SECOND
ADDITIONAL SUPPORT AGREEMENT
This Second Additional Support Agreement (the "Agreement") is entered
into as of December 13, 1996 by and between Samsung Electronics Co., Ltd., a
Korean corporation ("SEC"), and AST Research, Inc., a Delaware corporation
("AST"). Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Stock Purchase Agreement
referred to in recital A immediately below.
A. SEC and AST entered into that certain Stock Purchase Agreement
dated as of February 27, 1995, as amended by Amendment No. 1 thereto dated as of
June 1, 1995 and Amendment No. 2 thereto dated as of July 29, 1995 (as so
amended, the "Stock Purchase Agreement") pursuant to which SEC acquired certain
shares of AST's Common Stock and became a significant stockholder of AST.
B. SEC and AST entered into that certain Additional Support
Agreement dated as of December 21, 1995 pursuant to which SEC extended certain
vendor credit to AST and guaranteed bank credit lines for the benefit of AST in
the amount of $200 million (the "First Guaranties").
E. AST has requested additional support from SEC to further enhance
its business prospects and competitive position and SEC desires to provide such
support in consideration of the issuance of the Preferred Stock to SEC as herein
provided.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, SEC and
AST hereby agree as follows:
ARTICLE 1
ADDITIONAL GUARANTY
1.1 Additional Guaranty. In addition to the amounts guarantied by
the First Guaranties, SEC shall, as promptly as practicable after receipt of a
request from AST, execute and deliver one or more guaranties (the "Additional
Guaranty") of a line or lines of credit from one or more banks or other
financial institutions for the benefit of AST in an aggregate amount not to
exceed $200 million outstanding at any one time; provided, however, that the
obligation to provide such Additional Guaranty shall not extend beyond December
31, 1998, and provided further that the terms of such Additional Guaranty shall
not differ materially from the terms of the First Guaranties or other forms of
guaranties previously submitted to SEC by AST.
1.2 Extension of First Guaranties. Article 2.1 of the Additional
Support Agreement stating that the Guaranty provided therein shall not extend
beyond December 31, 1997 is hereby amended to instead state that the Guaranty
provided therein shall not extend beyond December 31, 1998. SEC hereby consents
to the extension until not later than December 31, 1998 of the indebtedness
guaranteed by the First Guaranties, and SEC shall execute and deliver such
consents, acknowledgments or other documents as the beneficiaries of the First
Guaranties shall reasonably request to confirm SEC's consent to such extension.
ARTICLE 2
PREFERRED STOCK
2.1 Issuance. Concurrently with delivery by SEC of the first
Additional Guaranty requested by AST, and as a condition to SEC's obligation to
execute and deliver such Additional Guaranty, AST shall issue to SEC 500,000
shares of Series A Redeemable Preferred Stock (the "Preferred Stock"), having
the rights, powers, preferences and privileges set forth on Exhibit A attached
hereto.
2.2 Conditions to Delivery of Preferred Stock. The obligation of AST
to issue and deliver the Preferred Stock to SEC is subject to the following
conditions:
(a) Such delivery would not in any material respect violate, or
otherwise cause the material violation of, any law or regulation (including any
rules or regulations of the NASDAQ National Market or any other principal stock
exchange on which the Common Stock of AST is at the time listed or quoted)
applicable to the issuance and delivery of the Preferred Stock; and
(b) There shall be no preliminary or permanent injunction or
other order by any court of competent jurisdiction preventing or prohibiting
such issuance and delivery of the Preferred Stock.
2.3 Investment Intent. SEC represents and warrants to AST that the
Preferred Stock will be acquired by SEC solely for its own account, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of such Preferred Stock. SEC understands that the
Preferred Stock will not have been registered under the Securities Act and that
any disposition thereof by SEC must be registered under the Securities Act or
exempt from such registration.
2.4 Sophistication. SEC represents and warrants to AST that SEC is
able to bear the economic risk of an investment in the Preferred Stock and can
afford to sustain a total loss on such investment, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the proposed investment and therefore has the capacity
to protect its own interests in connection with the purchase of the Preferred
Stock.
2.5 No Transfer. SEC shall not sell or otherwise transfer any shares
of the Preferred Stock except to an Affiliate of SEC which is bound by the
provisions of the Stockholder Agreement dated July 31, 1995, as subsequently
amended, between AST and SEC.
