment during the Term hereof in the
event of a Change in Responsibilities. In such event, Employee shall be
entitled to receive his then-current Compensation and Benefits for the
remainder of the Term of this Agreement; PROVIDED, however, that the Employee
is and at all times hereunder remains in compliance with Paragraphs 13 and 14
hereof. For purposes of this Paragraph, the term "Compensation" shall also
include the payment (in a lump sum by the end of such year or in equal monthly
installments over the course of the next succeeding year, at the Company's
election and in either case without interest) of the pro-rated amount of the
bonus, if any, that Employee would receive for the calendar year in which this
Event of Termination occurs as determined under the Company's Annual Incentive
Plan as established by the Committee in advance for that calendar year; such
amount to be pro-rated by multiplying the amount of such bonus for the full
year by a fraction the numerator of which is the number of months worked by the
Employee during that calendar year through the effective date of this Event of
Termination and the denominator of which is 12. Such payments shall be made on
the Company's normal payroll schedule. If Employee should commence other
employment with an entity that the Company deems a competitor as described in
subparagraph 13(c) below, then the Company shall have the right to stop further
payment of any and all Compensation and Benefits that may be payable to
Employee hereunder.
10. TERMINATION OF EMPLOYEE'S EMPLOYMENT IN THE EVENT OF A CHANGE IN
CONTROL. If, in connection with preparing for, or within one year following, a
Change In Control: (i) the Employee's employment with the Company or the
Acquiring Entity is Terminated Without Cause by the Company or the Acquiring
Entity; or (ii) the Employee resigns his employment with the Company or with
the Acquiring Entity upon the occurrence of any of the following:
(a) A significant change in the nature or scope of Employee's
employment duties or authority including, but not limited to, without
Employee's prior written consent assigning Employee duties inconsistent
with his status within the Company or substantially altering Employee's
duties and responsibilities so as to render his position to be of less
dignity, responsibility or scope;
(b) Employee being required by the Company or the Acquiring
Entity, as a condition of employment, to take up permanent residence
outside of or to spend more than 25% of his time in any location that is
more than a 50 mile radius from the Rochester, New York metropolitan area
(except for required travel on Company business to an extent
substantially consistent with Employee's customary business travel
obligations);
(c) A reduction in Employee's Compensation or Benefits as in
effect on the execution date hereof or as the same may be increased from
time to time, excluding, however, (i) reductions in bonuses paid from
year to year when such bonuses are based upon objective performance
criteria (E.G., increases in earnings per share, return on equity, etc.)
established in advance by the Board of Directors or Executive
Compensation or comparable Committee of the Board of ACC Corp. or an
Acquiring Entity, as the case may be; and (ii) proportional across-the-
board Compensation or Benefits reductions similarly affecting all
executives and/or key employees of the Company or the Acquiring Entity,
as the case may be; provided, however, that in no event shall Employee's
Compensation be reduced below its current annual amount as in effect on
the execution date hereof without Employee's prior written consent;
(d) Failure to grant Employee an annual salary increase
reasonably necessary to maintain such salary as comparable to salaries of
key employees holding positions equivalent to Employee's in the industry
in which the Company's then-principal business activity is conducted;
(e) Failure by the Company or an Acquiring Entity, as the case
may be, to continue in effect any compensation plan, program or
arrangement in which Employee then participates unless an equitable
arrangement reasonably acceptable to Employee and embodied in an ongoing
substitute or alternative plan, program or arrangement has been made with
respect to such plan, or the failure to continue Employee's
participation therein;
(f) Any material reduction by the Company or an Acquiring Entity,
as the case may be, of any of the Benefits enjoyed by Employee under any
of the Company's pension, retirement, profit sharing, savings, life
insurance, medical, health and accident, disability or other employee
benefit plans, programs or arrangements as in effect from time to time,
the taking of any action by the Company or an Acquiring Entity, as the
case may be, that would directly or indirectly materially reduce any of
such Benefits or deprive Employee of any such Benefits, or the failure by
the Company or an Acquiring Entity, as the case may be, to provide
Employee with the number of paid vacation days to which he/she is
entitled on the basis of years of service with the Company in accordance
with its normal vacation policy; provided, however, that this
subparagraph shall not apply to any proportional across-the-board
reduction or action similarly affecting all executives and/or key
employees of the Company or an Acquiring Entity, as the case may be;
(g) Failure of the Company to obtain a satisfactory agreement
from any Acquiring Entity to assume and agree to perform this Agreement;
then Employee shall be entitled to receive his then-current Compensation and
Benefits as were in effect immediately prior to any such Change In Control for
the remainder of the Term of this Agreement; PROVIDED, however, that Employee
is and at all times hereunder remains in compliance with Paragraphs 13 and 14
hereof. For purposes of this Paragraph, the term "Compensation" shall also
include the payment (in a lump sum by the end of such year or in equal monthly
installments over the course of the next succeeding year, at Employee's
election and in either case without interest) of the amount of the bonus that
Employee would receive for the full calendar year in which this Event of
Termination occurs based on the "Maximum" amount of such bonus as determined
under the Company's Annual Incentive Plan as established by the Committee in
advance for that calendar year. Such payments shall be made on the normal
payroll schedule of the Company or the Acquiring Entity, as the case may be,
EXCEPT THAT at any time during such period, Employee shall have the right, upon
notice to the Company or an Acquiring Entity, as the case may be, to elect to
be paid the remaining amount of his Compensation and Benefits in a lump sum
payment, which the Company or the Acquiring Entity must then pay to Employee
within 30 days following receipt of such notice, subject to receipt by the
Company or the Acquiring Entity of an executed release from Employee,
substantially in the form attached as Exhibit A hereto, prior to the payment of
such lump sum payment. In no event shall the compensation to which Employee is
entitled under this Paragraph be less than the greater of (i) Employee's then-
current Compensation and Benefits as were in effect immediately prior to the
effective date of such resignation or Termination Without Cause, or (ii)
Employee's then-current Compensation and Benefits as were in effect immediately
prior to the date of the Change In Control.
11. ADDITIONAL TERMINATION PAYMENTS. In the event that Employee is
Terminated Without Cause, or in connection with a Change in Control, or
Employee elects to terminate his employment due to a Change in
Responsibilities, then he shall also be entitled to the following additional
payments and benefits:
(i) On the effective date of any such Event of Termination, all
Incentive Stock Options that shall have been granted to Employee through
such date under the Company's Employee Long Term Incentive Plan shall be
deemed fully vested and exercisable on such date and for a period of one
year following such date, and all Non-Qualified Stock Options that shall
have been granted to Employee under this Plan AND which shall have vested
as to exercisability through such date shall remain exercisable for a
period of one year following such date, all in accordance with the other
terms of such Plan.
