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EXHIBIT 10.14
This PREFERRED STOCK PURCHASE AGREEMENT, dated April 28, 1997
(together with the exhibits appended hereto, the "Agreement"), is made and
entered into by and between COMPUTER 2000, INC., a Delaware corporation
("Purchaser"), and AMERIQUEST TECHNOLOGIES, INC., a Delaware corporation
("Company").
W I T N E S S E T H:
WHEREAS, the Company has authorized the sale and issuance of
300,000 shares of its Series H Cumulative Convertible Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), a new series of preferred stock that
has in addition to those powers, designation, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof set forth in the Company's Certificate of
Incorporation, as amended (the "AQS Certificate of Incorporation"), those
additional powers, designation, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, in each case, as fixed in the Certificate of Designations,
dated April 25, 1997, in the form attached hereto as Exhibit A (the "Certificate
of Designations"); and
WHEREAS, the Company desires to sell, and the Purchaser
desires to purchase, 300,000 shares of Preferred Stock (the "Shares") on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the purchase of the Preferred Stock as contemplated
herein is intended to fulfill the commitment of Computer 2000 AG, the parent
company of the Purchaser, to provide the Company with additional financing early
in calendar year 1997,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
SALE OF SHARES AND CLOSING
1.1 Issuance and Sale; Purchase of Shares. Subject to the
terms and conditions hereof, on the Closing Date (as defined herein) the Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, the Shares.
1.2 Purchase Price. The aggregate payment to be made by
Purchaser for the Shares shall be $30,000,000, equal to a purchase price of
$100.00 per share (the "Purchase Price"), payable in the manner provided in
Section 1.3.
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1.3 Closing. The closing shall take place at 10:00 A.M. local
time at the offices of Gibson, Dunn & Crutcher LLP, Irvine, California (the
"Closing"), or at such other place as the Purchaser and the Company shall
mutually agree, on May 1, 1997, or on such other time and date as the Purchaser
and the Company shall mutually agree (the "Closing Date").
(a) At the Closing, the Purchaser shall pay to or for the
benefit of the Company the Purchase Price by wire transfer of immediately
available funds to such account or accounts as the Company and the Purchaser
shall mutually agree.
(b) Simultaneously, the Company shall assign and transfer to
the Purchaser good and valid title in and to the Shares by delivering to the
Purchaser a certificate or certificates representing the Shares.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF COMPANY
The Company hereby represents, warrants and agrees as follows:
2.1 Organization of Company. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
issue, sell and transfer (pursuant to this Agreement) the Shares. The Company is
duly qualified, licensed or admitted to do business and is in good standing in
all jurisdictions in which the ownership, use or leasing of its assets, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary and in which the failure to be so qualified, licensed or
admitted and in good standing could reasonably be expected to have an adverse
effect on the validity or enforceability of this Agreement or on the ability of
the Company to perform its obligations hereunder.
2.2 Authority. The execution and delivery by the Company of
this Agreement, and the performance by the Company of its obligations hereunder,
have been duly and validly authorized by the Board of Directors of the Company,
no other corporate action on the part of the Company being necessary. No
consent, approval or action of the Company's stockholders, including but not
limited to stockholder consents, approvals or actions mandated by the policies,
practices or procedures of the New York Stock Exchange, is necessary in
connection with the issuance or sale of the Shares to Purchaser as contemplated
in this Agreement. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws relating to or affecting the enforcement
of creditors' rights generally.
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2.3 Shares and Common Stock Duly Authorized and Validly
Issued. The Shares are duly authorized, validly issued, outstanding, fully paid
and nonassessable. The Company's common stock, par value $0.01 per share (the
"Common Stock"), into which the Shares may be converted, as provided in the
Certificate of Designations, is duly authorized and, upon the Purchaser's
exercise of its right to convert Shares into shares of Common Stock, such Common
Stock will be validly issued, outstanding, fully paid and nonassessable. Upon
exercise by the Purchaser of its right to convert Shares into Common Stock, the
delivery of a certificate or certificates representing such Common Stock will
transfer to the Purchaser good and valid title to the Common Stock, free and
clear of all Liens. The delivery of a certificate or certificates at the Closing
representing the Shares in the manner provided in Section 1.3 will transfer to
the Purchaser good and valid title to the Shares, free and clear of all Liens.
As used in this Agreement, "Liens" means any pledge, assessment, security
interest, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale contract or other contract to give any of the foregoing.
2.4 No Conflicts. The execution and delivery by the Company of
this Agreement do not, and the performance by the Company of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the AQS Certificate of Incorporation or
the Company's by-laws;
(b) conflict with or result in a violation or breach of any
term or provision of any Law or Order (each, as defined below) applicable to the
Company; or
(c) conflict with or result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
any contract or license to which the Company is a party or by which any of its
assets is bound or result in the creation or imposition of any Lien upon the
Company or any of its assets or upon the Shares or any shares of Common Stock.
As used in this Agreement, "Law" means any law, statute, rule, regulation,
ordinance or other pronouncement having the effect of law in the United States
or in any other country, or in any state, providence, county, city or other
political subdivision thereof. As used in this Agreement, "Order" means any
writ, judgment, decree, injunction or similar order of any governmental or
regulatory authority of the United States or of any other country, or of any
state, providence, county, city or other political subdivision thereof (in each
such case, whether preliminary or final).