ARTICLE 3
COMPLIANCE WITH LAW
3.1 Consents. Each of the parties represents on its own behalf to the
other party that it has obtained all consents required of it under applicable
laws, rules or regulations (including, in the case of SEC, those of Korea) for
the execution, delivery and performance of its obligations under this Agreement,
that such execution, delivery and performance does not violate such laws, rules
or regulations and that this Agreement is legal, valid and binding on such party
in accordance with its terms.
ARTICLE 4
MISCELLANEOUS
4.1 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, construed under and enforced in accordance with, the laws of the
State of Delaware without regard to its conflict-of-laws principles. SEC and
AST agree that (i) any legal action or proceeding arising out of or in
connection with this Agreement or the transactions contemplated hereby shall be
brought exclusively in the courts of the State of Delaware or the Federal courts
of the United States of America sitting in Delaware, (ii) each irrevocably
submits to the jurisdiction of each such court, and (iii) any summons, pleading,
judgment, memorandum of law, or other paper relevant to any such action or
proceeding shall be sufficiently served if delivered to the recipient thereof by
certified or registered mail (with return receipt) at its address set forth in
Section 4.3. Nothing in the proceeding sentence shall affect the right of any
party to proceed in any jurisdiction for the enforcement or execution of any
judgment, decree or order made by a court specified in said sentence.
4.2 Expenses. Each of the parties shall pay its own expenses
incurred in connection with the negotiation and preparation of this Agreement
and the effectuation of the transactions contemplated hereby including, without
limitation, all fees and disbursements of its respective legal counsel,
advisors, and accountants.
4.3 Notices. In case of any event or circumstance giving rise to an
obligation of SEC or AST to provide notice hereunder, such notice shall be
delivered within the time specifically set forth herein or, if no such time is
specified, then as promptly as practicable after becoming aware of such event or
circumstance. Any notice required or permitted to be given under this Agreement
shall be written, and may be given by personal delivery, by cable, telecopy,
telex or telegram (with a confirmation copy mailed as follows), by Federal
Express, United Parcel Service, DHL, or other reputable commercial delivery
service, or by registered or certified mail, first-class postage prepaid, return
receipt requested. Notice shall be deemed given upon actual receipt. Mailed
notices shall be addressed as follows, but each party may change address by
written notice in accordance with this paragraph.
To AST: AST Research, Inc.
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
To SEC: Samsung Electronics Co., Ltd.
Samsung Main Xxxxxxxx
000, 0-Xx, Xxxxxxxx-Xx, Xxxxx-Xx
Xxxxx, Xxxxx 100-742
Attention: General Legal Counsel
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx
0 Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
4.4 Waiver. Each party hereto may in its sole discretion (i) extend
the time for the performance of any of the obligations or other acts of the
other party hereunder, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. No term or
provision hereof shall be deemed waived and no breach hereof excused unless such
waiver or consent shall be in writing and signed by the party claimed to have
waived or consented. No waiver hereunder shall apply or be construed to apply
beyond its expressly stated terms. No failure to exercise and no delay in
exercising any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right, remedy, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. No failure to insist
upon strict performance of any term or provision of this Agreement, or to
exercise any right hereunder, shall be construed as a waiver or as a
relinquishment of such term, provision, or right.
4.5 SEC Subsidiaries; Successors, Assignment, and Parties in
Interest. This Agreement and the rights hereunder may not be assigned by SEC or
AST without the prior written consent of the other party, which may be given or
withheld in the other party's discretion, except that SEC may (i) exercise any
or all rights and/or fulfill any or all obligations under this Agreement in
conjunction with or through one or more wholly owned subsidiaries of SEC; and/or
(ii) assign this Agreement to an Affiliate or Affiliates of SEC; provided that
SEC shall remain liable for all of its obligations under this Agreement not
fully performed by its subsidiaries or assignees. This Agreement shall be
binding upon and inure solely to the benefit of SEC and AST and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
4.6 Entire Agreement. This Agreement constitutes the entire
agreement between SEC and AST with respect to the subject matter hereof and the
transactions contemplated hereby and supersedes all prior or contemporaneous,
written or oral agreements or understandings with respect thereto (including
without limitation all term sheets). The parties acknowledge that their
agreements hereunder were not procured through representations or agreements not
set forth herein or therein.
4.7 Amendment. This Agreement may be amended only by a written
instrument executed and delivered by a duly authorized officer of SEC and a duly
authorized officer of AST.