12. DEATH. In the event that Employee shall die before the end of the
Term hereof, the obligation to accrue further benefits under this Agreement
shall cease as of the date of death, save for any benefits accrued but unpaid
as of the date of death, which benefits shall remain payable to Employee's
estate.
13. COVENANT NOT TO COMPETE. Employee hereby covenants and agrees that
(i) during the Term of this Agreement, (ii) if no Event of Termination occurs
during the Term hereof, then for one year following the Term of this Agreement,
and (iii) should an Event of Termination occur during the second year of the
Term hereof, then for one year following the effective date of such Event of
Termination:
(a) He will not, for himself or on behalf of any other person,
firm, partnership or corporation call upon any customer of the Company
for the purpose of soliciting or providing to such customer any products
or services which are the same as or substantially similar to those
provided to customers by the Company. For purposes of this Agreement,
"customers of the Company" shall include, but not be limited to, all
customers contacted or solicited by the Company or Employee within 12
months prior to the end of the Term of this Agreement.
(b) Employee will not, directly or through another person or
entity, for himself or on behalf of any other person, firm, partnership
or corporation, directly or indirectly, seek to persuade any Director,
officer, or employee of the Company to discontinue that individual's
status or employment with the Company.
(c) Employee will not, directly or indirectly, alone or as an
employee, independent contractor of any type, partner, officer, director,
creditor, substantial (i.e., 5% or greater) stockholder or holder of any
option or right to become a substantial stockholder in any entity or
organization, engage (i) in the long distance telecommunications business
as conducted by the Company in the United States, Canada and Europe
during the term of this Covenant Not To Compete or (ii) in substantial
and direct competition with any other business operation actively
conducted by the Company during the term of this Covenant Not To Compete,
in any business pertaining to the sale, distribution, manufacture,
marketing, production or provision of products or services similar to or
in competition with any products or services produced, designed,
manufactured, sold, distributed or rendered, as the case may be, by the
Company; nor for the same period of time, within the same area and under
the same conditions as previously set forth, shall Employee advance
credit, lend money, furnish quarters or give advice, directly or
indirectly, to any person, corporation or business entity of any kind
(other than the Company) which is engaged in any such business or
operation, nor shall he, directly or indirectly, ship or cause to be
shipped or have any part in the shipping of such products to any point
within said area for the purposes of resale; provided, however, that
nothing contained in this Paragraph shall prevent Employee from investing
in corporate securities which are traded on a recognized stock exchange
(subject to a 5% ceiling on any such investment as referenced in the
first sentence of this subparagraph).
(d) If any of the restrictions on competitive activities
contained in this Paragraph 13 shall for any reason be held by a court of
competent jurisdiction to be excessively broad as to duration,
geographical scope, activity or subject, such restrictions shall be
construed so as to be enforceable to the extent compatible with
applicable law as it shall then exist; it being understood that by the
execution of this Agreement the parties hereto regard such restrictions
as reasonable and compatible with their respective rights and
expectations.
(e) Additionally, if any conduct prohibited by this Paragraph 13
is approved by the ACC Corp. Board of Directors, then such conduct shall
not constitute a breach of this Agreement.
14. TRADE SECRETS; NON DISPARAGEMENT. Except as may be required by his
employment with the Company, Employee will not at any time or in any manner,
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, organization or entity any information concerning matters
affecting or relating to the services, marketing, contractual relationships,
long range plans, products, processes, formulas, inventions, discoveries,
devices or other business of the Company or of its customers. Employee will
likewise hold inviolate and keep secret all knowledge or information acquired
by him concerning the names of the Company's customers, their addresses, the
prices the Company obtains or has obtained from them for its goods or services,
all knowledge or information acquired by him concerning the products, formulas,
processes, methods of manufacture and distribution and all other trade secrets
of such customers. In addition, Employee shall make no disclosure, directly or
indirectly, of any financial information, contractual relationships, policies,
past or contemplated future actions or policies of the Company, personnel
matters, marketing or sales data, technical data or specifications and written
or oral communications of any sort of the Company or any of its customers which
have not previously been disclosed to the general public with the Company's
consent or without first obtaining the consent of the Company for such
disclosure. Upon the occurrence of any Event of Termination, Employee or his
representatives shall immediately deliver to the Company all notes, notebooks,
letters, papers, drawings, memos, communications, blueprints or other writings
or data relating to the business of the Company or its customers.
Additionally, Employee shall not in any way publicly disparage the Company at
any time or he shall not be entitled to receive payment of any further
Compensation and Benefits otherwise payable hereunder. Likewise, neither the
Company nor any Acquiring Entity shall in any way publicly disparage Employee
at any time. (For purposes of this Agreement, however, the commencement of any
legal proceedings involving matters such as Employee's performance, conduct,
etc., shall not constitute "disparagement.")
15. INJUNCTIVE RELIEF.
(a) Because Employee shall acquire by reason of his employment and
association with the Company an extensive knowledge of its trade secrets,
customers, procedures, and other confidential information, the parties hereto
recognize that in the event of a breach or threat of breach by Employee of the
terms and provisions contained in Paragraphs 13 or 14, compensation alone to
the Company would not be a adequate remedy for a breach of those terms and
provisions. Therefore, it is agreed that in the event of a breach or threat of
a breach of the provisions of Paragraphs 13 or 14 by Employee, the Company
shall be entitled, in addition to (i) terminating further payment of any
Compensation and Benefits that may be payable to Employee hereunder and (ii)
provable damages and reasonable attorneys' fees, to an immediate injunction
from any court of competent jurisdiction restraining Employee from committing
or continuing to commit a breach of such provisions without the showing or
proving of actual damages. Any preliminary injunction or restraining order
shall continue in full force and effect until any and all disputes between the
parties regarding this Agreement have been finally resolved on the merits by
settlement or by a court of law.(b)In the event of a breach or threat of a
breach of the provisions of Paragraphs 13 or 14 by the Employee, the Company
can terminate further payment of any and all Compensation and Benefits that may
be payable to the Employee hereunder, regardless of whether the Company seeks
or obtains injunctive relief under subparagraph 15(a) above.
16. SPECIAL PROVISIONS IN EVENT OF DISABILITY.
(a) During the Term hereof, in the event that the Employee becomes
Disabled as defined in this Agreement, but for meeting the requirement that
such a condition persist for a minimum of 60 consecutive days, then the Company
agrees that it will not, except in a situation constituting a Termination For
Cause, terminate the Employee's employment or otherwise act so as to deprive
the Employee of his eligibility to receive benefits under any Company-provided
disability insurance policy. In all such circumstances, however, the Company
retains the right to Terminate the Employee For Cause, at any time.