2.5 Governmental Approvals and Filings. No consent, approval
or action of, filing with or notice to any governmental or regulatory authority
on the part of the Company is required in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
2.6 Legal Proceedings. Other than the action captioned Kenfil
v. R.L.I. and the action captioned Leading Edge v. AmeriQuest Technologies,
Inc., there are no Actions or Proceedings (as defined below) pending or, to the
knowledge of the Company, threatened
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relating to or affecting the Company or any of its assets which (a) could
reasonably be expected to result in (i) any materially adverse change in the
business, prospects, financial condition, affairs, operations or equity
ownership of the Company or any of its assets or (ii) any material impairment of
the right or ability of the Company to carry on its business as now conducted or
as proposed to be conducted or (b) which question the legality or validity of
this Agreement or the transactions contemplated herein, or any action taken or
to be taken in connection herewith, or which seeks to prevent the consummation
of any transaction contemplated hereby by restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated herein. As used in this Agreement, "Actions or Proceedings" means
any action, suit, proceeding, arbitration or governmental or regulatory
authority investigation or audit.
2.7 Stockholder Approvals. The Company agrees to use its best
efforts to obtain as soon as reasonably possible all consents, approvals and/or
actions of the Company's stockholders as may be necessary to authorize the
issuance of the Shares and of shares of Common Stock issuable upon conversion of
Shares, including but not limited to stockholder consents, approvals or actions
mandated by the policies, practices or procedures of the New York Stock Exchange
or required by the Company's Certificate of Incorporation, by the Company's
By-Laws, by the Certificate of Designations, by Delaware law, or otherwise.
2.8 Registration Rights. The Company agrees to use its best
efforts to cause all shares of Common Stock issued to the Purchaser upon the
conversion of Shares to be treated as "Registrable Securities," as that term is
defined in the Registration Rights Agreement, dated August 7, 1995, by and among
the Company, Computer 2000 AG and the Purchaser (the "Registration Rights
Agreement"), and to cause all such shares of Common Stock, upon issuance, to be
entitled to the registration rights set forth in the Registration Rights
Agreement.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PURCHASER
The Purchaser hereby represents, warrants and agrees as
follows:
3.1 Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Purchaser has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
3.2 Authority. The execution and delivery by the Purchaser of
this Agreement, and the performance by the Purchaser of its obligations
hereunder, have been duly and validly authorized by the Board of Directors of
the Purchaser, no other corporate action on the part of the Purchaser or its
stockholders being necessary. This Agreement has been duly and validly executed
and delivered by the Purchaser and constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium,
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reorganization and other similar laws relating to or affecting the enforcement
of creditors' rights generally.
3.3 No Conflicts. The execution and delivery by the Purchaser
of this Agreement do not, and the performance by the Purchaser of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the certificate of incorporation or
by-laws or other comparable corporate charter document of the Purchaser;
(b) conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to the Purchaser or any of its
assets; or
(c) conflict with or result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
any contract or license to which the Purchaser is a party or by which any of its
assets is bound.
3.4 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of the Purchaser, threatened relating to or
affecting the Purchaser or any of its assets which question the legality or
validity of this Agreement or the transactions contemplated herein, or any
action taken or to be taken in connection herewith, or which seeks to prevent
the consummation of any transaction contemplated hereby by restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated herein.
3.5 Purchase Without View to Distribute. The Purchaser
represents and warrants to the Company that the Shares are being acquired by the
Purchaser for its own account, not with a view to resale or distribution within
the meaning of the Securities Act of 1933, as amended, and the rules and
regulations thereunder, and Purchaser will not distribute the Shares in
violation of such Act.
3.6 Purchaser's Knowledge and Experience. The Purchaser
represents that its knowledge and experience in financial and business matters
are such that it is capable of evaluating the merits and risks of its purchase
of the Shares, as contemplated by this Agreement; provided, however, that the
Purchaser's representation set forth in this Section 3.6 shall in no way
prejudice or otherwise affect the Purchaser's right to rely upon and enforce the
Company's representations, warranties, agreements, covenants and obligations
contained in this Agreement or imposed by any applicable Law.
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ARTICLE 4
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of the Purchaser hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Purchaser in its sole
discretion):
4.1 Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement (other than
those made as of a specified date earlier than the Closing Date) shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty had been made on and as of the Closing Date, and
any representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects on and as
of such earlier date.
4.2 Performance. The Company shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company at or
before the Closing.
4.3 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, and there shall not be pending or threatened on the Closing Date any
Action or Proceeding or any other Action which could reasonably be expected to
result in the issuance of any such Order, or the enactment, promulgation or
deemed applicability to the Purchaser, the Company or any of the transactions
contemplated by this Agreement.
4.4 Opinion of Counsel. The Purchaser shall have received the
opinion of Gibson, Dunn & Crutcher, counsel to the Company, dated the Closing
Date, substantially in the form and to the effect of Exhibit B hereto.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF COMPANY
The obligations of the Company hereunder are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Company in its sole
discretion):
5.1 Representations and Warranties. Each of the
representations and warranties made by the Purchaser in this Agreement shall be
true and correct in all material respects on and as of the Closing Date as
though such representation or warranty had been made on and as of the Closing
Date.
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5.2 Performance. The Purchaser shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Purchaser
at or before the Closing.
5.3 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement, and there shall not be pending or threatened on the Closing Date any
Action or Proceeding or any other Action which could reasonably be expected to
result in the issuance of any such Order, or the enactment, promulgation or
deemed applicability to the Purchaser, the Company or any of the transactions
contemplated by this Agreement.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
6.1 Survival of Representations and Warranties. The Company
and the Purchaser shall have the right to rely fully upon the representations,
warranties, covenants and agreements of the other party contained in this
Agreement. The representations, warranties, covenants and agreements of the
Company and the Purchaser contained in this Agreement shall survive the Closing.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Company. Effective at the Closing, the
Company agrees to indemnify, hold harmless and defend the Purchaser and its
Affiliates (as defined below), against and in respect of any and all claims,
demands, liabilities, losses, costs and expenses (including reasonable
attorneys' fees and litigation expenses) arising out of or based upon (i) the
breach of any representation or warranty made by the Company in this Agreement
or (ii) the breach by the Company of any agreement or covenant contained in this
Agreement (such indemnification and holding harmless, together, referred to in
this Agreement as "Indemnification"). As used in this Agreement, "Affiliate"
means any Person that directly, or indirectly through one of more
intermediaries, controls or is controlled by or is under common control with the
Person specified; and "Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental or Regulatory Authority. For purposes
of this definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise and, in any event and without limitation of the
previous sentence, any Person owning ten percent (10%) or more of the voting
securities of a second Person shall be deemed to control that second Person.
