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EXHIBIT 4.9
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Dated as of May 31, 1996
by and between
PETERSBURG LONG DISTANCE INC.
and
THE BANK OF NEW YORK
as Warrant Agent
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WARRANT AGREEMENT
TABLE OF CONTENTS*
PAGE
SECTION 1. Appointment of Warrant Agent .................................. 2
SECTION 2. Issuance of Warrants .......................................... 2
SECTION 2A. Reset of Exercise Price ...................................... 2
SECTION 3. Warrant Certificates .......................................... 2
SECTION 4. Execution of Warrant Certificates ............................. 3
SECTION 5. Transfers of Warrants ......................................... 4
(a) Prior to the Separation of Warrants and
Senior Notes; Separation of Warrants and
Senior Notes ............................................. 4
(b) Private Placement Legend ................................. 5
(c) Global Warrant Legend .................................... 5
SECTION 6. Registration and Countersignature ............................. 6
SECTION 7. (a) Registration of Transfers and Exchanges ................... 6
(b) Book-Entry Provisions for the Global Warrants ............. 7
(c) Special Transfer Provisions ............................... 8
SECTION 8. Terms of Warrants; Exercise of Warrants ....................... 10
SECTION 9. Reports ....................................................... 12
SECTION 10. Payment of Taxes ............................................. 12
SECTION 11. Mutilated or Missing Warrant Certificates .................... 13
SECTION 12. Reservation of Warrant Shares ................................ 13
SECTION 13. Obtaining Stock Exchange Listings ............................ 14
SECTION 14. Consolidation ................................................ 14
SECTION 15. Adjustment of Exercise Price ................................. 15
SECTION 16. [Intentionally Omitted] ...................................... 25
SECTION 17. Fractional Interests ......................................... 25
SECTION 18. Notices to Warrant Holders ................................... 26
SECTION 19. Warrant Agent ................................................ 27
SECTION 20. Merger, Consolidation or Change of Name
of Warrant Agent ........................................... 29
SECTION 21. Change of Warrant Agent ...................................... 30
SECTION 22. Notices to the Company and Warrant Agent ..................... 31
SECTION 23. Supplements and Amendments ................................... 32
SECTION 24. Successors ................................................... 32
SECTION 25. Termination .................................................. 32
SECTION 26. Governing Law; Jurisdiction .................................. 32
SECTION 27. Indemnity .................................................... 33
SECTION 28. Benefits of This Agreement ................................... 34
SECTION 29. Counterparts ................................................. 34
SECTION 30. Further Assurances ........................................... 35
EXHIBIT A Form of Warrant Certificate .................................. 38
EXHIBIT B Form of Warrant Shares Legend ................................ 42
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* This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
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WARRANT AGREEMENT (this "Agreement") dated as of May 31, 1996
between Petersburg Long Distance Inc., (the "Company"), and The Bank of New
York, a New York banking corporation, as Warrant Agent (the "Warrant Agent")
WHEREAS, the Company has entered into a purchase agreement, dated
May 24, 1996, with Xxxxx Xxxxxx Inc. (the "Initial Purchaser") pursuant to which
the Company has agreed to sell to the Initial Purchaser (i) 123,000 Units (the
"Units") consisting of $123,000,000 aggregate principal amount at maturity of
14% Senior Discount Notes due 2004 (the "Senior Notes") and warrants (the
"Warrants") to purchase up to an aggregate of 4,182,000 common shares without
par value of the Company (the "Common Shares") and (ii) $26,500,000 principal
amount of 9% Convertible Subordinated Notes due 2006 (the "Convertible Notes").
Each Warrant entitles the holder thereof, upon exercise, to purchase thirty
four fully paid and nonassessable Common Share at an exercise price of $6.60 per
share (the "Exercise Price"). The Exercise Price and the number of shares are
both subject to adjustment under certain circumstances as provided in Section 2A
and Section 15 hereof. The Common Shares issuable upon exercise of the Warrants
are referred to herein as "Warrant Shares." The Senior Notes will be issued
under an indenture to be dated as of May 31, 1996 (the "Senior Note Indenture")
among the Company, the guarantors named therein and The Bank of New York, as
trustee (the "Senior Note Trustee"); and
WHEREAS, the Warrants shall bear the legend (the "Warrant Legend")
set forth on the form of Warrant Certificate set forth in Exhibit A attached
hereto and the Senior Notes shall bear the legend set forth in Exhibit A
attached to the Senior Note Indenture, in each case subject to the terms of this
Agreement and the Indenture, as the case may be. Unless registered under the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws, the Warrant Shares shall bear the legend set forth in
Exhibit B (the "Warrant Shares Legend"); and
WHEREAS, the Warrants and the Senior Notes shall not be separately
transferable until the close of business upon the earliest to occur of (i) a
date 180 days after the issue of the Warrants, (ii) such date as the Initial
Purchaser may determine and specify to the Warrant Agent, (iii) the commencement
of the offer by the Company to the holders of Senior Notes of the opportunity to
acquire Exchange Notes in substitution for the Senior Notes (the "Exchange
Offer") and (iv) in the event of Change of Control, the date the Company mails
notice thereof to the holders of the Senior Notes (the "Separation Date"); and
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WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates and other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Issuance of Warrants. Warrants shall be originally issued
in connection with the issuance of the Senior Notes and shall not be separately
transferable from the Senior Notes until on or after the Separation Date as
provided in Section 5 hereof.
SECTION 2A. Reset of Exercise Price. On December 1, 1996 (the "Reset
Date"), the Exercise Price will be adjusted (the "Reset") to equal (x) the
product of (i) the average of the high and low prices on the Nasdaq National
Market or the consolidated transaction reporting tape in the event that the
Common Shares are not then traded on the Nasdaq National Market, and (ii) the
number of Common Shares reported as being traded on that day for each trading
day of the 30 calendar days preceding the Reset Date (the "Reset Period")
divided by the total number of Common Shares traded over the Reset Period
multiplied by (y) 110% (the "Reset Price"), if such Reset Price shall be lower
than the Exercise Price before such calculation. In the event that the Exercise
Price before such calculation shall be equal to or less than the Reset Price
calculated in accordance with this Section 2A, then no adjustment to the
Exercise Price shall be made pursuant to this Section 2A. The Exercise Price as
of the date hereof and as adjusted to the Reset Price are subject to the further
adjustments of Section 15. In no event shall the effect of this Section 2A be to
increase the number of Common Shares issuable upon exercise of the Warrants.
SECTION 3. Warrant Certificates. The certificates evidencing the
Warrants ("Warrant Certificates") shall be substantially in the form annexed
hereto as Exhibit A.