(b) If the Employee is Terminated Without Cause after he begins
receiving disability insurance payments under any Company-provided disability
insurance policy, then he shall also be entitled to receive his Compensation
and Benefits payable in the event of a Termination Without Cause, LIMITED,
HOWEVER, to the net amount, if any, by which such termination payments, on a
monthly basis, exceed the monthly benefits payable to the Employee under such
disability insurance policy.
(c) Except as otherwise specifically provided in this Paragraph, the
provisions of this Paragraph 16 shall not apply in the event that any Event of
Termination under this Agreement shall first occur. Additionally, the Employee
shall only be entitled to receive the Benefits provided by this Paragraph 16 if
he is and at all times hereunder remains in compliance with Paragraphs 13 and
14 hereof.
17. ABSENCE OF RESTRICTIONS. Employee represents and warrants that he
is not prevented or restricted from entering into an employment relationship
with the Company by any agreement with or obligation to any person, firm or
entity or by any other disability or restraint, including, but not limited to,
the order, judgment or decree of any court or governmental agency. Employee
hereby agrees to indemnify and hold the Company harmless from any and all
expenses, losses or damages it may incur, including, but not limited to, all
expenses of defense and attorneys' fees, caused by reason of Employee's breach
of the covenants contained in this Paragraph.
18. SURVIVAL. The provisions of Paragraph 13, COVENANT NOT TO COMPETE,
shall survive for one year following the Term of this Agreement; the provisions
of Paragraph 14, TRADE SECRETS, shall indefinitely survive the Term of this
Agreement, and the provisions of Paragraphs 15, INJUNCTIVE RELIEF, and 19,
GENERAL TERMS, shall survive the Term of this Agreement for so long as
necessary to enable the Company to enforce any of the provisions of Paragraphs
13, 14 or 15 hereof.
19. GENERAL TERMS.
(a) NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal
Service as certified mail, return receipt requested and postage prepaid, or
(iii) on the first day following delivery to a recognized overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested. Any such notice shall be delivered or directed to a party at its
address previously set forth in this Agreement or to such other address as a
party may specify by notice given to the other party hereto in accordance with
the provisions of this paragraph.
(b) BINDING EFFECT. This Agreement and the rights and obligations
contained herein shall be binding upon and inure to the benefit of the Company,
its successors and assigns, including any Acquiring Entity, and upon Employee,
his legal representatives, heirs and distributees.
(c) ASSIGNMENT. This Agreement may not be assigned, in whole or in
part, by either party hereto without the prior written consent of the other
party.
(d) ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto and supersedes any prior understanding, memoranda or
other written or oral agreements between them respecting the within subject
matter. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties relating to the subject
matter of this Agreement which are not fully expressed herein.
(e) MODIFICATIONS; WAIVER. Any modification or waiver of this
Agreement must be in writing and signed by both parties to be effective. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature. No course of dealing between the parties hereto will be
deemed effective to modify, amend or discharge any part of this Agreement or
the rights or obligations of either party hereunder.
(f) PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(g) APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within New York State, without giving effect to
conflict of laws principles.
(h) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the courts of
the State of New York and/or the Federal Courts located in the State of New
York shall have jurisdiction over each of the parties hereto and over the
subject matter of any such proceedings, and the venue of any such action shall
be in Monroe County, New York and/or the U.S. District Court for the Western
District of New York.
(i) HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each one of which will be deemed an original and all of which
shall constitute one and the same instrument.
(k) ARBITRATION. In the event that any disagreement or dispute should
arise between the parties hereto with respect to this Agreement, then such
disagreement or dispute shall be submitted to arbitration in Rochester, New
York in accordance with the rules then pertaining to the American Arbitration
Association with respect to commercial disputes. Judgment upon any resulting
award may, after its rendering, be entered in any court of competent
jurisdiction by either party. After any demand for arbitration pursuant to
this Agreement and prior to any scheduled arbitration date, either party to
such arbitration proceedings shall be entitled to discovery according to the
provisions and within the time limits prescribed in Article 31 of the New York
Civil Practice Law and Rules with respect to all materials and records in the
possession of either party hereto, or in the possession of others, which are
relevant to the matter or matters to be arbitrated.
(l) REMEDIES. All rights and remedies of the Company or Employee,
whether provided for herein or by operation of law, are cumulative and may be
exercised singularly or concurrently, and the exercise of any such remedy shall
not be deemed an election of remedies so as to preclude the election of any
other remedy.
(m) NAMED FIDUCIARY. The Board of Directors of ACC Corp. or of an
Acquiring Entity, as the case may be, is hereby designated as the named
fiduciary ("Named Fiduciary") under this Agreement. The Named Fiduciary shall
have authority to operate and administer this Agreement, and it shall be
responsible for establishing and carrying out a funding policy, if any, and
method consistent with the objectives of this Agreement.
(n) CLAIMS PROCEDURE. The Named Fiduciary shall make all
determinations regarding disputes between the Company or the Acquiring Entity,
as the case may be, and Employee as to Employee's rights under this Agreement.
Any such determination by the Named Fiduciary shall be stated in writing and
delivered or mailed to Employee or his estate, as the case may be, within 30
days following the Company or the Acquiring Entity becoming aware of such
dispute. This communication shall set forth the specific reason(s) for the
determination, written to the best of the Named Fiduciary's ability in a manner
that can be understood without legal or actuarial counsel. In addition, the
Named Fiduciary shall afford a reasonable opportunity to Employee or his
estate, as the case may be, for a full and fair review of the determination.
If Employee or his estate disagrees with the determination, or any part
thereof, or if a determination is not received by Employee or his estate within
the 30 day period set forth above, then Employee or his estate may seek
judicial relief.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of October 6, 1995.
EMPLOYEE ACC CORP.
/s/ David K. Laniak By: /s/ Michael R. Daley
Title: EVP & CFO
<PAGE>
EXHIBIT A
[Date]
[Name and Address
of Employee]
Dear :
You and ACC Corp. (the "Company") are parties to an Employment Agreement
dated ___________, 199_ (the "Employment Agreement"). You have requested a
lump-sum payment of all remaining Compensation and Benefits (as those terms are
defined in the Employment Agreement) payable to you under the terms of the
Employment Agreement, pursuant to either Paragraph 7 or Paragraph 10 thereof.
In consideration for the receipt of such lump-sum payment from the Company, you
hereby agree to the following:
1) This Agreement is intended to settle fully and finally all claims,
controversies, disputes and other matters between you and the Company.