4.8 Cumulation of Remedies. All remedies available to any party for
breach or non-performance of this Agreement are cumulative and not exclusive of
any rights, remedies, powers or privileges provided by law, and may be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed an election of such remedy to the exclusion of other remedies.
4.9 Fair Construction. This Agreement shall be deemed the joint work
product of SEC and AST without regard to the identity of the draftsperson, and
any rule of construction that a document shall be interpreted or construed
against the drafting party shall not be applicable.
4.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
AST RESEARCH, INC., SAMSUNG ELECTRONICS CO., LTD.,
a Delaware corporation a Korean corporation
By: /s/ XXXXXXX X. XXXX By: /s/ HYEON GON XXX
Name: Xxxxxxx X. Xxxx Name: Hyeon Gon Xxx
Title: Assistant Secretary Title: Executive Vice President
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES A REDEEMABLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
AST RESEARCH, 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 AST Research, Inc., a Delaware Corporation
(the "CORPORATION"), at a meeting duly convened and held on December 12, 1996,
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 4(b) of the Restated Certificate of Incorporation of the Corporation
dated July 31, 1995 (the "CERTIFICATE OF INCORPORATION"), the Board of Directors
hereby authorizes and approves the creation and issuance of a new series of
Preferred Stock of the Corporation upon the terms and conditions set forth in
these resolutions, which fix the powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions of the shares of such new series, in addition to
those set forth in the Certificate of Incorporation, as follows:
1. SERIES A PREFERRED STOCK. The new series of Preferred Stock of the
Corporation authorized hereby shall be designated the Series A Redeemable
Preferred Stock (the "SERIES A PREFERRED STOCK"), and shall consist of Five
Hundred Thousand (500,000) shares, par value $.01 per share; provided, however,
that the Board of Directors, or, to the extent permitted by applicable law, a
duly authorized committee thereof, 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 A 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 A Preferred Stock as set forth
herein and in the Certificate of Incorporation. For purposes of this
Certificate of Designations, the terms "PREFERRED STOCK" and "COMMON STOCK"
shall have the meanings ascribed to them in the Certificate of Incorporation in
effect as of the Original Issuance Date.
2. DIVIDENDS.
(A) PAYMENT OF DIVIDENDS. No dividends or other distributions shall
accrue or be payable on or in respect of the Series A Preferred Stock prior to
January 1, 1999 (the "COMMENCEMENT DATE"). Dividends shall commence accruing on
the Series A Preferred Stock on the Commencement Date, and unless and until all
of the Series A Preferred Stock has been exchanged or redeemed by the
Corporation pursuant to Section 5 or Section 6, the holders of Series A
Preferred Stock shall be entitled to receive cash dividends, 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 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 ranking, as
to dividends and distributions, junior to the Series A Preferred Stock (other
than dividends payable in Common Stock or Preferred Stock ranking, as to
dividends and distributions, junior to the Series A Preferred Stock), at the
respective annual rates per share of Series A Preferred Stock set forth below
(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 each year commencing on March 31, 1999:
Calendar Year Annual Dividend
1999 $4.72
2000 5.36
2001 6.00
2002 6.64
2003 7.32
2004 7.96
and
thereafter
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 quarterly 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 A 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 ranking, as to
dividends and distributions, junior to the Series A Preferred Stock. The term
"DISTRIBUTION" as used in this Section 2(a) 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 that are junior to the Series A
Preferred Stock as to dividends and distributions and except as contemplated by
this Certificate of Designations) to the holders of shares of capital stock of
the Corporation, in such holders' capacity as such, 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 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.
(B) PRIORITY AS TO DIVIDENDS. No dividends shall be declared or paid
or set apart for payment on Common Stock or on Preferred Stock of any series
ranking, as to dividends and distributions, junior to the Series A Preferred
Stock, unless at the time of such declaration or payment or setting apart for
payment all dividends to which holders of Series A Preferred Stock are entitled
pursuant to Section 2(a) have been or contemporaneously are declared and paid
(or declared and a sum sufficient for the payment thereof set apart for such
payment).
3. LIQUIDATION PREFERENCE.
(A) SERIES A LIQUIDATION PREFERENCE. In the event of any Liquidation
Event (as defined below), either voluntary or involuntary, the holders of Series
A 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 ranking, as to
liquidation, junior to the Series A Preferred Stock, an amount per share in cash
equal to the sum of (i) $65.00 for each outstanding share of Series A Preferred
Stock, as adjusted for any stock dividends, combinations or splits with respect
to such share plus (ii) an amount equal to all accrued but unpaid dividends
(whether or not declared) on each such share (the "Liquidation Preference").
