SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-A/A
Amendment to Form 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ACC CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 16-1175232
(State of incorporation or organization) (IRS Employer
Identification No.)
400 WEST AVENUE, ROCHESTER, NEW YORK 14611
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act: None
If this Form relates to the registration of a class of debt securities
and is effective upon filing pursuant to General Instruction A(c)(1),
please check the following box. [ ]
If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933
pursuant to General Instruction A(c)(2), please check the following box.
[ ]
Securities to be registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, PAR VALUE $.015 PER SHARE (REDESIGNATION OF COMMON
STOCK)
(Title of Class)
<PAGE>
Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
The purpose of this filing is to amend the Form 8-A previously filed by
this Registrant (the "Company") with respect to its Common Stock, par value
$.015 per share, to reflect the recent redesignation of such Common Stock as
Class A Common Stock, par value $.015 per share. This change was approved by
the Company's shareholders at their 1995 Annual Meeting, which was held on July
19, 1995. This redesignation was part of Proposal 4 in the Company's 1995
Proxy Statement, which Proposal was approved in its entirety. Proposal 4
provided that, if approved, the Company's Certificate of Incorporation would be
amended to authorize the issuance of 2,000,000 shares of Preferred Stock, par
value $1.00 per share, and of 25,000,000 shares of Class B non-voting Common
Stock, par value $.015 per share, and to redesignate the previously-authorized
50,000,000 shares of Common Stock, par value $.015 per share, as 50,000,000
shares of Class A Common Stock, par value $.015 per share.
As disclosed in a Form 8-K filed by the Company on June 22, 1995, 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.
Following the Company's 1995 Annual Meeting, pursuant to the terms of the
Note and Warrant Purchase Agreement under which the Notes were purchased, 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 a Certificate of
Designations 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.
Therefore, subject to all of the preferences and rights of both the
Preferred Stock or any series thereof and of the Class B non-voting 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
non-voting 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.
Item 2. EXHIBITS.
The following exhibits are filed herewith:
1) Proposal 4 to the Company's Proxy Statement for its 1995 Annual
Meeting.
2) The Company's First Restated Certificate of Incorporation.
3) The Certificate of Designations filed with the Delaware Secretary
of State with respect to the issuance of 10,000 shares of Series A Preferred
Stock, par value $1.00 per share.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 13, 1995 ACC CORP.
By: /S/ JOHN J. ZIMMER
Title: Vice President--Finance
<PAGE>
EXHIBIT LIST
Exhibit
NUMBER DESCRIPTION LOCATION
1 Proposal 4 of Proxy Statement for ACC Corp.'s Incorporated by
1995 Annual Meeting Reference to
the Company's
definitive
Proxy Statement
filed in
connection with
its 1995 Annual
Meeting.
2 ACC Corp.'s First Restated Certificate of Filed herewith.
Incorporation
3 ACC Corp.'s Certificate of Designations filed Filed herewith.
with respect to the issuance of 10,000 shares
of Series A Preferred Stock, par value $1.00 per share.
Exhibit 2
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 3
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 SeriesA
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