Accordingly, as a material inducement to the Company to enter into this
Agreement and in consideration for the above lump-sum payment, you agree to
forever release, acquit and discharge the Company, and its employees, officers,
representatives, attorneys, directors and shareholders and their predecessors,
successors and assigns from and against any and all charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, suspected or unsuspected
and all claims for attorney's fees, costs, disbursements, and expert witness
fees which you now have, own or hold or claim to have, own or hold or which you
owned or claimed to have, own or hold, including, but not limited to those
relating to or arising out of:
(a) your employment with the Company;
(b) your termination of employment with the Company;
(c) claims relating to wages, payments and benefits except as set forth
herein;
(d) the New York Labor Law, the New York State Human Rights Law, the
New York State Lawful Activities Act, Title VII of the Civil Rights
Act of 1964, Title IX of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Equal Pay Act, the Employee Retirement
Income Security Act of 1974, the Age Discrimination in Employment
Act of 1967, as amended, the Older Workers Benefit Protection Act
of 1990, the Rehabilitation Act of 1973, the Fair Labor Standards
Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act, Federal Executive Order 11246 and all amendments
thereto, the Family and Medical Leave Act, New York Civil Rights
Law <section><section> 70-a, and all regulations pertaining to all
such laws;
(e) any other federal, state or local law, rule or regulation; and
(f) all tort claims and all claims of wrongful or unjust termination,
defamation, prima facia tort, breach of or interference with
contract, promissory estoppel, intentional infliction of emotional
distress or breach of any express or implied covenant of good faith
and fair dealings.
You agree that the Company shall not have any obligation to you other than as
set forth in the Employment Agreement for any other monies or benefits
including, but not limited to, salary, benefits, bonus, or vacation or any
other obligation or agreement with the Company, whether such agreement may be
express or implied.
2. This Agreement shall not in any way be construed as an admission by
the Company that it or its officers, directors or employees have acted
wrongfully with respect to you or that you have any rights whatsoever against
the Company or its officers, directors or employees. This Agreement shall not
in any way be construed as an admission by you of any wrongdoing.
3. If you breach this Agreement, you acknowledge that all monies to be
paid by the Company hereunder shall immediately cease, and you shall
immediately return all monies paid pursuant to this Agreement or the Employment
Agreement. These rights are in addition to all other rights or remedies
provided to the Company in law or in equity by reason of your breach.
4. You are hereby advised of your right to consult with an attorney
before signing this Agreement and acknowledge that you have been given the
opportunity to consult with an attorney before signing it. Further, you
acknowledge that, as this Agreement was an Exhibit to the Employment Agreement
at the time you signed the Employment Agreement, you have had a draft of this
Agreement for more than 21 days to review it and consider its terms.
Additionally, you understand that you can revoke this Agreement at any time
within seven days following your execution of it, by written revocation notice
to the Company sent certified mail, return receipt requested. Therefore, you
understand and agree that the Company will not make any payment of the lump-
sum you have hereby requested until 28 days have passed from the date the
Company receives this Agreement signed by you.
Your signature below indicates your acceptance of this Agreement and
shall cause this Agreement to be binding upon you, your heirs, representatives
and assigns. Your signature shall also signify that you have read and
understand the Agreement, and that you either have reviewed it with your
attorney or have elected not to do so.
Very truly yours,
ACC Corp.
By:________________________________
Title: ______________________________
Accepted and Agreed to on this
day of , 199_
_________________________
Employee
EXHIBIT 10-3
SALARY CONTINUATION AND DEFERRED COMPENSATION AGREEMENT
AGREEMENT made by and between ACC CORP., 400 West Avenue, Rochester, New
York 14611 and RICHARD T. AAB, residing at 29 Woodstone Rise, Pittsford, NY
14534 ("Employee").
R E C I T A L S:
WHEREAS, Employee has served as the Chairman and Chief Executive Officer
of ACC Corp. (the "Company") for more than twelve years; and
WHEREAS, Employee is stepping down as ACC Corp.'s Chief Executive
Officer, but plans to remain as its Chairman of the Board and as an employee of
the Company, with the concurrence of the Company's Board of Directors; and
WHEREAS, in view of the valuable contributions that the Employee has made
and will continue to make to the business of the Company, ACC Corp. desires,
through this Agreement, to provide both some recognition to the Employee for
his many years of tireless leadership and service in his role as the Company's
Chief Executive Officer and as an incentive to the Employee to continue to
labor diligently on its behalf in his continuing role as a Company employee and
its Chairman of the Board;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
(a) "ACQUIRING ENTITY" shall mean any entity, whether a corporation,
partnership, joint venture, etc., that, as a result of a Change In Control,
either directly or indirectly has effective control over the business plans,
direction and operations of ACC Corp. This term shall also include any
subsidiaries or related entities over which the Acquiring Entity has control.
(b) "CHANGE IN CONTROL" shall mean a change in control of ACC Corp. of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect on the date of this Agreement or, if in the future Item 6(e)
is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes; provided that, without limitation, a Change In Control shall be
deemed to have occurred if and when: (x) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
the Employee, is or becomes a beneficial owner, directly or indirectly, of
securities of ACC Corp. representing a majority of the combined voting power of
ACC Corp.'s then outstanding securities (excluding, however, the transfer of
any shares beneficially owned by the Employee); or (y) individuals who were
members of the Board of Directors of ACC Corp. immediately prior to a meeting
of the shareholders of ACC Corp. involving a contest for the election of
Directors shall not constitute a majority of the Board of Directors following
such election.
(c) "COMPANY" shall mean ACC Corp. and/or any of its subsidiaries
and/or affiliates as the same may exist from time to time anywhere in the
world, regardless of the laws under which incorporated.
(d) "DISABILITY" shall mean the Employee's total inability, due to a
mental or physical illness, incapacity or injury, to render his services to the
Company for any period of 60 consecutive days or if the Employee shall be
deemed "totally disabled" or the equivalent thereof within the meaning of any
long-term disability insurance policy provided by the Company and covering the
Employee.
(e) "EVENT OF TERMINATION" shall mean the termination of the Employee's
employment and his status as the Chairman of the Board of ACC Corp. for
whatever reason, except if due to a Termination For Cause, including but not
limited to his termination without cause, his termination as the result of a
Change in Control, or his voluntarily termination of employment, such that the
Employee is no longer employed by the Company nor serving as the Chairman of
the Board of ACC Corp.
This definition shall also include a termination of Employee's employment
that occurs if, as a condition precedent to, as a result of, or within one year
following, a Change In Control of ACC Corp.: (i) the Employee's employment
with the Company is terminated for cause or without cause by the Company or the
Acquiring Entity; or (ii) the Employee resigns his employment with the Company
or with the Acquiring Entity upon the occurrence of either of the following
events:
(1) A reduction in Employee's total compensation as the same
existed immediately prior to the Change In Control; or
(2) Employee is no longer serving as the Chairman of the ACC
Corp. Board of Directors.