Warrants were offered and sold in reliance on Rule 144A and shall be
evidenced initially in the form of a single permanent global Warrant (the
"Global Warrant") evidenced by a single Warrant Certificate in definitive, fully
registered form, substantially in the form set forth in Exhibit A (the "Global
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Warrant Certificate"), deposited with the Warrant Agent, as custodian for the
Depositary and registered in the name of a nominee of the Depositary, duly
executed by the Company and countersigned by the Warrant Agent as hereinafter
provided. The aggregate amount of the Global Warrant may from time to time be
increased or decreased by adjustments made on the records of the Warrant Agent,
as custodian for the Depositary or its nominee, as hereinafter provided.
SECTION 4. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by any two of the following officers:
its Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President, any Vice President, Secretary or an Assistant Secretary, under its
corporate seal. Each such signature upon the Warrant Certificates may be in the
form of a facsimile signature of the present or any future Chairman of the
Board, Chief Executive Officer, Chief Financial Officer, President or any Vice
President and Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant Certificates and for that purpose the Company may
adopt and use the facsimile signature of any person who shall have been Chairman
of the Board, Chief Executive Officer, Chief Financial Officer, President, any
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of he or she shall have ceased to hold such office. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Agreement
any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
In the event that the Exercise Price is adjusted pursuant to Section
2A, the Company may instruct the Warrant Agent to issue new Warrant Certificates
with the new Exercise
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Price to replace the Warrant Certificates issued prior to the Reset Date.
SECTION 5. Transfers of Warrants.
(a) Prior to the Separation of Warrants and Senior Notes; Separation
of Warrants and Senior Notes. Notwithstanding the provisions of Section 7
hereof, on or after the Separation Date, the registered holder of a Warrant
Certificate containing a Warrant Legend may surrender such Warrant Certificate
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney to the Warrant Agent, at its address specified in
Section 22 hereof (the "Warrant Agent Office") for the exchange of such Warrant
Certificate containing a Warrant Legend, in whole or in part, for a new Warrant
Certificate or certificates.
Until the Separation Date, no Warrant may be sold, assigned or
otherwise transferred to any person unless simultaneously with such transfer,
the Warrant Agent receives confirmation from the Senior Note Trustee that the
holder thereof has requested a transfer to such transferee of $1,000 principal
amount at maturity of Senior Notes for each Warrant to purchase 34 Common Shares
of the Company (subject to adjustment under Section 2A and Section 15 hereof) so
transferred. In connection with the foregoing, upon original issuance (if prior
to the Separation Date) and, thereafter (until Separation with respect to the
first paragraph only), each Warrant Certificate will bear the following legend:
UNTIL THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) A DATE 180
DAYS AFTER THE ISSUE OF THE WARRANTS, (ii) SUCH DATE AS XXXXX XXXXXX INC.
MAY DETERMINE, (iii) THE COMMENCEMENT OF AN EXCHANGE OFFER RELATING TO THE
14% SENIOR DISCOUNT NOTES DUE 2004 (THE "SENIOR NOTES") OF PETERSBURG LONG
DISTANCE INC. (THE "COMPANY"), (iv) IN THE EVENT OF CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE RELATING TO THE SENIOR NOTES), THE DATE THE
COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE NOTES, THE WARRANTS
EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED TO ANY
PERSON UNLESS, SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF
TRANSFERS TO SUCH TRANSFEREE $1,000 PRINCIPAL AMOUNT AT MATURITY OF SENIOR
NOTES AND A WARRANT TO PURCHASE 34 COMMON SHARES OF THE COMPANY (SUBJECT
TO ADJUSTMENT UNDER SECTION 2A AND SECTION 15 OF THE WARRANT AGREEMENT,
DATED AS OF JUNE 7, 1996, BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS
WARRANT AGENT) SO TRANSFERRED.
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THE COMMON SHARES (THE "COMMON SHARES") FOR WHICH THIS WARRANT IS
EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL BE
ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE
TIME OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE ACT COVERING THE
OFFER AND SALE OF THE COMMON SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE
BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER
SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN
ISSUED BY THE SEC OR (II) THE OFFER AND SALE OF THE WARRANT SHARES TO THE
WARRANT HOLDERS ARE EXEMPT FROM REGISTRATION UNDER THE ACT AND THE WARRANT
HOLDER, IF SO REQUESTED BY THE COMPANY, HAS DELIVERED TO THE COMPANY AN
OPINION OF COUNSEL TO SUCH EFFECT.
(b) Private Placement Legend. Except as otherwise provided in
Section 7(c)(ii) hereof, the Global Warrant Certificate shall bear the following
legend (the "Private Placement Legend"):
THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS WARRANT CERTIFICATE WAS
ORIGINALLY ISSUED, THE COMMON SHARES PURCHASABLE UPON THEIR EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND THE PROVINCES OF CANADA.
(c) Global Warrant Legend. The Global Warrant Certificate shall also
bear the following legend:
UNLESS THIS WARRANT IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY WARRANT ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO
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CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 7 OF THE WARRANT AGREEMENT.
SECTION 6. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, Chief Financial Officer, President, a Senior Vice
President or Secretary of the Company, initially countersign and deliver Warrant
Certificates entitling the holders thereof to purchase not more than the number
of Warrant Shares referred to above in the first recital hereof and shall
countersign and deliver Warrant Certificates as otherwise provided in this
Agreement. Such written instructions shall specify the amount of the Warrants to
be countersigned and the date of countersignature.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. The Company agrees to arrange for the
Trustee under the Indenture (or any other Registrar thereunder) to act as
registrar hereunder with respect to Warrants that are not Separated.
SECTION 7. (a) Registration of Transfers and Exchanges. In
accordance with this Section 7, the Warrant Agent shall from time to time
register the transfer of any outstanding Warrant Certificates upon the records
to be maintained by it for that purpose, upon surrender thereof accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered holder or holders
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thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled by the Warrant Agent. Canceled Warrant
Certificates shall thereafter be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure and in accordance with
applicable law.
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Warrant Agent at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled by the Warrant Agent. Such canceled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure and in accordance with
applicable law.
No service charge shall be made for any transfer or exchange of
Warrant Certificates or any issuance of Warrant Certificates, but the Company
may require payment of a sum sufficient to cover any stamp or other governmental
charge or tax that may be imposed in connection with any such transfer or
exchange.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 7 and Section 5, the new Warrant
Certificates required pursuant to the provisions of this Section 7.
(b) Book-Entry Provisions for the Global Warrants.
(i) The Global Warrant Certificate initially shall (x) be
registered in the name of the Depositary or the nominee of such Depositary, (y)
be delivered to the Warrant Agent as custodian for the Depositary and (z) bear
the legend as set forth in Section 5(b).