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7.2 Indemnification by Purchaser. Effective at the Closing,
the Purchaser agrees to indemnify, hold harmless and defend the Company and its
Affiliates against and in respect of any and all claims, demands, liabilities,
losses, costs and expenses (including reasonable attorneys' fees and litigation
expenses) arising out of or based upon (i) the breach of any representation or
warranty made by the Purchaser in this Agreement or (ii) the breach by the
Purchaser of any agreement or covenant contained in this Agreement (also
collectively referred to in this Agreement as "Indemnification").
7.3 Certain Limitations on Indemnification. No claims for
Indemnification under this Article 7 may be made (a) with respect to the
inaccuracy or breach of a representation or warranty, later than April 30, 2001,
or (b) with respect to the breach of a covenant or agreement, later than four
years after such breach first occurred.
7.4 Method of Asserting Claims. The party seeking
Indemnification under this Article 7 (the "Indemnified Party") agrees to give
prompt notice to the party against whom Indemnification is sought (the
"Indemnifying Party") of the assertion of any claim, or the commencement of any
suit, action or proceeding, in respect of which Indemnification may be sought
under this Article 7. The Indemnifying Party may participate in and, at its
election, control the defense of any such suit, action or proceeding at its own
expense; provided that counsel selected to conduct such defense is reasonably
satisfactory to the Indemnified Party. The Indemnifying Party shall not be
liable under this Article 7 in the event prompt notice of the assertion of a
claim or the commencement of a suit, action or proceeding in respect of which
Indemnification is sought is not given as described herein, but only to the
extent the defense of such claim, suit, action or proceeding is prejudiced
thereby, or for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which Indemnification may be sought
hereunder. The Indemnifying Party may settle or compromise any claim without the
prior written consent of the Indemnified Party; provided that the Indemnifying
Party may not agree to any such settlement pursuant to which any remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time:
(a) by mutual consent of the Company and the Purchaser in a
written instrument;
(b) by either the Purchaser or the Company if there has been a
material breach on the part of the other of any representation, warranty,
covenant or agreement set forth in this Agreement, which breach has not been
cured within 30 business days following receipt by the breaching party of notice
of such breach; or
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(c) by either the Company or the Purchaser if the Closing
shall not have occurred on or before May 29, 1997 unless the failure to close by
such time is due to the breach of this Agreement by the party seeking to
terminate.
8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or the Purchaser as provided in Section 8.1,
this Agreement shall forthwith become void. No termination of this Agreement
shall relieve any party from liability resulting from a breach by such party of
any of its representations, warranties, covenants or agreements set forth
herein.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly given only
if delivered personally or by facsimile transmission or mailed via overnight
courier to the parties at the following addresses or facsimile numbers:
If to the Purchaser, to:
Computer 2000, Inc.
c/o Computer 2000 AG
Wolfratshauser Stra(beta)e 84
D-81379 Munch
Federal Republic of Germany
Facsimile No.: 011-49-89-7427-4402
Attn: Mr. Manfred Gunzel
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Facsimile No.: (212) 878-8375
Attn: Klaus H. Jander, Esq.
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If to the Company, to:
AmeriQuest Technologies, Inc.
6100 Hollywood Boulevard
Seventh Floor
Hollywood, Florida 33024
Facsimile No.: (954) 989-9206
Attn: Mr. Holger Heims
with a copy to:
Gibson, Dunn & Crutcher
4 Park Plaza
Irvine, California 92714
Facsimile No.: (714) 451-4220
Attn: Thomas D. Magill, Esq.
All such notices, requests and other communications shall: (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by overnight courier in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to
whom a copy of such notice is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
9.2 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof between the parties and contains the sole and entire agreement
between the parties hereto with respect to the subject matter hereof.
9.3 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each party shall pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the transactions
contemplated hereby.
9.4 Public Announcements. At all times at or before the
Closing, the Company and the Purchaser shall not issue or make any reports,
statements or releases to the public or generally to the employees, customers,
suppliers or other Persons to whom the Company sell goods or provide services or
with whom the Company and the Subsidiaries otherwise have significant business
relationships with respect to this Agreement or the transactions contemplated
hereby without the consent of the other, which consent shall not be unreasonably
withheld, except to the extent that such reports, statements or releases may be
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required by applicable Law. The Company and the Purchaser will also obtain the
other party's prior approval of any press release to be issued immediately
following the Closing announcing the consummation of the transactions
contemplated by this Agreement.
9.5 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
9.6 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
9.7 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal Laws of the State of Delaware without
giving effect to the conflicts-of-laws principles thereof.
9.9 Jurisdiction. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of New York,
County of New York, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
9.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Preferred Stock Purchase Agreement
has been duly executed and delivered by the duly authorized officer of each
party hereto as of the date first above written.
COMPUTER 2000, INC.
By: /s/ Richard Obermaier
Name: Richard Obermaier
Title: Corporate Secretary
AMERIQUEST TECHNOLOGIES, INC.