(f) "TERMINATION FOR CAUSE" shall mean that the Company, in its sole
discretion, terminates the Employee's employment for any of the following
reasons: Employee fails to perform his assigned duties as an officer and/or
employee of the Company in a satisfactory manner due to dishonesty, fraud,
gross neglect, or use of alcohol or drugs; or any breach of Paragraphs 5 or 6
of this Agreement. Employee shall not be deemed to be in breach of this
Agreement nor to have been Terminated For Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of a three-fourths majority of the entire Board of Directors
at a Board meeting duly called and held for that purpose (after reasonable
notice to Employee and an opportunity for Employee, together with his counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board, Employee was guilty of conduct set forth in this paragraph 1(f) and
specifying the particulars thereof in reasonable detail.
2. BASE SALARY AND BENEFITS.Upon the execution of this Agreement, for
so long as he serves as the Chairman of the Board of ACC Corp., the Employee
will be entitled to receive the following compensation and benefits:
(a) A base salary of $200,000 per year;
(b) A bonus payable annually in addition to the Employee's base salary,
the amount of which shall be determined by the Company's Board of Directors, on
the recommendation of its Executive Compensation Committee, based upon the
Company's Annual Incentive Plan; and
(c) The following benefits:
(i) Six weeks of paid vacation per year, or such greater period
as may be approved from time to time by the Executive Compensation
Committee of the Board of Directors;
(ii) paid holidays as customarily provided to the Company's other
employees;
(iii) coverage in accordance with their terms of any pension or
profit-sharing plans now existing or hereafter established by the
Company;
(iv) life insurance coverage in such amounts and on such terms as
is currently provided;
(v) reimbursement of miscellaneous medical, legal, and financial
planning expenses, up to $12,000 per year;
(vi) payment of Employee's business, professional and club dues
and initiation fees as reasonably requested by Employee, specifically
including membership dues and expenses related to membership at both the
Genesee Valley Club and Locust Hill Country Club; and
(vii) other fringe benefits as are made available from time to time
by the Company to its executive employees.
3. TERMINATION OF EMPLOYMENT FOR CAUSE. In the event that the
Employee's employment is Terminated For Cause, he shall not be entitled to
receive any payments hereunder. Under these circumstances, the Employee shall
only be entitled to receive his accrued but unpaid salary and any other
nonforfeitable payments or benefits accrued as of the effective date of such
Event of Termination.
4. SALARY CONTINUATION PAYMENTS UPON AN EVENT OF TERMINATION. Upon
the occurrence of an Event of Termination, Employee shall be entitled to
receive a payment of $1,000,000 within a three-year period beginning on the
date of such termination; PROVIDED, however, that the Employee shall at all
times hereunder remain in compliance with Paragraphs 5 and 6 hereof. This
amount shall be paid in three equal annual installments, with the first such
payment being made within five business days following the date of such Event
of Termination, and the second and third such payments being made on the first
and second anniversary dates of such Event of Termination; provided, however,
that the unpaid balance of such payments shall be accelerated and paid in full
within 30 days following a Change In Control of the Company before all such
payments have been made. In addition, for a period of ten years following the
date of such termination, the Employee's right to indemnification and
advancement of expenses as currently provided for in Article V of the Company's
Bylaws shall not be amended, modified or changed in any respect whatsoever, and
any directors' and officers' liability policy then in effect under which the
Employee is an insured shall be maintained; PROVIDED, however, that the
Employee shall at all times hereunder remain in compliance with Paragraphs 5
and 6 hereof.
5. COVENANT NOT TO COMPETE. As a condition to receiving the payments
provided for under this Agreement, the Employee must abide by the terms of his
Non-Competition Agreement with the Company, dated of even date herewith.
6. TRADE SECRETS; NON-DISPARAGEMENT. (a)Except as may be required by
his employment with the Company, the Employee will not ever, whether while an
Employee or at any time after he is no longer an Employee, at any time or in
any manner, directly or indirectly, divulge, disclose or communicate to any
person, firm, corporation, organization or entity any information concerning
matters affecting or relating to the services, marketing, contractual
relationships, long range plans, products, processes, formulas, inventions,
discoveries, devices or other business of the Company or of its customers. The
Employee will likewise hold inviolate and keep secret all knowledge or
information acquired by him concerning the names of the Company's customers,
their addresses, the prices the Company obtains or has obtained from them for
its goods or services, all knowledge or information acquired by him concerning
the products, formulas, processes, methods of manufacture and distribution and
all other trade secrets of such customers. In addition, the Employee shall
make no disclosure, directly or indirectly, of any financial information,
contractual relationships, policies, past or contemplated future actions or
policies of the Company, personnel matters, marketing or sales data, technical
data or specifications and written or oral communications of any sort of the
Company or any of its customers which have not previously been disclosed to the
general public with the Company's consent or without first obtaining the
consent of the Company for such disclosure. Upon the occurrence of any Event
of Termination or in the event of his Termination For Cause, the Employee or
his representatives shall immediately deliver to the Company all notes,
notebooks, letters, papers, drawings, memos, communications, blueprints or
other writings or data relating to the business of the Company or its
customers. However, nothing contained in this Agreement or in a certain Non-
Competition Agreement between the Employee and the Company of even date
herewith shall prohibit Employee from participating, alone or as an employee,
independent contractor, partner, officer, director, creditor, or substantial
(I.E. greater than 5%) owner (by reason of stock ownership or otherwise) in any
entity whose business is the design, development and/or market distribution of
computer systems software and/or applications software useful to any industry,
including the telecommunications industry, and such conduct shall not be deemed
to involve any trade secrets of the Company.
(b) Additionally, the Employee shall not in any way publicly disparage
the Company at any time or he shall not be entitled to receive payment of any
further amounts otherwise payable hereunder. Likewise, neither the Company nor
any Acquiring Entity shall in any way publicly disparage the Employee at any
time. (For purposes of this Agreement, however, the commencement of any legal
proceedings involving matters such as the Employee's performance, conduct,
etc., shall not constitute "disparagement.")
7. INJUNCTIVE RELIEF. Because the Employee currently possesses and
shall acquire by reason of his continued employment and association with the
Company an extensive knowledge of the Company's trade secrets, customers,
procedures, and other confidential information, the parties hereto recognize
that in the event of a breach or threat of breach by the Employee of the terms
and provisions contained in Paragraphs 5 or 6 hereof, compensation alone to the
Company would not be a adequate remedy for a breach of those terms and
provisions. Therefore, it is agreed that in the event of a breach or threat of
a breach of the provisions of Paragraphs 5 or 6 by the Employee, the Company
shall be entitled to an immediate injunction from any court of competent
jurisdiction restraining the Employee from committing or continuing to commit a
breach of such provisions without the showing or proving of actual damages.