(ii) Transfers of the Global Warrant Certificates shall be
limited to transfers of such Global Warrant Certificates in whole, but not in
part, to the Depositary, its successors or their respective nominees. Beneficial
interests in the Global Warrant may be transferred in accordance with the
applicable rules and procedures of the Depositary. Physical Warrant Certificates
in substantially the form set forth in Exhibit A ("Physical Warrant
Certificates"), evidencing physical warrants ("Physical Warrants"), shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Warrant if the Depositary notifies the Company that it
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is unwilling or unable to continue as, or ceases to be, a "Clearing Agency"
registered under Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and a successor depositary registered as a "Clearing
Agency" under Section 17 of the Exchange Act is not appointed by the Company
within 90 days of such notice.
(iii) In connection with the transfer of the Global Warrant to
beneficial owners pursuant to paragraph (b) (ii) of this Section 7, the Global
Warrant shall be deemed to be surrendered to the Warrant Agent for cancellation,
and the Company shall execute, and the Warrant Agent shall countersign and
deliver, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the Global Warrant, an equal aggregate amount of
Physical Warrant Certificates of authorized denominations.
(iv) Any Physical Warrant Certificate delivered in exchange
for an interest in the Global Warrant pursuant to paragraph (b) (ii) of this
Section 7 shall, except as otherwise provided by paragraph (c) (ii) of this
Section 7, bear the legend regarding transfer restrictions set forth in Section
5(b).
(v) The registered holder of the Global Warrant may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a
Warrant holder is entitled to take under this Warrant Agreement or the Warrants.
(c) Special Transfer Provisions.
(i) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of a Warrant to a QIB:
(x) If the Warrant to be transferred consists of Physical
Warrants, the Warrant Agent shall register the transfer if
such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Warrant stating,
or has otherwise advised the Company and the Warrant Agent in
writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Warrant stating, or
has otherwise advised the Company and the Warrant Agent in
writing, that it is purchasing the Warrant for its own account
or an account with respect to which it exercises sole
investment discretion and that it and any such
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account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is
aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
(y) If the proposed transferee is an Agent Member and the Warrant
to be transferred consists of Physical Warrants, upon receipt
by the Warrant Agent of the documents referred to in clause
(x) and instructions given in accordance with the Depositary's
and the Warrant Agent's procedures, the Warrant Agent shall
reflect on its books and records the date and an increase in
the aggregate amount of the Global Warrant in an amount equal
to the aggregate amount of the Physical Warrants, as the case
may be, to be transferred, and the Warrant Agent shall cancel
the Physical Warrants so transferred.
(ii) Private Placement Legend. Upon the transfer, exchange or
replacement of Warrant Certificates not bearing the Private Placement Legend,
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of Warrant
Certificates bearing the Private Placement Legend, the Warrant Agent shall
deliver only Warrant Certificates that bear the Private Placement Legend unless
there is delivered to the Warrant Agent an opinion of counsel reasonably
satisfactory to the Company and the Warrant Agent to the effect that neither
such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act and the provisions
of applicable Canadian provincial securities legislation.
(iii) General. The provisions hereof shall be qualified in
their entirety by any applicable securities laws of the United States, the
Province of Ontario, and any other applicable jurisdiction and by the procedures
of any applicable clearing agency, in each case as in effect from time to time,
and all such laws and clearing procedures shall be deemed to be incorporated
herein by reference. By its acceptance of any Warrant Certificate bearing the
Private Placement Legend, each holder of such a Warrant Certificate shall be
deemed to acknowledge the restrictions on transfer of such Warrant
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Certificate set forth in this Warrant Agreement and in the Private Placement
Legend and agrees that it will transfer such Warrant Certificate only as
provided in this Warrant Agreement. The Warrant Agent shall not register a
transfer of any Warrant Certificate unless such transfer complies with the
restrictions on transfer of such Warrant Certificate set forth in this Warrant
Agreement. In connection with any transfer of Warrant Certificates, each Warrant
holder agrees by its acceptance of the Warrant Certificates to furnish the
Warrant Agent or the Company such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act and the
provisions of applicable Canadian provincial securities legislation; provided
that the Warrant Agent shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
SECTION 8. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised at any time beginning 180 days from the date of original issuance
thereof and on or prior to the close of business on a date ten years following
the issue date (the "Expiration Date") to exercise each Warrant and receive from
the Company the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as herein defined) then in effect for such
Warrant Shares; provided that no Warrant holder shall be entitled to exercise
such holder's Warrants at any time unless, at the time of exercise, (i) a
registration statement under the Securities Act covering the offer and sale of
the Warrant Shares has been filed with, and declared effective by, the
Securities and Exchange Commission (the "SEC"), and no stop order suspending the
effectiveness of such registration statement has been issued by the SEC or (ii)
the offer and sale of the Warrant Shares to the Warrant holder are exempt from
registration under the Securities Act and the holder of the Warrants, if so
requested by the Company, has delivered to the Company an opinion of counsel to
such effect. Each Warrant, when exercised, will entitle the holder thereof to
purchase 34 fully paid and nonassessable Common Shares at the Exercise Price.
The Exercise Price and the number of shares are both subject to adjustment under
certain circumstances as provided herein by Sections 2A and 15. Each Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time.
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A Warrant may be exercised at any time on or after 180 days from the
date of original issuance thereof upon surrender to the Company at the principal
office of the Warrant Agent of the Warrant Certificate or Certificates to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by an "eligible
guarantor" as defined in the regulations promulgated under the Exchange Act and
upon payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for each Warrant then exercised. Payment
of the aggregate Exercise Price shall be made in the form of cash or a certified
or official bank or bank cashier's check payable to the order of the Company.
Subject to the provisions of Section 9 hereof, upon such surrender
of Warrants and payment of the Exercise Price, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Warrant holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of whole Warrant Shares issuable upon
the exercise of such Warrants together with any cash which may be payable as
provided in Section 17 hereof; provided that if any consolidation, merger or
lease or sale of assets is proposed to be effected by the Company as described
in Section 14 hereof, or a tender offer or an exchange offer for Common Shares
of the Company shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, the Company shall, as soon as possible, but in any
event not later than two Business Days thereafter, issue and cause to be
delivered to the registered holder thereof or any person so designated to be
named therein the full number of Warrant Shares issuable upon the exercise of
such Warrants in the manner described in this sentence together with any cash
which may be payable as provided in Section 17 hereof. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the aggregate Exercise Price. No fractional shares shall be issued upon exercise
of any Warrants in accordance with Section 17 hereof.
The Warrants shall be exercisable at any time on or after 180 days
from the date of original issuance thereof at the election of the holders
thereof, either in full or from time to time in part (in whole shares) and, in
the event that a Warrant Certificate is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the
Expiration Date, a new Warrant Certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby irrevocably authorized
to countersign and to
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deliver the required new Warrant Certificate or Certificates pursuant to the
provisions of this Section and of Section 4 hereof, and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Warrant Agent. Such canceled Warrant Certificates shall then
be disposed of by the Company in accordance with applicable law. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Warrant
holders during normal business hours at its office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agent may request.