(B) INSUFFICIENT FUNDS. If, in connection with any Liquidation
Event, the Corporation's cash funds legally available for distribution to the
holders of the Series A Preferred Stock and any shares of the Corporation's
Preferred Stock ranking on a parity with the Series A Preferred Stock as to
liquidation are not sufficient to pay the full Series A Preferred Stock
liquidation preference in cash, then any deficiency in the cash payment of the
Series A Preferred Stock liquidation preference may be paid in non-cash assets
of the Corporation legally available for distribution to the holders of Series A
Preferred Stock. If the cash and non-cash assets legally available for
distribution to the holders of the Series A Preferred Stock shall be
insufficient to permit the full payment to such holders of the full Series A
Preferred Stock liquidation preference, then any cash and non-cash assets of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series A 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 A 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.
(C) LIQUIDATION EVENT. For purposes of Section 3, a "LIQUIDATION
EVENT" shall mean any liquidation, dissolution, or winding up of the
Corporation. Neither a consolidation or merger of the Corporation with or into
another Corporation, nor a merger of any other Corporation with or into the
Corporation, nor the sale of all or substantially all of the Corporation's
property or business (other than in connection with a winding up of its
business) will be considered a Liquidation Event for purposes of this
Certificate of Designations.
4. NO VOTING RIGHTS. The holders of Series A Preferred Stock will not
have any voting rights except such rights as from time to time are required by
the Delaware General Corporation Law. Any shares of Series A Preferred Stock
held by the Corporation or any subsidiary of the Corporation shall not have
voting rights hereunder and shall not be counted in determining the presence of
a quorum or in calculating any percentage of shares under this Section 4.
5. EXCHANGE BY CORPORATION.
(A) EXCHANGE RATIO AND DIVIDENDS. At any time, and from time to
time, on or after the Commencement Date, the Corporation may, at the sole option
of the Independent Directors (as defined in Section 5(f)), exchange (an
"EXCHANGE"), in whole or in part, each share of the Series A Preferred Stock for
thirteen and eleven hundredths (13.11) fully paid and nonassessable shares of
the Corporation's Common Stock (the "EXCHANGE RATIO"). At the time of any
Exchange, the Corporation shall pay in cash all accrued but unpaid dividends
(whether or not declared) on such exchanged shares to and as of the Exchange
Date (as defined in Section 5(c)) to the exchanging holders thereof.
(B) PRO RATA EXCHANGE. In the event of any Exchange of only a part
of the then outstanding Series A Preferred Stock, the Corporation shall effect
such Exchange pro rata among the outstanding shares of Series A Preferred Stock
according to the number of shares then held by each holder thereof.
(C) MECHANICS OF EXCHANGE. In the event of any Exchange pursuant to
this Section 5, at least twenty (20) but no more than sixty (60) days prior to
the date fixed by the Independent Directors (an "EXCHANGE DATE"), written notice
shall be mailed, first class postage prepaid, to each holder of record (at the
close of business on the business day next preceding the day on which notice is
mailed) of the Series A Preferred Stock to be exchanged, at the address last
shown on the records of the Corporation for such holder or given in writing by
the holder to the Corporation for the purpose of notice, notifying such holder
of the Exchange to be effected, specifying the number of shares of Series A
Preferred Stock to be exchanged by such holder, the Exchange Date, the number of
shares of Common Stock to be received by the holder in such Exchange, the amount
of cash for any fractional share and for all accrued but unpaid dividends to be
paid to the holder, and calling upon such holder to surrender to the Corporation
at its principal executive office or the office of its transfer agent, such
holder's certificate or certificates representing the shares of Series A
Preferred Stock to be exchanged (the "EXCHANGE NOTICE"). On or after the
Exchange Date, each holder of Series A Preferred Stock to be exchanged shall
surrender to the Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Exchange Notice, and
each surrendered certificate shall be canceled. In the event less than all the
shares represented by any such Series A Preferred Stock certificate are
exchanged, a new certificate shall be issued representing the unexchanged
shares.