8. SPECIAL PROVISIONS IN EVENT OF DISABILITY OR DEATH.
(a) If while employed by the Company the Employee becomes Disabled as
defined in this Agreement, then the Company agrees that it will not, except in
a situation constituting a Termination For Cause, terminate the Employee's
employment or otherwise act so as to deprive the Employee of his eligibility to
receive benefits under any Company-provided disability insurance policy. In
all such circumstances, however, the Company retains the right to Terminate the
Employee For Cause, at any time.
(b) If the Employee is terminated without cause after he begins
receiving disability insurance payments under any Company-provided disability
insurance policy, then he shall also be entitled to receive his compensation
and benefits payable in the event of a termination without cause, LIMITED,
HOWEVER, to the net amount, if any, by which such payments, on a monthly basis,
exceed the monthly benefits payable to the Employee under such disability
insurance policy.
(c) In addition to the salary continuation benefit provided for herein,
in the event that the Employee is terminated without cause while Disabled, or
in the event that the Employee dies during the term of this Agreement, then the
Employee or his estate, as the case may be, shall be entitled to the following
benefit. Upon the occurrence of either such event, all unexercised stock
options that the Employee may hold on that date under ACC Corp.'s Employee Long
Term Incentive Plan shall automatically be deemed fully exercisable for a
period of one year following the occurrence of such event, subject, however, to
the original term of the option grant(s), if shorter (the "Exercisability
Period"). If at any time or from time to time during this Exercisability
Period the Employee or his estate, as the case may be, desires to exercise any
of such stock options, then he or his estate shall so notify ACC Corp., stating
specifically the number of options being exercised, and shall comply with the
other requirements of such Plan in effecting such exercise(s).
(d) The provisions of this Paragraph 8 shall not apply, except as
provided above in this Paragraph 8, in the event that any Event of Termination
other than Employee's termination without cause under this Agreement shall
first occur. Additionally, the Employee shall only be entitled to receive the
benefits provided by this Paragraph 8 if he is and at all times hereunder
remains in compliance with Paragraphs 5 and 6 hereof.
9. AUTOMATIC RESIGNATION. By signing this Agreement, the Employee
specifically agrees that without further action on the part of either party
hereto, upon the occurrence of any Event of Termination hereunder or Employee's
being Terminated For Cause hereunder, he shall automatically be deemed to have
resigned as the Chairman of the Board of ACC Corp. (but NOT as a Director of
ACC Corp.) and as a director and officer of all of its subsidiaries and
affiliates.
10. BASE SALARY AND BENEFITS. While employed by the Company, the
Employee's base salary shall not be reduced, nor shall the Employee's Company-
provided benefits be reduced, except as part of a Company-wide reduction of
salaries or of such benefits for all Company executives, without the Employee's
consent, or the Employee may deem such reduction to constitute a termination
without cause hereunder.
11. SUPERSEDING OF OUTSTANDING SEVERANCE AGREEMENT. Upon its
execution, this Agreement shall be in full force and effect and shall
automatically supersede and terminate the current Severance Agreement between
the parties hereto, dated February 8, 1994, and each party hereto hereby waives
and releases any claims it may have against the other arising under that
Severance Agreement.
12. GENERAL TERMS.
(a) NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal
Service as certified mail, return receipt requested and postage prepaid, or
(iii) on the first day following delivery to a recognized overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested. Any such notice shall be delivered or directed to a party at its
address previously set forth in this Agreement or to such other address as a
party may specify by notice given to the other party hereto in accordance with
the provisions of this paragraph.
(b) BENEFIT. This Agreement and the rights and obligations contained
herein shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and upon the Employee, his legal representatives, heirs
and distributees.
(c) WAIVER. The waiver of any party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach.
(d) ENTIRE AGREEMENT. This Agreement may not be altered, amended or
terminated except by an instrument in writing signed by the parties hereto.
(e) PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(f) APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within New York State, without giving effect to
conflict of laws principles.
(g) HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each one of which will be deemed an original and all of which
shall constitute one and the same instrument.
(i) ASSIGNMENT. The Employee may not assign any of his rights, duties
or obligations hereunder without the prior written consent of ACC Corp.
Likewise, ACC Corp. may not assign any of its rights, duties or obligations
hereunder without the prior written consent of the Employee except
in the event of a merger or other acquisition of ACC Corp. in which ACC Corp.
is not the surviving entity or the purchase of all or substantially all its
assets, provided that such merger, acquisition or purchase is for a valid
business purpose not involving this Agreement.
(j) REMEDIES. All rights and remedies of the Company, whether provided
for herein or by operation of law, are cumulative and may be exercised
singularly or concurrently, and the exercise of any such remedy shall not be
deemed an election of remedies so as to preclude the election of any other
remedy.
(k) RESIDENCY. In no event shall the Company nor any Acquiring Entity
require the Employee to take up permanent residence outside of the Rochester,
New York metropolitan area as a condition of employment or as a condition for
receiving any benefits under this Agreement, nor shall the Employee's refusal
to so relocate be deemed sufficient cause to enable him to be Terminated For
Cause hereunder.
(l) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the courts of
the State of New York and/or the Federal Courts located in the State of New
York shall have jurisdiction over each of the parties hereto and over the
subject matter of any such proceedings, and the venue of any such action shall
be in Monroe County, New York and/or the U.S. District Court for the Western
District of New York.
(m) NAMED FIDUCIARY. The Board of Directors of ACC Corp. or of an
Acquiring Entity, as the case may be, is hereby designated as the named
fiduciary ("Named Fiduciary") under this Agreement. The Named Fiduciary shall
have authority to operate and administer this Agreement, and it shall be
responsible for establishing and carrying out a funding policy, if any, and
method consistent with the objectives of this Agreement.
(n) CLAIMS PROCEDURE. The Named Fiduciary shall make all
determinations regarding disputes between the Company or the Acquiring Entity,
as the case may be, and the Employee as to the Employee's rights under this
Agreement. Any such determination by the Named Fiduciary shall be stated in
writing and delivered or mailed to the Employee or his estate, as the case may
be, within 30 days following the Company or the Acquiring Entity becoming aware
of such dispute. This communication shall set forth the specific reason(s) for
the determination, written to the best of the Named Fiduciary's ability in a
manner that can be understood without legal or actuarial counsel. In addition,
the Named Fiduciary shall afford a reasonable opportunity to the Employee or
his estate, as the case may be, for a full and fair review of the
determination. If the Employee or his estate disagrees with the determination,
or any part thereof, or if a determination is not received by the Employee or
his estate within the 30 day period set forth above, then the Employee or his
estate may seek judicial relief.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of October 6, 1995.