SECTION 9. Reports. So long as any of the Warrants remain
outstanding, the Company shall cause copies of all quarterly and annual
financial reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act ("SEC Reports") to be filed with the Warrant
Agent and mailed to the holders of Warrants, in each case, within 15 days after
filing with the SEC. If the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall nevertheless continue
to cause reports, comparable to those that it would be required to file pursuant
to Section 13 or 15(d) of the Exchange Act if it were then subject to the
requirements of either such Section, to be so filed with the SEC for public
availability (unless the SEC will not accept such a filing) and with the Warrant
Agent and mailed to the holders of Warrants, in each case, within the same time
periods as would have applied (including under the preceding sentence) had the
Company then been subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall make available to investors and prospective
investors of the Warrants information that satisfies the requirements of Rule
144A(d)(4) under the Securities Act.
SECTION 10. Payment of Taxes. No service charge shall be made to any
holder of a Warrant for any exercise, exchange or registration of transfer of
Warrant Certificates, and the Company will pay all documentary stamp taxes
attributable to the initial
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issuance of Warrant Shares upon the exercise of Warrants or to any Separation;
provided that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 11. Mutilated or Missing Warrant Certificates. If any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security there for, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 12. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issuance
thereof, out of the aggregate of its authorized but unissued Common Shares, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of Common Shares which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or the transfer agent for the Common Shares (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates
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required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available to the Warrant Agent any cash which may be payable as provided in
Section 17 hereof. The Company will furnish such Transfer Agent a copy of all
notices of adjustments and certificates related thereto transmitted to each
holder pursuant to Section 18 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 15 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take all corporate action necessary, in
the opinion of its counsel (which may be counsel employed by the Company), in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares will be, upon payment
of the Exercise Price and issuance thereof, duly and validly issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issuance thereof.
SECTION 13. Obtaining Stock Exchange Listings. The Company shall
from time to time take all action necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges, interdealer quotation systems and markets,
if any, on which any Common Shares are then listed or quoted.
SECTION 14. Consolidation. In the event the Company consolidates
with, merges with or into, or sells all or substantially all of its property and
assets to another Person, each Warrant thereafter shall entitle the holder
thereof to receive upon exercise thereof the number of shares of capital stock
or other securities or property which the holder of a Common Share is entitled
to receive upon completion of such consolidation, merger or sale of assets. If
the Company merges or consolidates with, or sells all or substantially all of
its property and assets to, another Person and, in connection therewith,
consideration to the holders of Common Shares in exchange for their shares is
payable solely in cash, or in the event of the dissolution, liquidation or
winding-up of the Company, then the holders of the Warrants will be entitled to
receive distributions on an equal basis with the holders of Common Shares or
other securities issuable upon exercise of the warrants, as if the Warrants had
been exercised immediately prior to such event, less the Exercise Price. Upon
receipt of such
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payment, if any, the Warrants will expire and the rights of the holders thereof
will cease.
In case of any such merger, consolidation or sale of assets, the
surviving or acquiring Person, and in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds or other consideration, if any, necessary to pay the
holders of the Warrants. After such funds and the surrendered Warrant
Certificate are received, the Warrant Agent shall make payment by delivering a
check in such amount as is appropriate (or, in the case of consideration other
than cash, shall transfer such other consideration as is appropriate) to such
Person or Persons as it may be directed in writing by the holders surrendering
such Warrants.
SECTION 15. Adjustment of Exercise Price.
(a) In case the Company shall make a dividend or other distribution
on the Common Shares exclusively in Common Shares (other than a distribution
referred to in paragraph (c) of this Section), the Exercise Price in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Exercise Price by a fraction
of which the numerator shall be the number of shares of Common Shares
outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. In case the Company shall
make a dividend or other distribution on the Common Shares in shares of its
capital stock other than Common Shares, and such dividend or distribution would
not otherwise require reduction of the Exercise Price pursuant to paragraph (d),
then, the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of a Warrant (as in effect immediately
prior to such dividend or distribution) shall be proportionately adjusted so
that the holder of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company that such holder would
have owned immediately following such dividend or distribution if such Warrant
had been exercised immediately prior thereto. For the purpose of this paragraph
(a), the number of Common Shares at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of Common Shares. The
Company shall not pay any dividend or make
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any distribution on Common Shares held in the treasury of the Company.
(b) Subject to the last sentence of paragraph (g) of this Section,
in case the Company shall make a dividend or other distribution on the Common
Shares consisting exclusively of, or shall otherwise issue to all holders of the
Common Shares, rights, options or warrants entitling the holders thereof to
subscribe for or purchase Common Shares or securities convertible into or
exchangeable for Common Shares at a price per share (determined on an
as-converted or as-exercised basis if the rights, options or warrants pertain to
securities convertible into or exchangeable for Common Shares) less than the
Current Market Price (determined as provided in paragraph (h) of this Section)
on the date fixed for the determination of shareholders entitled to receive such
rights, options or warrants, the Exercise Price in effect at the opening of
business on the day following the date fixed for such determination shall be
reduced by multiplying such Exercise Price by a fraction of which the numerator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares which the
aggregate of the offering price (including the minimum consideration payable
upon exercise or exchange of securities convertible into or exchangeable for
Common Shares) of the total number of Common Shares so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of Common Shares outstanding at the close of business on the
date fixed for such determination plus the number of Common Shares so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (b), the number of Common
Shares at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of Common Shares. The Company shall not issue any
rights, options or warrants in respect of Common Shares held in the treasury of
the Company.
(c) In case outstanding Common Shares shall be subdivided into a
greater number of Common Shares, the Exercise Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case outstanding
Common Shares shall be combined into a smaller number of Common Shares, the
Exercise Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately
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after the opening of business on the day following the day upon which
subdivision or combination becomes effective.
(d) (i) Subject to the last sentence of this paragraph (d)(i) and
the last sentence of paragraph (g) of this Section, in case the Company shall,
by dividend or otherwise, distribute to all holders of the Common Shares
evidences of its indebtedness, shares of any class of its capital stock, cash or
other assets (including securities, but excluding any rights, options or
warrants referred to in paragraph (b) of this Section, excluding any dividend or
distribution paid exclusively in cash out of consolidated current or retained
earnings as shown on the books of the Company prepared in accordance with GAAP
(other than any Extraordinary Cash Dividend (as hereinafter defined)) and
excluding any dividend or distribution referred to in paragraph (a) or (c) of
this Section), the Exercise Price shall be reduced by multiplying the Exercise
Price in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) on such date of the
portion of the evidences of indebtedness, shares of capital stock, cash and
other assets to be distributed applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If the Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d)(i) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to paragraph (h)
of this Section, to the extent possible. For purposes of this paragraph (d)(i),
an "Extraordinary Cash Dividend" shall be that portion, if any, of the aggregate
amount of all cash dividends paid in any fiscal year which exceed $25,000,000.