By: /s/ Holger Heims
Name: Holger Heims
Title: Chief Financial Officer
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EXHIBIT A
[FORM OF CERTIFICATE OF DESIGNATIONS]
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES H CUMULATIVE CONVERTIBLE STOCK PREFERRED
(Par Value $.01 Per Share)
OF
AMERIQUEST TECHNOLOGIES, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, does hereby certify that the following
resolution was duly adopted by the Board of Directors of AmeriQuest
Technologies, Inc., a Delaware corporation (the "Corporation"), at a meeting
duly convened and held on April 23, 1997, at which a quorum was present and
acting throughout:
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation (the "Board of
Directors") by Article FOURTH of the Certificate of Incorporation of the
Corporation, as amended by that certain Certificate of Amendment effective as of
April 1, 1996 (the "Certificate of Incorporation") the Board of Directors hereby
authorizes and approves the creation and issuance of a new series of Preferred
Stock of this Corporation upon the terms and conditions set forth in these
resolutions which fix the powers, designation, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of such new series, in
addition to those set forth in the Certificate of Incorporation, as follows:
(A) Series H Cumulative Convertible Preferred Stock. The new series of
Preferred Stock of the Corporation authorized hereby shall be designated the
"Series H Cumulative Convertible Preferred Stock" (hereinafter referred to as
the "Series H Preferred Stock"), and shall consist of 300,000 shares, $.01 par
value per share; provided, however, that the Board of Directors may decrease
(but not increase) the number of authorized shares in such series subsequent to
the date of original issuance of shares in such series (the "Original Issuance
Date"), but not below the number of shares of such series then outstanding. The
Series H Preferred Stock is issuable solely in whole shares that shall entitle
the holder thereof to exercise the voting rights, to participate in the
distributions and to have the benefit of all other rights of holders of Series H
Preferred Stock as set forth herein and in the Certificate of Incorporation.
(B) Rights, Preferences and Restrictions of Series H Preferred Stock.
The Series H Preferred Stock shall have the voting power, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, as set forth below.
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For purposes of this Certificate of Designations, the terms "Common Stock" and
"Preferred Stock" shall have the meanings set forth in the Certificate of
Incorporation in effect as of the Original Issuance Date.
1. Dividend Provisions. The holders of shares of Series H Preferred
Stock shall be entitled to receive dividends payable in cash (or, through and
including the dividend payable on June 30, 1998, at the option of the
Corporation, payable in whole or in part in Common Stock valued as set forth
below, out of any funds legally available therefor, prior and in preference to
any declaration or payment of any dividend (other than a dividend payable in
shares of Common Stock of the Corporation) on the Common Stock and to any
declaration or payment of any dividend on any other series of Preferred Stock of
the Corporation (other than dividends payable in Preferred Stock of the same
series and class upon which such dividend is declared and paid), at the rate of
$7.00 per share of Series H Preferred Stock per annum (as adjusted for any stock
dividends, combinations or splits with respect to such shares), payable
quarterly on the last day of March, June, September and December of each year,
commencing June 30, 1997. Such dividends shall accrue on each share and accrue
from day to day, whether or not earned or declared, and shall be cumulative so
that if such dividends with respect to any previous quarter dividend period at
said rate per share per annum shall not have been paid on or declared and set
apart for all shares of Series H Preferred Stock at the time outstanding, the
deficiency shall be fully paid on or declared and set apart for such shares
before the Corporation makes any distribution (as such term is hereinafter
defined) to the holders of Common Stock or any other series of Preferred Stock.
The term "distribution" as used in this paragraph shall mean the transfer of
cash or property without consideration, whether by way of dividend or otherwise
(except a dividend in shares of the Corporation which are junior to the Series H
Preferred Stock as to dividends and assets and except as contemplated by this
Certificate of Designations) or the purchase or redemption of shares of the
Corporation for cash or property (except for the repurchase of Common Stock from
employees, directors, consultants and advisers pursuant to the terms of stock
purchase agreements existing on the Original Issuance Date under which such
shares are issued), including any such transfer, purchase or redemption by a
subsidiary of the Corporation. The time of any distribution by way of dividend
shall be the date of declaration thereof and the time of any distribution by
purchase or redemption of shares shall be the day cash or property is
transferred by the Corporation, whether or not pursuant to a contract of an
earlier date; provided that, where a negotiable debt security is issued in
exchange for shares the time of the distribution is the date when the
Corporation acquires the shares in such exchange. In the event the Corporation
exercises its option to pay any dividend in whole or in part in Common Stock,
such Common Stock shall be valued as follows: (a) if the Corporation's Common
Stock is trading on the New York Stock Exchange (the "NYSE"), at the closing
price on the day such dividend accrues (whether or not declared); (b) if the
Corporation's stock is not trading on the NYSE but is trading on any other
domestic public market, at the price of the last reported bona fide trade in
such market; or (c) if the Corporation's stock is not trading on any public
market, at a price to be determined by an investment banking firm of national
reputation that has not in the prior twelve (12) months performed any investment
banking services for the Corporation or any holder of Series H Preferred Stock.
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2. Liquidation Preference.
(a) Series H Liquidation Preference. In the event of any Liquidation
Event (as defined below), either voluntary or involuntary, the holders of Series
H Preferred Stock shall be entitled to receive by reason of their ownership
thereof, prior and in preference to any distribution of any of the assets of the
Corporation to the holders of Common Stock, or to any other series of Preferred
Stock that may be issued by the Corporation from time to time, an amount per
share in cash equal to the sum of (i) $100.00 for each outstanding share of
Series H Preferred Stock, as adjusted for any stock dividends, combinations or
splits with respect to such share (the "Original Series H Issue Price"), and
(ii) an amount equal to all accrued but unpaid dividends (whether or not
declared) on each such share (the "Liquidation Preference").