EMPLOYEE: ACC CORP.
/s/ Richard T. Aab By: /s/ Michael R. Daley
Richard T. Aab
Title: EVP & CFO
EXHIBIT 10-4
NON-COMPETITION AGREEMENT
AGREEMENT made by and between ACC CORP., 400 West Avenue, Rochester, New
York 14611 and RICHARD T. AAB, residing at 29 Woodstone Rise, Pittsford, NY
14534 ("Employee").
R E C I T A L S:
WHEREAS, Employee has served as the Chairman and Chief Executive Officer
of ACC Corp. (the "Company") for more than twelve years; and
WHEREAS, Employee is stepping down as ACC Corp.'s Chief Executive
Officer, but plans to remain as its Chairman of the Board and as an employee of
the Company, with the concurrence of the ACC Corp. Board of Directors; and
WHEREAS, the Company wishes to strengthen the terms of Employee's
existing Covenant Not To Compete under his current Severance Agreement dated as
of February 8, 1994, and Employee is willing to agree to such additional
restrictions in consideration for the terms contained hereinafter in this
Agreement; and
WHEREAS, the parties desire to supersede the terms of their existing
Covenant Not To Compete through their execution of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
(a) "ACQUIRING ENTITY" shall mean any entity, whether a corporation,
partnership, joint venture, etc., that, as a result of a Change In Control,
either directly or indirectly has effective control over the business plans,
direction and operations of ACC Corp. This term shall also include any
subsidiaries or related entities over which the Acquiring Entity has control.
(b) "CHANGE IN CONTROL" shall mean a change in control of ACC Corp. of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 as in effect on the date of this Agreement or, if in the future Item 6(e)
is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes; provided that, without limitation, a Change In Control shall be
deemed to have occurred if and when: (x) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
the Employee, is or becomes a beneficial owner, directly or indirectly, of
securities of ACC Corp. representing a majority of the combined voting power of
ACC Corp.'s then outstanding securities (excluding, however, the transfer of
any shares beneficially owned by the Employee); or (y) individuals who were
members of the Board of Directors of ACC Corp. immediately prior to a meeting
of the shareholders of ACC Corp. involving a contest for the election of
Directors shall not constitute a majority of the Board of Directors following
such election.
(c) "COMPANY" shall mean ACC Corp. and/or any of its subsidiaries
and/or affiliates as the same may exist from time to time anywhere in the
world, regardless of the laws under which incorporated.
(d) "EVENT OF TERMINATION" shall mean the termination of the Employee's
employment and his status as the Chairman of the Board of ACC Corp., whether
due to a Termination For Cause, a Termination Without Cause, a Change In
Control or a Voluntary Termination of Employment by the Employee, such that the
Employee is no longer employed by the Company nor serving as its Chairman of
the Board.
(e) "TERMINATION OF EMPLOYEE'S EMPLOYMENT IN THE EVENT OF A CHANGE IN
CONTROL" shall mean that if, as a condition precedent to, as a result of, or
within one year following, a Change In Control of ACC Corp. (i) the Employee's
employment with the Company is terminated for cause or without cause by the
Company or the Acquiring Entity, or (ii) the Employee resigns his employment
with the Company or with the Acquiring Entity upon the occurrence of either of
the following events:
(1) A reduction in Employee's total compensation as the same
existed immediately prior to the Change In Control; or
(2) Employee is no longer serving as the Chairman of the ACC
Corp. Board of Directors.
(f) "TERMINATION FOR CAUSE" shall mean that the Company, in its sole
discretion, terminates the Employee's employment for any of the following
reasons: Employee fails to perform his assigned duties as an officer and/or
employee of the Company in a satisfactory manner due to dishonesty, fraud,
gross neglect, or use of alcohol or drugs; or any breach the terms of this
Agreement. Employee shall not be deemed to be in breach of this Agreement nor
to have been Terminated For Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
a three-fourths majority of the entire Board of Directors at a Board meeting
duly called and held for that purpose (after reasonable notice to Employee and
an opportunity for Employee, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, Employee was
guilty of conduct set forth in this paragraph 1(f) and specifying the
particulars thereof in reasonable detail.
(g) "TERMINATION WITHOUT CAUSE" shall mean that the Company, in its
sole discretion, terminates the Employee's employment not for any reason that
would constitute a Termination For Cause, nor as a result of any Change In
Control, nor as a result of the Employee's Voluntary Termination of Employment
with the Company.
(h) "VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EMPLOYEE" shall mean
that the Employee, at his volition, leaves his employment with the Company not
under a circumstance involving a Termination Without Cause, a Termination For
Cause, nor a Termination of Employee's Employment in the Event of a Change In
Control.
2. COVENANT NOT TO COMPETE. Employee hereby covenants and agrees
that, while employed by the Company during the term of this Agreement and for
three years following the occurrence of ANY Event of Termination hereunder:
(a) He will not, for himself or on behalf of any other person, firm,
partnership or corporation call upon any customer of the Company for the
purpose of soliciting or providing to such customer any products or services
which are the same as or substantially similar to those provided to customers
by the Company. For purposes of this Agreement, "Customers of the Company"
shall include, but not be limited to, all customers contacted or solicited by
the Company or the Employee prior to the occurrence of any Event of
Termination;
(b) Employee will not, directly or through another person or entity,
for himself or on behalf of any other person, firm, partnership or corporation,
directly or indirectly, seek to persuade any director, officer, or employee of
the Company to discontinue that individual's status or employment with the
Company; and
(c) Employee will not, directly or indirectly, alone or as an employee,
independent contractor of any type, partner, officer, director, creditor,
substantial (i.e., 5% or greater) stockholder or holder of any option or right
to become a substantial stockholder in any entity or organization, engage in
Company Business; nor for the same period of time shall the Employee advance
credit, lend money, or give advice, directly or indirectly, to any person,
corporation or business entity of any kind (other than the Company) with
respect to Company Business or for the purpose of assisting such person,
corporation or business entity to compete with the Company with respect to
Company Business; provided, however, that nothing contained in this paragraph
shall prevent or inhibit Employee from investing in corporate securities of
companies that are competitors of the Company that are traded on a national
securities exchange or other recognized stock market (subject to a 5% ceiling
on any such investment as referenced in the first sentence of this
subparagraph). For purposes of this Agreement, "Company Business" shall mean
the business of the transport or resale of local, intrastate, interstate and
international TELECOMMUNICATION SERVICES in, and only in, the following market
segments: VOICE SERVICES, PACKET-SWITCHED DATA TRANSMISSION SERVICES
(including frame relay services), TELEX SERVICES, TELEGRAPH SERVICES, and
FACSIMILE SERVICES in or between the geographic areas of New York,
Massachusetts, Canada, the United Kingdom and any other state or territory of
the United States or any other country in which the Company has generated $1
million or more in gross originating traffic revenues during the fiscal year
immediately preceding an Event of Termination. The underlined terms in this
paragraph shall have the same definition as that attributed to them by the
United States trade representatives in the "U.S. Offer and Basic
Telecommunications Services" dated July 31, 1995, prepared in connection with
the GATS negotiations, attached as Exhibit A hereto. The Employee further
agrees that during the term of this covenant not to compete, he will not make
any offers to acquire any corporation or other entity which the Company is
attempting to acquire.