For purposes of this paragraph (d), any dividend or distribution that includes
Common Shares, rights, options or warrants to subscribe for or purchase Common
Shares or securities convertible into or exchangeable for Common Shares shall be
deemed to be (x) a dividend or distribution of the evidences of indebtedness,
cash, assets or shares of capital stock other than such Common Shares, such
rights, options or warrants or such convertible or exchangeable securities
(making any Exercise Price reduction required by this paragraph (d)(i)
immediately followed by (y) in the case of such Common Shares or such rights,
options or warrants, a dividend or distribution thereof (making any further
Exercise Price reduction required by
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paragraph (a) and(b) of this Section, except any Common Shares included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
paragraph (a) of this Section), or (z) in the case of such convertible or
exchangeable securities, a dividend or distribution of the number of Common
Shares as would then be issuable upon the exercise or exchange thereof, whether
or not the exercise or exchange of such securities is subject to any conditions
(making any further Exercise Price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(ii) In case the Company shall issue Common Shares for a
consideration per share less than the Current Market Price (determined as
provided in paragraph (h) of this Section), the Exercise Price shall be reduced
by multiplying the Exercise Price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on the date fixed for such
determination plus a fraction equal to the aggregate consideration received by
the Company from the issuance of such additional Common Shares over the Current
Market Price on the date on which the Company fixes the offering price of such
additional shares (determined as provided in paragraph (h) of this Section), and
the denominator of which shall be the number of Common Shares outstanding
immediately after giving effect to such issuance. The reduction in the Exercise
Price provided for in the preceding sentence shall not apply to (i) securities
issued in transactions described in paragraphs (a), (b), (c), (d)(i), (d)(ii) or
(f) of this Section or pursuant to the exercise or exchange of any such
securities (to the extent applicable); (ii) the exercise or exchange of
securities (including options) convertible or exchangeable for Common Shares
outstanding on the date of this Warrant Agreement, or issuable pursuant to
binding agreements in effect on the date of this Warrant Agreement; (iii) Common
Shares issued and issuable upon the exercise of options issued to the Company's
directors, officers and employees under bona fide employee benefit plans adopted
by the Board of Directors and approved by the holders of Common Shares when
required by law or otherwise where such issuances have been approved by the
Board of Directors (but only to the extent that the aggregate number of shares
excluded hereby and issued after the date of this Warrant Agreement shall not
exceed 1% of the Common Shares outstanding at the time of issuance); (iv) Common
Shares issued to shareholders of any person that merges into the Company in
proportion to their stock
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holdings of such person immediately prior to such merger, upon such merger; (v)
Common Shares issued in a bona fide underwritten public offering; (vi) Common
Shares issued in a bona fide private placement through a placement agent that is
a member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the Current Market Price (determined as
provided in paragraph (h) of this Section) attributable to restrictions on
transferability of the Common Shares, as determined in good faith by the Board
of Directors and described in a resolution thereof which shall be filed with the
Warrant Agent, shall exceed 20%), or issuable pursuant to a binding agreement in
effect on the date of this Warrant Agreement; or (vii) Common Shares issued as a
dividend on any securities outstanding on the date of this Warrant Agreement
required to be made pursuant to the certificate of designation pertaining to
such securities in effect at the time such securities were issued.
(iii) In case the Company shall issue any securities
convertible into or exchangeable for Common Shares for a consideration per
Common Share (including the minimum consideration per share payable upon
exercise or exchange of any securities convertible into or exchangeable for
Common Shares) of Common Shares initially deliverable upon exercise or exchange
of such securities less than the Current Market Price (determined as provided in
paragraph (h) of this Section), the Exercise Price shall be reduced by
multiplying the Exercise Price in effect immediately prior to the close of
business on the date on which the Company fixes the offering price of such
additional shares by a fraction of which the numerator shall be the number of
Common Shares outstanding immediately prior to the issuance of such securities
plus a fraction equal to the aggregate consideration received for the issuance
of such securities (including the minimum consideration per share payable upon
exercise or exchange of any securities convertible into or exchangeable for
Common Shares) over the Current Market Price on the date on which the Company
fixes the offering price of such additional shares (determined as provided in
paragraph (h) of this Section) and the denominator of which shall be the number
of shares outstanding immediately prior to the issuance of such securities plus
the maximum number of shares deliverable upon exercise of or in exchange for
such securities at the initial exercise or exchange rate. The reduction in the
Exercise Price provided for in the preceding sentence shall not apply to (i)
securities issued in transactions described in paragraphs (a), (b) or (d) (i) of
this Section; (ii) convertible securities issued to shareholders of any person
that merges into the Company, or with a Subsidiary of the Company, in proportion
to their stock holdings of such person immediately prior to such merger, upon
such merger; (iii) convertible securities issued in a bona fide underwritten
public
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offering; (iv) convertible securities issued in a bona fide private placement
through a placement agent that is a member firm of the National Association of
Securities Dealers, Inc. (except to the extent that any discount from the
Current Market Price (determined as provided in paragraph (h) of this Section)
attributable to restrictions on transferability of Common Shares issuable upon
exercise, as determined in good faith by the Board of Directors and described in
a resolution thereof which shall be filed with the Warrant Agent, shall exceed
20% of the then Current Market Price, or issuable pursuant to a binding
agreement in effect on the date of this Warrant Agreement; or (v) stock options
issued to the Company's directors, officers or employees.
(e) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of the Common Shares cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) (i) of this
Section or in connection with a transaction to which Section 14 applies) in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of the Common Shares made exclusively in cash
within the 12 months preceding the date fixed for the determination of
shareholders entitled to such distribution and in respect of which no Exercise
Price adjustment pursuant to paragraph (d) (i) or this paragraph (e) has been
made previously and (ii) the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) as of such
date of determination of consideration payable in respect of any tender offer by
the Company or a Subsidiary for all or any portion of the Common Shares, and any
purchase by the Company of Common Shares in the open market, consummated within
the 12 months preceding such date of determination and in respect of which no
Exercise Price adjustment pursuant to paragraph (f) of this Section has been
made previously, exceeds 12.5% of the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date of
determination times the number of Common Shares outstanding on such date, the
Exercise Price shall be reduced by multiplying the Exercise Price in effect
immediately prior to the close of business on such date of determination by a
fraction of which the numerator shall be the Current Market Price (determined as
provided in paragraph (h) of this Section) on such date less the amount of cash
to be distributed at such time applicable to one Common Share and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day after such
date.