(b) Participation. After the distributions described in subsection (a)
above have been paid, the entire remaining assets of the Corporation legally
available for distribution to the stockholders of the Corporation shall be
distributed to the holders of any other series of Preferred Stock then
outstanding, if any, having a liquidation preference over the Common Stock (to
the extent of and in accordance with the liquidation preference rights of such
other series of Preferred Stock) and then among the holders of the Common Stock
pro rata based on the number of shares of Common Stock held by each holder.
(c) Insufficient Funds. If in connection with any Liquidation Event the
Corporation's cash funds legally available for distribution to the holders of
the Series H Preferred Stock are not sufficient to pay the full Series H
Preferred Stock liquidation preference in cash, then any deficiency in the cash
payment of the Series H Preferred Stock liquidation preference shall be paid in
non-cash assets of the Corporation legally available for distribution to the
holders of Series H Preferred Stock. If the cash and non-cash assets legally
available for distribution to the holders of the Series H Preferred Stock shall
be insufficient to permit the full payment to such holders of the full Series H
Preferred Stock liquidation preference, then the entire cash and non-cash assets
of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Series H Preferred Stock in proportion to the
number of such shares owned by each such holder. In connection with the
distribution of any non-cash assets in payment of the Series H Preferred Stock
liquidation preference, the non-cash assets will be valued at their fair market
value, as determined by independent appraisal by an appraiser selected in good
faith by the Board of Directors.
(d) Liquidation Event. For purposes of this Section 2, a "Liquidation
Event" shall mean any Reorganization Transaction (as defined below),
liquidation, dissolution, or winding up of the Corporation. A reorganization of
the Corporation, for purposes of this Certificate of Designations, shall mean
any consolidation or merger of the Corporation with or into another corporation,
or other entity or person or any other corporate reorganization, or the sale of
all or substantially all of the Corporation's assets to another person, or any
transaction by the Corporation in which an excess of 50% of the Corporation's
voting power is transferred (each, a "Reorganization Transaction").
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3. Redemption. Shares of the Series H Preferred Stock shall not be
subject to redemption, either mandatorily or at the option of the Corporation or
the holder thereof.
4. Conversion. The holders of Series H Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Subject to subsection (c), each share of Series H
Preferred Stock shall be convertible (subject to stockholder approval of the
Common Stock issuable upon such conversion as required by the NYSE) at the
option of the holder thereof, at any time after the Original Issuance Date at
the office of the Corporation or any transfer agent for the Series H Preferred
Stock, into such number of fully paid and nonassessable shares of the
Corporation's Common Stock as is determined by dividing the Liquidation
Preference by the Series H Conversion Price then in effect. The Series H
Conversion Price per share is set forth in subsection 4(c).
(b) Mechanics of Conversion. Before any holder of Series H Preferred
Stock shall be entitled to convert any Shares into shares of Common Stock, such
holder shall deliver the certificate or certificates therefor, with a duly
executed election to convert, to the principal executive office of the
Corporation or of any transfer agent for the Series H Preferred Stock and shall
give written notice to the Corporation at its principal executive office (which
notice and delivery shall be deemed given when received by the Corporation) of
the election to convert some or all of its Shares and shall state therein the
number of Shares to be converted and the name or names in which the certificate
or certificates for shares of Common Stock are to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Series H Preferred Stock or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series H Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. Following the conversion
of shares of Series H Preferred Stock into Common Stock, as contemplated by this
paragraph (b), the Corporation shall promptly prepare and deliver a new
certificate or new certificates to the holder of Series H Preferred Stock
representing the remaining number or shares of Series H Preferred Stock still
held by such holder following such conversion.
(c) Series H Conversion Price and Adjustments.
(i) Series H Conversion Price. The Series H Conversion Price
shall be $0.715 (Seventy-One and 5/10 Cents) per share, which amount is equal to
110% of the average of the daily closing price per share of the Common Stock for
the 20 consecutive trading days immediately preceding April 28, 1997.
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(ii) Series H Conversion Price Adjustments.
(1) Subdivision, Combination or Reclassification. In
the event that the Corporation at any time or from time to time after the
Original Issuance Date shall declare or pay, without consideration, any dividend
on the Common Stock payable in shares of Common Stock or in any right to acquire
shares of Common Stock for no consideration, or shall effect a subdivision of
the outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock), or in the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification, reverse stock split or otherwise, into a lesser number of
shares of Common Stock, then the Series H Conversion Price in effect immediately
prior to such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any dividend on the
shares of Common Stock payable in any right to acquire Common Stock for no
consideration, then the Corporation shall be deemed to have made a dividend
payable in shares of Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire shares of
Common Stock.
(2) Issuance of Additional Shares. If at any time
after the Original Issuance Date and while there are any shares of Series H
Preferred Stock outstanding, the Corporation shall issue or sell Additional
Shares of Common Stock at a Price Per Share less than the Series H Conversion
Price in effect immediately prior to such issuance or sale, then the Series H
Conversion Price then in effect shall be adjusted to an amount determined by
multiplying the Series H Conversion Price in effect immediately prior to the new
issuance by a fraction,
(A) the numerator of which is equal to the sum of (x) the
number of shares of Outstanding Common Stock immediately prior to the issuance
of such Additional Shares, and (y) the amount determined by (i) dividing the
aggregate consideration received by the Corporation upon the issuance of such
Additional Shares, by (ii) the Series H Conversion Price in effect immediately
prior to the issuance of the Additional Shares, and
(B) the denominator of which is the number of shares of
Outstanding Common Stock immediately after the issuance of such Additional
Shares.