(d) If any of the restrictions on competitive activities contained in
this Paragraph 2 shall for any reason be held by a court of competent
jurisdiction to be excessively broad as to duration, geographical scope,
activity or subject, such restrictions shall be construed so as to thereafter
be limited or reduced to be enforceable to the extent compatible with
applicable law as it shall then exist; it being understood that by the
execution of this Agreement the parties hereto regard such restrictions as
reasonable and compatible with their respective rights and expectations.
(e) Additionally, if any conduct which would otherwise be prohibited by
this Paragraph 2 is approved by ACC Corp.'s Board of Directors, then such
conduct shall not constitute a breach of this Agreement.
(f) Nothing contained in this Agreement or in a certain Salary
Continuation and Deferred Compensation Agreement between the Employee and the
Company of even date herewith shall prohibit Employee from participating, alone
or as an employee, independent contractor, partner, officer, director,
creditor, or substantial (I.E. greater than 5%) owner (by reason of stock
ownership or otherwise) in any entity whose business is the design, development
and/or market distribution of computer systems software and/or applications
software useful to any industry, including the telecommunications industry.
3. CONSIDERATION FOR COVENANT NOT TO COMPETE.In consideration for the
terms of the Covenant Not To Compete contained in this Agreement, upon the
execution of this Agreement, the Company shall pay to Employee the sum of
$750,000, by certified or cashier's check payable to the order of Employee or
by wire transfer of funds in accordance with instructions given by Employee.
4. INJUNCTIVE RELIEF. Because the Employee currently possesses and
shall acquire by reason of his continued employment and association with the
Company an extensive knowledge of the Company's trade secrets, customers,
procedures, and other confidential information, the parties hereto recognize
that in the event of a breach or threat of breach by the Employee of the terms
and provisions contained in this Agreement, compensation alone to the Company
would not be a adequate remedy for a breach of the terms and provisions hereof.
Therefore, it is agreed that in the event of a breach or threat of a breach of
any of the provisions of this Agreement by the Employee, the Company shall be
entitled to an immediate injunction from any court of competent jurisdiction
restraining the Employee from committing or continuing to commit a breach of
such provisions without the showing or proving of actual damages.
5. SUPERSEDING OF OUTSTANDING NON-COMPETITION AGREEMENT. Upon its
execution, this Agreement shall automatically supersede and terminate the terms
of the current Covenant Not To Compete between the parties hereto, dated as of
February 8, 1994, and each party hereto hereby waives and releases any claims
it may have against the other arising under that Agreement.
6. GENERAL TERMS.
(a) NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal
Service as certified mail, return receipt requested and postage prepaid, or
(iii) on the first day following delivery to a recognized overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested. Any such notice shall be delivered or directed to a party at its
address previously set forth in this Agreement or to such other address as a
party may specify by notice given to the other party hereto in accordance with
the provisions of this paragraph.
(b) BENEFIT. This Agreement and the rights and obligations contained
herein shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and upon the Employee, his legal representatives, heirs
and distributees.
(c) WAIVER. The waiver of any party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach.
(d) ENTIRE AGREEMENT. This Agreement may not be altered, amended or
terminated except by an instrument in writing signed by the parties hereto.
(e) PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(f) APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within New York State, without giving effect to
conflict of laws principles.
(g) HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each one of which will be deemed an original and all of which
shall constitute one and the same instrument.
(i) ASSIGNMENT. The Employee may not assign any of his rights, duties
or obligations hereunder without the prior written consent of ACC Corp.
Likewise, ACC Corp. may not assign any of its rights, duties or obligations
hereunder without the prior written consent of the Employee except in the event
of a merger or other acquisition of ACC Corp. in which ACC Corp. is not the
surviving entity or the purchase of all or substantially all its assets,
provided that such merger, acquisition or purchase is for a valid business
purpose not involving this Agreement.
(j) REMEDIES. All rights and remedies of the Company, whether provided
for herein or by operation of law, are cumulative and may be exercised
singularly or concurrently, and the exercise of any such remedy shall not be
deemed an election of remedies so as to preclude the election of any other
remedy.
(k) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the courts of
the State of New York and/or the Federal Courts located in the State of New
York shall have jurisdiction over each of the parties hereto and over the
subject matter of any such proceedings, and the venue of any such action shall
be in Monroe County, New York and/or the U.S. District Court for the Western
District of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of October 6, 1995.
EMPLOYEE: ACC CORP.
/s/ Richard T. Aab By: /s/ Michael R. Daley
Richard T. Aab
Title: EVP & CFO
Note: The Registrant agrees to furnish supplementally to the Commission a copy
of any omitted schedule or exhibit to this Agreement upon request.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACC CORP.'S
SEPTEMBER 30, 1995 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000783233
<NAME> ACC CORP.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 1,672
<SECURITIES> 0
<RECEIVABLES> 34,526
<ALLOWANCES> 2,659
<INVENTORY> 160
<CURRENT-ASSETS> 40,902
<PP&E> 75,781
<DEPRECIATION> 24,789
<TOTAL-ASSETS> 113,074
<CURRENT-LIABILITIES> 50,776
<BONDS> 23,445<F1>
<COMMON> 127
8,997
0
<OTHER-SE> 24,549
<TOTAL-LIABILITY-AND-EQUITY> 113,074
<SALES> 119,268
<TOTAL-REVENUES> 127,241
<CGS> 79,163
<TOTAL-COSTS> 128,913
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,191
<INTEREST-EXPENSE> 3,666
<INCOME-PRETAX> (5,447)
<INCOME-TAX> 538
<INCOME-CONTINUING> (5,760)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,760)
<EPS-PRIMARY> (0.77)
<EPS-DILUTED> 0
<FN>
<F1>Total long term debt
</FN>
</TABLE>