(f) In case a tender of exchange offer made by the Company or any
subsidiary for all or any portion of the Common
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Shares shall be consummated, or in case the Company shall purchase Common Shares
in the open market, the Exercise Price shall be reduced by multiplying the
Exercise Price in effect immediately prior to the Expiration Time by a fraction
of which the numerator shall be (x) the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) times the number of
Common Shares outstanding (including any tendered or exchanged shares) at the
Expiration Time and the denominator shall be the sum of (A) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
shareholders upon consummation of such tender or exchange offer, or upon such
purchase, and (B) the product of such Current Market Price times such number of
outstanding shares at the Expiration Time minus the number of shares accepted
for payment in such tender or exchange offer, or so purchased (the "Purchased
Shares"). For the purpose of this paragraph, "Expiration Time" means either the
last time that tenders may be made pursuant to a tender offer or exchanges may
be made pursuant to an exchange offer, or the time of an agreement to purchase
shares in the open market, as the case may be. Any reduction in the Exercise
Price pursuant to this paragraph shall be made immediately following the close
of business on the last trading day used to compute Current Market Price;
provided, that, such reduction shall be deemed to have become effective
immediately prior to the opening of business on the day following the Expiration
Time. To the extent that a Holder exercises Warrants prior to the conclusion of
the period for which Current Market Price is to be calculated, any adjustment in
the number of Common Shares issuable upon exercise of such Warrant shall inure
to the benefit of the holder of record of such Warrant at the close of business
on the first Trading Day following the Expiration Time.
(g) The reclassification of Common Shares into securities which
include securities other than Common Shares (other than any reclassification
upon a consolidation or merger to which Section 14 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Shares to all
holders of Common Shares (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of shareholders entitled
to such distribution" within the meaning of paragraph (d) (i) of this Section),
and (ii) a subdivision or combination, as the case may be, of the number of
Common Shares outstanding prior to such reclassification into the number of
Common Shares outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (c) of this Section). Rights,
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options or warrants issued by the Company to all holders of the Common Shares
entitling the holders thereof to subscribe for or purchase Common Shares (either
initially or under certain circumstances), which rights, options or warrants (i)
are deemed to be transferred with such Common Shares, (ii) are not exercisable
and (iii) are also issued in respect of future issuances of Common Shares, in
each case in clauses (i) through (iii) until or upon the occurrence of a
specified event or events ("Trigger Event"), shall for purposes of this Section
15 not be deemed issued until the occurrence of the earliest Trigger Event.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Share (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices for the 30 consecutive trading days
commencing 45 trading days before the date in question. For the purpose of any
computation under paragraph (f) of this Section, the Current Market Price on any
date shall be deemed to be the average of the daily closing prices for the five
consecutive trading days commencing on the first trading day immediately
following the expiration time. Notwithstanding anything to the contrary
contained in this paragraph, (i) the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d) or (e) above
occurs on or after the 15th trading day prior to the date in question and prior
to the "ex" date for the issuance or distribution requiring such computation,
the closing price for each trading day prior to the "ex" date for such other
event shall be adjusted by multiplying such closing price by the same fraction
by which the conversion price is so required to be adjusted as a result of such
other event, (ii) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
conversion price pursuant to paragraph (a),(b), (c), (d), (e) or (f) above
occurs on or after the "ex" date for the issuance or distribution requiring such
computation and on or prior to the date in question, the closing price for each
trading day on and after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the fraction by which the
conversion price is so required to be adjusted as a result of such other event,
and (iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the closing
price for each trading day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date in
question (as determined by the Board of Directors in a manner consistent with
any determination of such value for
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the purposes of paragraph (d) or (e) of this Section, whose determination shall
be conclusive and described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of Capital Stock or assets being distributed
applicable to one share of Common Stock of the Company as of the close of
business on the day before such "ex" date.
(i) (i) If any event shall occur as to which the other provisions
of this Section 15 are not strictly applicable but the failure to make any
adjustment would have the effect of depriving holders of the benefit of all or a
portion of the exercise rights in respect of any Warrant in accordance with the
essential intent and principles of this Section 15, then, in each such case, the
Company shall appoint an Independent Financial Expert, which shall give its
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 15 necessary to preserve,
without dilution, such exercise rights. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the holders and shall make the
adjustments described therein. As used herein, an "Independent Financial Expert"
is a firm (a) which does not, and whose directors, officers and employees or
affiliates do not have a direct or indirect financial interest in the Company
and (b) which, in the judgment of the Board of Directors, is otherwise
independent and qualified to perform the task for which it is to be engaged.
(ii) The Company will not, by amendment of its articles of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, 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 of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders thereof against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (i) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Common Shares on the exercise of the Warrants from time to time
outstanding and (ii) will not take any action which results in any adjustment of
the Exercise Price if the total number of Common Shares issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
Common Shares then authorized by the Company's certificate of incorporation and
available for the purposes of issue upon such exercise.
(j) The Company may, but shall not be obligated to, make such
reductions in the Exercise Price, in addition to those
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required by paragraphs (a), (b), (c), (d), (e), (f) and (g) of this Section, as
it considers to be advisable in order that any event treated for United States
federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients or if that is not possible, to diminish any income
taxes that are otherwise payable because of such event. No adjustment shall be
made in respect of any change in the conversion price at which the Company's 9%
Convertible Subordinated Note due 2006 may be converted into Common Shares of
the Company on the "Reset Date", as contemplated by Section 13.1 of the
Indenture dated May 31, 1996 relating to such Notes.
(k) No adjustment in the Exercise Price shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (k)) would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments which by reason of this
paragraph (k) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment shall be made in the
Exercise Price in respect of any change in the conversion price at which the
Convertible Notes may be converted into Common Shares of the Company on the
"Reset Date," as contemplated by Section 2A of this Warrant Agreement relating
to such Convertible Notes.
(l) [Intentionally Deleted]
(m) In any case in which this Section 15 shall require that an
adjustment in the Exercise Price be made effective as of or immediately after a
record date for a specified event, the Company may elect to defer until the
occurrence of such event (i) issuing to the holder of any Warrant exercised
after such record date the Common Shares and other capital stock of the Company,
if any, issuable upon such exercise over and above the Common Shares and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Exercise Price prior to such adjustment and (ii) paying to such holder
any amount in cash in lieu of a fractional share pursuant to Section 17 hereof;
provided that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
Common Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(n) (i) No adjustment need be made for a transaction referred to
in subsections (a), (b), (c), (e) or (f) of this Section 15 if holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which
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Page 25
holders of Common Shares of the Company participate in the transaction.