The Corporation shall, as soon as practicable after each Exchange,
issue and deliver to the exchanging holder of Series A 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 exchange shall be deemed to have been made immediately upon the opening of
business on the Exchange Date, and the person or persons entitled to receive the
shares of Common Stock issuable upon such exchange shall be treated for all
purposes as the record holder or holders of such shares of Common Stock
immediately upon the opening of business on such Exchange Date. From and after
the opening of business on the Exchange Date, unless there shall have been a
failure by the Corporation to effectuate an Exchange, all rights of the holders
of such exchanged shares as holders of Series A Preferred Stock (except the
right to receive the appropriate number of shares of Common Stock and cash for
any fractional share and for accrued but unpaid dividends in exchange for the
surrender of their certificate or certificates), shall cease with respect to
such shares of Series A Preferred Stock, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purposes whatsoever.
(D) NO FRACTIONAL SHARES. No fractional share of Common Stock shall
be issued upon any Exchange of Series A Preferred Stock pursuant to the
provisions of this Section 5. In lieu of any fractional share to which a holder
of Series A Preferred Stock would otherwise be entitled, the Corporation shall
pay in cash the Fair Market Value (as defined below) of any such fractional
share of Common Stock. The "FAIR MARKET VALUE" of a fraction of a share of
Common Stock shall be an amount equal to the same fraction of the closing price
of the Common Stock on the last trading day prior to the Exchange Date on the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System (the "NMS"), or such other national securities
exchange or quotation system as such Common Stock is then listed or, if not so
listed or quoted, the average of the closing bid and asked prices on such
trading date. The determination of the fractional share for which a cash
payment will be made shall be determined on the basis of the total number of
shares of the Series A Preferred Stock the holder is at the time required to
exchange into Common Stock and the number of shares of Common Stock issuable
upon such aggregate Exchange.
(E) TRANSFER TAXES. The Corporation shall pay any and all United
States issue or other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock upon exchange of the Series A Preferred
Stock. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than that in which
the shares of Series A Preferred Stock so exchanged were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid.
(F) INDEPENDENT DIRECTOR. For purposes of this Certificate of
Designations, "INDEPENDENT DIRECTOR" means each director of the Corporation who
is not currently (i) a holder of Series A Preferred Stock nor (ii) apart from
such directorship, an affiliate, officer, director, employee, agent, principal
stockholder, consultant or partner of any holder of Series A Preferred Stock or
the Corporation or any affiliate of either of them or of any entity that was
dependent on a holder of Series A Preferred Stock or the Corporation or any
affiliate of either of them for more than five percent (5%) of its revenues or
earnings in its most recent fiscal year, and who was not at any time in the past
an affiliate, officer, employee, director, principal stockholder or partner of a
holder of Series A Preferred Stock or the Corporation or any affiliate of either
of them, and does not have, in the good faith judgment of the then existing
Independent Directors, any other direct or indirect interest in or relationship
with a holder of Series A Preferred Stock or the Corporation or any of their
respective affiliates so as to be reasonably likely to cause such person to have
any interest in any transaction with a holder of Series A Preferred Stock or the
Corporation or any of their respective affiliates.
(G) EXCHANGE RATIO AND SHARE ADJUSTMENTS.
(I) 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 Common Stock or in any right to acquire Common Stock for
no consideration, or shall effect a subdivision of the outstanding 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 Exchange Ratio 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 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 Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(II) NO MINOR ADJUSTMENTS TO EXCHANGE RATIO. No adjustment of
the Exchange Ratio shall be made pursuant to this Section 5(g) in an amount less
than one hundredth (0.01) of a share. Adjustment amounts under one hundredth
(0.01) of a share shall be carried forward and taken into account in any
subsequent adjustment calculations.
(III) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Exchange Ratio pursuant to this Section
5(g), 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 A Preferred Stock a certificate setting
forth (A) such adjustment or readjustment showing in detail the facts upon which
such adjustment or readjustment is based, (B) the Exchange Ratio 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 exchange of a share
of Series A Preferred Stock.
(H) 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 5(g)(i), then, in each
such case for the purpose of this Section 5(h), the holders of Series A
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 A Preferred Stock are
exchangeable pursuant to Section 5 as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such a distribution.
(I) 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 as set forth in Section 5(g)(i)), provision
shall be made so that the holders of Series A Preferred Stock shall thereafter
be entitled to receive, upon exchange of their Series A Preferred Stock, the
number of shares of stock or other securities or property of the Corporation, or
otherwise, to which a holder of Series A Preferred Stock would have been
entitled in such recapitalization if such holder's shares had been exchanged
into Common Stock immediately prior to such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of Series A Preferred
Stock after the recapitalization to the end that the provisions of this Section
5 (including adjustment of the Exchange Ratio, if applicable, then in effect and
the number of shares receivable upon exchange of Series A Preferred Stock) shall
be applicable after that event as nearly equivalent as may be practicable.