For the purposes of this Section 4(c)(ii), the issuance of any
Convertible Securities shall be deemed an issuance at such time of the Common
Stock issuable upon exercise, conversion, or exchange of the such Convertible
Securities if the Price Per Share shall be less than the Series H Conversion
Price in effect at the time of such issuance. No adjustment of the Series H
Conversion Price shall be made under this Section 4(c)(ii) upon the issuance of
any shares of Common Stock which are issued pursuant to the exercise,
conversion, or exchange of any Convertible Securities if any adjustment shall
previously have been made upon the issuance of any such Convertible Securities
as above provided. Any adjustment of the Series H Conversion Price made with
respect to the issuance of Convertible Securities shall be reversed if and when
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any such Convertible Securities expire or are canceled without being exercised,
converted, or exchanged so that the Series H Conversion Price in effect
immediately upon such cancellation or expiration shall be equal to the Series H
Conversion Price which would have been in effect had the expired or canceled
Convertible Securities never been issued (but any such reversal of an adjustment
shall only apply as to the portion of the Convertible Security which has expired
or been canceled), with such additional adjustments as would have been made to
the Series H Conversion Price which would have been in effect had such expired
or canceled Convertible Securities never been issued.
The provisions of this Section 4(c)(ii) shall not apply to any issuance
or distribution of Additional Shares if by reason of any other provision of this
Section 4 an adjustment of the Series H Conversion Price results with respect to
such issuance of Additional Shares or if the holders of Series H Preferred Stock
are entitled to receive a distribution of such Additional Shares.
For purposes of this Section 4(c)(ii), the following definitions apply:
"Additional Shares" shall mean shares of Common Stock (including Common Stock
deemed issued upon the issuance of Convertible Securities), other than Excluded
Additional Shares (the issuance of which shall not result in any adjustment of
the Series H Conversion Price).
"Convertible Securities" shall mean any securities (whether debt or equity)
issued by the Corporation which are exercisable, convertible, or exchangeable
into or for shares of Common Stock.
"Excluded Additional Shares" shall mean:
(1) Any Existing Securities, excluding any increase in the Common Stock
or Convertible Securities which may be issued pursuant to Existing Securities as
a result of any modifications or amendments to Existing Securities occurring
after the Original Issuance Date.
(2) Any Common Stock or Convertible Securities issued after the
Original Issuance Date to any employee, consultant, advisor, officer, or
director of the Corporation or any subsidiary thereof pursuant to any incentive
or compensation agreement, arrangement, or plan approved by the Board of
Directors.
(3) Any Common Stock issued in connection with any stock dividend on
the Common Stock which is also payable to the Series H Preferred Stock pursuant
to any provision of Section 4 hereof.
(4) Any Common Stock issued upon conversion of the Series H Preferred
Stock.
"Existing Securities" shall mean any Common Stock or Convertible Securities
issued with respect to any options, notes, rights, warrants, or other securities
of the Corporation outstanding
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as of the Original Issuance Date, and shall include all shares of Series H
Preferred Stock issued as of the Original Issuance Date.
"Outstanding Common Stock" shall mean all shares of Common Stock of the
Corporation outstanding (on a fully diluted basis) at the time of a calculation
under Section 4(c)(ii), assuming for this purpose that all then-outstanding
Convertible Securities are then deemed exercised, converted, or exchanged into
shares of Common Stock.
"Price Per Share" shall be determined as follows:
(1) In the case of an issuance of shares of Common Stock for cash, the
Price Per Share shall mean the per share cash consideration received by the
Corporation for such shares.
(2) The Price Per Share for purposes of Convertible Securities shall
mean the amount equal to the consideration received by the Corporation upon the
issuance of such Convertible Securities, plus the amount of consideration
payable to the Corporation upon exercise, conversion, or exchange thereof,
divided by the aggregate number of shares of Common Stock that would be issued
if all such Convertible Securities were exercised, exchanged, or converted.
(3) The Price Per Share for purposes of Convertible Securities shall be
determined in each instance as of the date of issuance of the Convertible
Securities without giving effect to any possible future price adjustments or
rate adjustments pursuant to the provisions of such Convertible Securities which
may result from any adjustments in the Series H Conversion Price pursuant to the
provisions of this Section 4.
(4) If a part or all of the consideration received by the Corporation
in connection with the issuance of securities consists of property other than
cash, the value of such consideration shall be the fair market value of such
property as determined by the Board of Directors in good faith.
(d) Other Distributions. In the event the Corporation shall declare a
distribution payable in securities of other persons, in evidences of
indebtedness issued by the Corporation or other persons or in assets (excluding
cash dividends) or in rights not referred to in Section 4(c)(ii), then, in each
such case for the purpose of this Section 4(d), the holders of Series H
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series H Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such a distribution.
(e) Recapitalizations. If at any time or from time to time there shall
be a recapitalization of the Common Stock (other than a subdivision, combination
or reclassification) provision shall be made so that the holders of Series H
Preferred Stock shall thereafter be entitled to receive, upon conversion of
their Series H Preferred Stock, the number of shares of
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stock or other securities or property of the Corporation, or otherwise, to which
a holder of Common Stock deliverable upon conversion would have been entitled in
such recapitalization as if converted immediately prior to such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of Series H Preferred Stock after the recapitalization to the end
that the provisions of this Section 4 (including adjustment of the Series H
Conversion Price, if applicable, then in effect and the number of shares
receivable upon conversion of Series H Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series H Preferred Stock against impairment.
(g) Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon conversion of
the Series H Preferred Stock pursuant to the provisions of this Section 4. In
lieu of fractional shares, the Corporation shall pay in cash the fair market
value of any fractional shares as determined by the Board of Directors in good
faith. The determination of the fractional shares for which a cash payment will
be made shall be determined on the basis of the total number of shares of the
Series H Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion. (ii) Upon the occurrence of each adjustment or readjustment of the
Series H Conversion Price pursuant to this Section 4, the Corporation, at its
expense, shall within a reasonable time compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to each holder of
Series H Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, within a reasonable time following
a written request of any holder of Series H Preferred Stock, furnish or cause to
be furnished to such holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Series H Conversion Price at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series H Preferred Stock.