(ii) No adjustment need be made for (x) a transaction referred
to in subsections (b), (d)(ii) or (d)(iii) of this Section 15 if the below
market portion of such issuances, taken together with the below market portion
of all other below market issuances and with the above market portion of all
above market tender or exchange offers described in clause (y) of this paragraph
made on and after the date of this Warrant Agreement, is less than 2.0% of the
Total Market Capitalization (as defined in the Senior Note Indenture) of the
Company (determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on the date
thereof) and (y) a transaction referred to in subsection (f) of this Section 15
if the above market portion of such tender or exchange offers, taken together
with the above market portion of all other above market tender or exchange
offers and with the below market portion of all below market issuances described
in clause (x) of this paragraph made on or after the date of this Warrant
Agreement, is less than 2.0% of the Total Market Capitalization of the Company
(determined by reference to the sum of the percentages of Total Market
Capitalization of the Company attributable to each such transaction on the date
thereof).
(iii) No adjustment need be made for a change in the par
value, or from par value to no par value, or from no par value to par value, of
the Common Shares.
SECTION 16. [Intentionally Omitted.]
SECTION 17. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 17,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall notify the Warrant Agent in writing of the amount to be paid in
lieu of the fraction of a Warrant Share and concurrently pay or provide to the
Warrant Agent for payment to the Warrant holder an amount in cash equal to the
product of (i) such fraction of a Warrant Share multiplied by (ii) the
difference of the current market price of a Common Share on the trading day
immediately preceding the date the Warrant is
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presented for exercise over the Exercise Price, computed to the nearest whole
cent.
SECTION 18. Notices to Warrant Holders.
(i) Whenever the Exercise Price is adjusted as herein provided:
(a) The Company shall compute the adjusted Exercise Price in
accordance with Section 15 and shall prepare a certificate signed by the
Treasurer or Chief Financial Officer of the Company setting forth the adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based,and such certificate shall forthwith be filed (with a copy
to the Trustee) at each office or agency maintained for the purpose of exercise
of Warrants pursuant to this Agreement; and
(b) a notice stating that the Exercise Price has been adjusted and
setting forth the adjusted Exercise Price shall forthwith be prepared, and as
soon as practicable after it is prepared, such notice shall be furnished by the
Company to the Trustee and mailed by the Company at its expense to all
registered holders at their last addresses as they shall appear in the Warrant
register.
(ii) In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Shares payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require an Exercise Price adjustment
pursuant to paragraph (e) of Section 15; or
(b) the Company shall authorize the granting to the holders of its
Common Shares of rights, options or warrants to subscribe for or purchase any
shares of Capital Shares of any class or of any other rights (excluding shares
of Capital Shares or options for Capital Shares issued pursuant to a benefit
plan for employees, officers or directors of the Company; or
(c) of any reclassification of the Common Shares of the Company
(other than a subdivision or combination of the outstanding shares of such
Common Shares), or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
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Page 27
(e) the Company or any subsidiary shall commence a tender or
exchange offer (other than an exchange offer contemplated by clause (c) above)
for all or a portion of the outstanding shares of Common Shares (or shall amend
any such tender or exchange offer to change the maximum number of shares being
sought or the amount or type of consideration being offered (including by
exchange) therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to this Agreement, and shall cause to be mailed to all registered
holders at their last addresses as they shall appear in the Warrant register, at
least 21 days (or 11 days in any case specified in clause (a), (b) or (e) above)
prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of its Common Shares of record who will be entitled to such dividend,
distribution, rights, options or warrants are to be determined, (y) the date on
which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of its Common
Shares of record shall be entitled to exchange their Common Shares, for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up, or (z) the date on which such tender or exchange offer (other
than an exchange offer contemplated by clause (y) above) commenced, the date on
which such tender or exchange offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Neither the failure to give any such notice nor
any defect therein shall affect the legality or validity of any action described
in clauses (a) through (e) of this Section 18.
SECTION 19. Warrant Agent. The Warrant Agent under takes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound.
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company. The Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no
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Page 28
responsibility with respect to the distribution of the Warrant Certificates
except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant Certificate in respect of any action taken, suffered or omitted by
it here under in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties. The Warrant Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or revision of this Agreement
or any of the terms hereof, unless evidenced by a writing between the Company
and the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent such compensation
from time to time as agreed between the Company and the Warrant Agent for all
services rendered by the Warrant Agent hereunder and in connection with the
execution of this Agreement, to reimburse the Warrant Agent for all expenses,
taxes (including withholding taxes and the reasonable fees and expenses of its
counsel and agents) and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution, delivery and performance
of its responsibilities under this Agreement and to indemnify the Warrant Agent
and its directors, officers and agents and save them harmless against any and
all liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent and its directors, officers and agents in the
execution, delivery and performance of its responsibilities under this Agreement
except as a result of its gross negligence or bad faith. The provisions of this
Section 19(e) shall survive termination of this Agreement and the resignation or
removal of the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one
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Page 29
or more registered holders of Warrant Certificates shall furnish the Warrant
Agent with reasonable security and indemnity for any costs and expenses which
may be incurred, but this provision shall not affect the power of the Warrant
Agent to take such action as it may consider proper, whether with or without any
such security or indemnity. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrant Certificates or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may appear.
(g) Except as required by law, the Warrant Agent, and any
stockholder, director, officer or employee of the Warrant Agent, may buy, sell
or deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross negligence or
bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
SECTION 20. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may
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be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Warrant Agent shall be a party, or
any corporation succeeding to the business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. To the extent practicable, the
Warrant Agent shall provide prior written notice to the Company of any such
merger, consolidation, succession or similar change with respect to the Warrant
Agent; provided, however, that the failure to deliver such notice will not
affect the rights of any of the parties hereto. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 21. Change of Warrant Agent. If the Warrant Agent shall
become incapable of acting as Warrant Agent or shall resign as provided below,
the Company shall appoint a successor to such Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity by the Warrant Agent or by the registered
holders of a majority of Warrant Certificates, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company.
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The holders of a majority of the unexercised Warrants shall be entitled at any
time to remove the Warrant Agent and appoint a successor to such Warrant Agent.
Such successor to the Warrant Agent need not be approved by the Company or the
former Warrant Agent. After appointment the successor to the Warrant Agent shall
be vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor to the Warrant
Agent any property at the time held by it here under and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in Section 21, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed effective date of its resignation. If no
successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent.
SECTION 22. Notices to the Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant Certificate to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Petersburg Long Distance Inc.,
000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Vice President, Administration
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000, X.X.X.
Attention: X.X. Xxxxxxxx
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by
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Page 32
the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Corporate Trust Department
Fax: (000) 000-0000
Notice may also be given by facsimile transmission (effective when
receipt is acknowledged) (effective at the time of delivery) or by overnight
delivery service (effective the next business day).
SECTION 23. Supplements and Amendments. The Company and the Warrant
Agent may from time to time, with the consent of The Toronto Stock Exchange,
supplement or amend this Agreement without the consent of any holders of Warrant
Certificates in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not in any way materially adversely
affect the interests of the holders of Warrant Certificates. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of holders shall require the written consent of registered holders of a majority
of the then outstanding Warrants. The consent of each holder of a Warrant
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (other than in accordance with Section
15 or 17 hereof). In executing any amendment or supplement, the Warrant Agent
shall be entitled to receive an opinion of counsel to the effect that such
amendment or supplement is authorized and permitted by this Agreement.