6. REDEMPTION BY CORPORATION. At any time, and from time to time, on or
after the Commencement Date, the Corporation may, at the option of the
Independent Directors, redeem for cash, in whole or in part, the Series A
Preferred Stock (a "REDEMPTION"), as follows:
(A) REDEMPTION PRICE. The redemption price per share for the Series
A Preferred Stock shall be one hundred dollars and seventy five cents ($100.75)
(the "REDEMPTION PRICE"). At the time of any Redemption, the Corporation shall
pay in cash all accrued but unpaid dividends (whether or not declared) on such
redeemed shares to and as of the Redemption Date (as defined in Section 6(c)) to
the redeeming holders thereof.
(B) PRO RATA REDEMPTION. In the event of any Redemption of only a
part of the then outstanding Series A Preferred Stock, the Corporation shall
effect such Redemption pro rata among the outstanding shares of Series A
Preferred Stock according to the number of shares then held by each holder
thereof.
(C) MECHANICS OF REDEMPTION. In the event of any Redemption pursuant
to this Section 6, at least twenty (20) but no more than sixty (60) days prior
to the date fixed by the Independent Directors for such Redemption of Series A
Preferred Stock (a "REDEMPTION DATE"), written notice shall be mailed, first
class postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is mailed) of the Series A
Preferred Stock to be redeemed, at the address last shown on the records of the
Corporation for such holder or given in writing by the holder to the Corporation
for the purpose of notice, notifying such holder of the Redemption to be
effected, specifying the number of shares of Series A Preferred Stock to be
redeemed, the Redemption Date, the Redemption Price, and calling upon such
holder to surrender to the Corporation at its principal executive office or the
office of its transfer agent, such holder's certificate or certificates
representing the shares of Series A Preferred Stock to be redeemed (the
"REDEMPTION NOTICE"). On or after the Redemption Date, each holder of Series A
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares, in the manner and at the place designated in the
Redemption Notice, and each surrendered certificate shall be canceled. Not less
than three (3) days prior to the Redemption Date, the Corporation shall deposit,
from funds legally available therefor, the Redemption Price for the shares
designated for redemption with a bank or trust Corporation having aggregate
capital and surplus in excess of $20,000,000 as a trust fund for the benefit of
the holder of the shares designated for Redemption. At such time, the
Corporation shall also deposit irrevocable instruction and authority to such
bank or trust Corporation to pay, on or after the Redemption Date, the deposited
Redemption Price of the Series A Preferred Stock to the holder thereof upon
surrender of its certificate(s).
If funds are available on the Redemption Date, then whether or not the
share certificates are surrendered for payment of the Redemption Price, the
shares shall no longer be outstanding and the holder thereof shall cease to be a
shareholder of the Corporation with respect to the shares redeemed on and after
the Redemption Date and shall be entitled only to receive the Redemption Price
without interest upon surrender of the share certificate. If less than all the
shares represented by one share certificate are to be redeemed, the Corporation
shall issue a new share certificate for the shares not redeemed.
7. 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 Certificate of Designations.
8. 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 A Preferred Stock, the Corporation shall not amend its Certificate of
Incorporation (including this Certificate of Designations) or its Bylaws 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 A
Preferred Stock.
9. STATUS OF ACQUIRED STOCK. Shares of Series A Preferred Stock acquired
by the Corporation by reason of exchange or otherwise will be restored to the
status of authorized but unissued shares of Preferred Stock, without designation
as to series, and may be issued, but not as shares of Series A Preferred Stock.
10. NO CONVERSION, EXCHANGE OR REDEMPTION BY HOLDERS. Shares of Series A
Preferred Stock shall not be subject to conversion, exchange or redemption at
the option of the holder thereof.
11. SEVERABILITY OF PROVISIONS. Whenever possible, each provision hereof
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to he 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 and
acknowledged by the undersigned on behalf of the Corporation on this 13th day of
December, 1996.
AST RESEARCH, INC.
By: /s/ XXXXXXX X.XXXX
Name: Xxxxxxx X. Xxxx
Title: Assistant Secretary