(h) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series H Preferred Stock such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series H Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the
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conversion of all of the then outstanding shares of Series H Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Series H Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purposes.
(i) No Minor Adjustments to Series H Conversion Price. No adjustment of
the Series H Conversion Price shall be made pursuant to this Section 4 in an
amount less than one cent ($.01) per share. Adjustment amounts under one cent
($.01) per share shall be carried forward and taken into account in any
subsequent adjustment calculations.
5. Notices.
(a) Required Notices.
(i) In the event of any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; the Corporation shall
mail to each holder of Series H Preferred Stock, at least thirty (30) days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(ii) The Corporation shall give each holder of record
of Series H Preferred Stock written notice of any impending Reorganization
Transaction not later than thirty (30) days prior to the stockholders' meeting
called to approve such transaction, or thirty (30) days prior to the closing of
any such Reorganization Transaction, whichever is earlier. Such notice shall
describe the material terms and conditions of the impending Reorganization
Transaction, describe the consideration per share to be received by the holders
of the Common Stock and by the holders of the Series H Preferred Stock as a
result of such Reorganization Transaction, and the date upon which the
conversion rights of the Series H Preferred Stock terminate in connection with
such Reorganization Transaction, and the Corporation shall thereafter give such
holders prompt notice of any material changes in the information contained in
such notice.
(b) Notice Procedures. Any notice required by the provisions
of this Section 5 to be given to a holder of shares of Series H Preferred Stock
shall be given in writing and shall be deemed given if addressed to the holder
of record of such shares at such holder's address appearing on the books of the
Corporation or such other address given in writing by the holder to the
Corporation for the purpose of notice and deposited in the United States mail,
postage prepaid, or with a courier which guaranteed delivery of the notice
within three business days after deposit with such courier, and in either case,
such notice shall be deemed given on the third business day after such deposit.
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6. Voting Rights. The holder of each share of Series H Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series H Preferred Stock could then be converted (with any fractional share
determined on an aggregate conversion basis being rounded to the nearest whole
share). Shares of Series H Preferred Stock shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the bylaws of the Corporation. Subject
to the provisions of Paragraph 7 below, Shares of Series H Preferred Stock shall
vote with holders of Common Stock as a single class with respect to any question
upon which holders of Common Stock have the right to vote; provided, however,
that the holders of Series H Preferred Stock will vote as a class on matters to
which a class vote is required under Delaware law.
7. Restrictions and Limitations. Without the vote or written consent of
the holders of at least eighty percent (80%) of the then outstanding shares of
Series H Preferred Stock, the Corporation will not:
(a) Authorize or issue, or obligate itself to issue, any other
equity security (including any security convertible into or exercisable for any
equity security) senior to or at parity with the Series H Preferred Stock as to
dividend rights, redemption rights or liquidation preferences or which have
voting rights as to matters upon which the holders of Common Stock are entitled
to vote that provide for more votes in any such matters than one vote for each
share of Common Stock into which such equity security could then be converted
into Common Stock in accordance with the conversion rights of such equity
security;
(b) Amend its Certificate of Incorporation (including this
Certificate of Designations) if such amendment would adversely affect any of the
rights, preferences or privileges provided for therein or herein for the benefit
of the shares of Series H Preferred Stock; or
(c) Engage in a Reorganization Transaction that would
adversely affect any of the rights, preferences or privileges of the Series H
Preferred Stock.
8. Status of Converted Stock. In the event any shares of Series H
Preferred Stock shall be converted pursuant to Section 4 hereof, or are
otherwise acquired by the Corporation, the shares so converted or acquired shall
resume the status of authorized but unissued shares of Series H Preferred Stock.
9. No Preemptive Rights. The holders of the Series H Preferred Stock
shall not have any preemptive rights.
10. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective an valid under
applicable law, but if any provision hereof should to be prohibited by or
invalid under applicable law, such provision shall be
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ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions hereof.
IN WITNESS WHEREOF, this Certificate of Designations is executed on this 25th
day of April, 1997.
AMERIQUEST TECHNOLOGIES, INC.
By:
Name:
Title:
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EXHIBIT B
[FORM OF OPINION OF COUNSEL TO THE COMPANY]
[Closing Date], 1997
Computer 2000, Inc.
c/o Computer 2000 AG
Wolfratshauser Strabe 84
D-81379 Munich
Federal Republic of Germany
Attention: Mr. Manfred Gunzel
Ladies and Gentlemen:
We have acted as special counsel to AmeriQuest Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the purchase by
Computer 2000, Inc., a Delaware corporation ("C2000"), of 300,000 shares of the
Company's Series H Cumulative Convertible Preferred Stock (the "Shares")
pursuant to that certain Preferred Stock Purchase Agreement, dated April 28,
1997 (the "Purchase Agreement"), by and between C2000 and the Company.
Capitalized terms not defined herein shall have the meanings ascribed to them in
the Purchase Agreement. We are rendering this opinion to you pursuant to Section
4.4 of the Purchase Agreement.
In rendering this opinion, we have made such documentary, factual and
legal inquiries and examined, among other things, originals or copies, certified
or otherwise identified to our satisfaction, of such records, agreements,
certificates, instruments and other documents as we have considered necessary or
appropriate for purposes of this opinion. As to certain factual matters, we have
relied upon the representations and warranties of the Company in the Purchase
Agreement, certificates of officers of the Company and certificates obtained
from public officials.
We have assumed that the signatures on all documents examined by us are
genuine, all individuals executing such documents had all requisite legal
capacity and competency and (except in the case of the Company's execution of
the Purchase Agreement) were duly authorized to execute and deliver such
documents, the documents submitted to us as originals are authentic and the
documents submitted to us as certified or reproduction copies conform to the
originals.
Except as expressly stated otherwise herein, whenever an opinion herein
with respect to the existence or absence of facts is stated to be to our
knowledge, such statement is intended to signify that, during the course of our
representation of the Company, as herein described, no information has come to
the attention of Thomas D. Magill and John E. Stoner that would give us actual
knowledge of facts contrary to the existence or absence of the facts indicated.
However, we have not undertaken any independent investigation to determine the
existence or
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absence of such facts, and no inference as to our knowledge of the existence or
absence of such facts should be drawn from our representation of the Company or
any affiliate thereof.
Based on the foregoing and in reliance thereon, and also subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we are
of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
corporate power and authority to execute and deliver the Purchase Agreement and
to perform its obligations thereunder and to consummate the transactions
contemplated thereby, including without limitation to issue, sell and deliver
(pursuant to the Purchase Agreement) the Shares.
2. The execution and delivery by the Company of the Purchase Agreement,
and the performance by the Company of its obligations thereunder, have been duly
and validly authorized by all necessary corporate actions on the part of the
Company. Except as described in Paragraph E below, no consent, approval or
action of the Company's stockholders is necessary in connection with the
issuance or sale of the Shares to Purchaser as contemplated in the Purchase
Agreement. The Purchase Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.
3. When issued in accordance with the terms of the Purchase Agreement
and after the Company's receipt of the payment therefor, the Shares will be duly
authorized, validly issued and outstanding, fully paid and nonassessable.
Subject to the stockholder approval required by Section (B)(4)(a) of the
Certificate of Designations, the shares of Common Stock issuable upon conversion
of the Shares in accordance with the terms of the Certificate of Designations
will be validly issued and outstanding, fully paid and nonassessable.
4. To our knowledge, there are no actions or proceedings pending or
threatened relating to or affecting the Company or any of its assets, which
actions or proceedings question the legality or validity of the Purchase
Agreement or the transactions contemplated therein, or any action taken or to be
taken in connection therewith, or which seek to prevent the consummation of any
transaction contemplated thereby by restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated therein. The foregoing opinions are also subject to the following
additional assumptions, exceptions, qualifications and limitations:
5. As of the date on which the Shares are originally issued, C2000
shall have the right to one vote for each share of Common Stock into which each
Share could then be converted, notwithstanding the requirement that the
Company's stockholders must approve the issuance of the Common Stock issuable
upon conversion of the Shares.
The foregoing opinions are also subject to the following additional
assumptions, exceptions, qualifications and limitations:
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A. We render no opinion herein as to matters involving the laws of any
jurisdiction other than (i) the Federal laws of the United States of America,
(ii) the laws of the State of California and (iii) to the limited extent set
forth below, the Delaware General Corporation Law. We are not admitted to
practice law in the State of Delaware; however, we are generally familiar with
the Delaware General Corporation Law as presently in effect and have made such
inquiries as we consider necessary to render our opinions set forth herein
related to Delaware law. This opinion is limited to the effect of the foregoing
laws as they presently exist. We assume no obligation to revise or supplement
this opinion in the event of future changes in such laws or the interpretations
thereof or such facts.
B. We have assumed that C2000 has all requisite power and authority to
execute, deliver and perform its obligations under the Purchase Agreement; the
execution and delivery of the Purchase Agreement and the performance of such
obligations have been duly authorized by all necessary action by C2000; and
C2000 is acquiring the Shares purchased from the Company in good faith.
C. Our opinion set forth in Paragraph 2 is subject to (i) the effect of
any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar
laws affecting the enforcement of creditors' rights generally (including without
limitation the effect of statutory or other laws regarding fraudulent transfers
or preferential transfers or distributions by corporations to stockholders) and
(ii) general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies, regardless of whether enforceability is considered in a proceeding in
equity or at law.
D. We express no opinion as to any provision of the Purchase Agreement
that purports to grant to C2000 a right to indemnity by the Company for any
breach of the Company's representations, warranties or covenants contained in
the Agreement.
E. The Company is required, pursuant to Section 312.03 of the New York
Stock Exchange ("NYSE") Listed Company Manual (the "Manual"), to obtain
stockholder approval prior to issuing the Shares. The NYSE has indicated,
pursuant to the letter attached hereto as Exhibit A, that the Company may
proceed with the issuance of the Shares prior to stockholder approval provided
such stockholder approval is a prerequisite to the conversion of the Shares.
Section (B)(4)(a) of the Certificate of Designations, which establishes the
conversion rights of the Shares, expressly conditions the right to convert the
Shares on obtaining the required stockholder approval. No opinion is expressed
herein as to the NYSE's authority to grant such an exception or as to the NYSE's
authority to allow the Company to proceed without literal compliance with the
terms of the Manual.
F. Our opinion in Paragraph 5 assumes that (i) C2000 will be the sole
beneficial owner of the Shares on the date of issuance thereof and (ii) C2000
and any subsequent holder of the Shares will abstain from voting the Shares in
the stockholder vote required pursuant to Section (B)(4)(a) of the Certificate
of Designations.
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This opinion is rendered to C2000 in connection with the Purchase
Agreement and may not be relied upon by any person other than C2000 or by C2000
in any other context, provided that C2000 may provide this opinion (i) to its
independent auditors and attorneys, (ii) pursuant to order or legal process of
any court or governmental agency and (iii) in connection with any legal action
to which C2000 a party arising out of the transactions contemplated by the
Purchase Agreement. This opinion may not be quoted without the prior written
consent of this Firm.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
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