SECTION 24. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 25. Termination. This Agreement shall terminate at 5:00
p.m., New York, New York time on June 1, 2006. Notwithstanding the foregoing,
this Agreement will terminate on such earlier date on which all outstanding
Warrants have been exercised. The provisions of Section 19 hereof shall survive
such termination.
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SECTION 26. Governing Law; Jurisdiction. This Agreement and each
Warrant Certificate shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York. The Company irrevocably consents to the jurisdiction
of any United States or State Court located in the State of New York in any suit
or proceeding based on or arising under this Agreement or the Warrant
Certificates and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in any such court. The Company irrevocably waives
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company hereby agrees to designate and appoint CT Corporation
System, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000 as an agent upon whom process may be
served in any suit or proceeding based on or arising under this Agreement. The
Company further agrees that service of process upon the Company, or upon an
agent appointed pursuant to the preceding sentence accompanied with written
notice of said service to the Company, as the case may be, mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the Warrant
Agent's or any Warrant holder's right to serve process in any other manner
permitted by law. The Company agrees that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
SECTION 27. Indemnity. The Company shall indemnify the Warrant Agent for,
and hold it harmless against, any and all loss, liability or expense (including
reasonable attorneys' fees) arising out of or incurred by it in connection with
the performance of its duties hereunder, except as set forth in the next
paragraph. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Warrant Agent to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend any such claim and the Warrant Agent shall cooperate in the defense
of such claim. The Warrant Agent may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Warrant Agent through the Warrant Agent's
own willful misconduct, negligence or bad faith.
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The Company's payment obligations pursuant to this Section 27 shall
survive the resignation or removal of the Warrant Agent and termination of this
Warrant Agreement.
SECTION 28. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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SECTION 30. Further Assurances. From time to time on and after the
date hereof, the Company shall deliver or cause to be delivered to the Warrant
Agent such further documents and instruments and shall do and cause to be done
such further acts as the Warrant Agent shall reasonably request (it being under
stood that the Warrant Agent shall have no obligation to make such request) to
carry out more effectively the provisions and purposes of this Agreement, to
evidence compliance herewith or to assure itself that it is protected hereunder.
IN WITNESS WHEREOF, the parties here to have caused this Agreement to be
duly executed, as of the day and year first above written.
PETERSBURG LONG DISTANCE INC.
By: /s/ XXXXX XXXX
-----------------------------
Name: Xxxxx Xxxx
Title: Chairman
THE BANK OF NEW YORK
By: /s/ XXXXXX X. XXXXXXXX
-----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Assistant Treasurer
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EXHIBIT A
EXERCISABLE ON OR AFTER DECEMBER 9, 1996
AND ON OR BEFORE JUNE 12, 2006
Form of Warrant Certificate
Face
No.______ CUSIP 00000X000
Warrant Certificate
PETERSBURG LONG DISTANCE INC.
This Warrant Certificate certifies that _________, or its registered
assigns, is the registered holder of ________ warrants expiring June 12, 2006
(the "Warrants") to purchase Common Shares (the "Common Shares") of Petersburg
Long Distance Inc. ("the Company"). Each Warrant entitles the holder upon
exercise to receive from the Company, at any time on or after 9:00 a.m., New
York, New York time on December 9, 1996 and on or prior to the close of business
on a date ten years following the issue date fully paid and nonassessable Common
Shares (each a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $6.60 per share payable in the form of cash or certified check,
official bank check or bank cashier's check payable to the order of the Company,
upon surrender of this Warrant Certificate and payment of the aggregate Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to herein. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement. All capitalized terms not defined herein shall
have the meaning assigned to such terms in the Warrant Agreement.
No Warrant may be exercised after 5:00 pm., New York, New York time
on June 12, 2006 and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
far all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
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IN WITNESS WHEREOF, Petersburg Long Distance Inc. has caused this
Warrant Certificate to be signed by its Chief Executive Officer and by its
Secretary, each by a facsimile of his signature, and has caused a facsimile of
its corporate seal to be affixed here unto or imprinted here on
Dated:
PETERSBURG LONG DISTANCE INC.
By:___________________________
Chief Executive Officer
By:___________________________
Secretary
(seal)
Countersigned:
as Warrant Agent
By: __________________________
Authorized Signatory
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Form of Warrant Certificate
Reverse
THE WARRANTS REPRESENTED HEREBY AND, AS OF THE DATE THIS WARRANT
CERTIFICATE WAS ORIGINALLY ISSUED, THE COMMON SHARES PURCHASABLE UPON
THEIR EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
THE PROVINCES OF CANADA.
THE COMMON SHARES (THE "COMMON SHARES") FOR WHICH THIS WARRANT IS
EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
ACCORDINGLY, NO WARRANT HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S
WARRANTS AT ANY TIME UNLESS, AT THE TIME OF EXERCISE, (I) A REGISTRATION
STATEMENT UNDER THE ACT COVERING THE OFFER AND SALE OF THE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE "WARRANT SHARES") HAS BEEN
FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF
SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (II) THE OFFER
AND SALE OF THE WARRANT SHARES TO THE WARRANT HOLDERS ARE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND THE WARRANT HOLDER, IF SO
REQUESTED BY THE COMPANY, HAS DELIVERED TO THE COMPANY AN OPINION OF
COUNSEL TO SUCH EFFECT.
UNTIL THE CLOSE OF BUSINESS UPON THE EARLIEST TO OCCUR OF (i) A DATE 180
DAYS AFTER THE ISSUE OF THE WARRANTS, (ii) SUCH DATE AS XXXXX XXXXXX INC.
MAY DETERMINE, (iii) THE COMMENCEMENT OF AN EXCHANGE OFFER RELATING TO THE
14% SENIOR DISCOUNT NOTES DUE 2004 (THE "SENIOR NOTES") OF PETERSBURG LONG
DISTANCE INC. (THE "COMPANY"), (iv) IN THE EVENT OF CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE RELATING TO THE SENIOR NOTES), THE DATE THE
COMPANY MAILS NOTICE THEREOF TO HOLDERS OF THE NOTES, THE WARRANTS
EVIDENCED HEREBY MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED TO ANY
PERSON UNLESS, SIMULTANEOUSLY WITH SUCH TRANSFER, THE HOLDER HEREOF
TRANSFERS TO SUCH TRANSFEREE $1,000 PRINCIPAL AMOUNT AT MATURITY OF SENIOR
NOTES AND A WARRANT TO PURCHASE 34 COMMON SHARES OF THE COMPANY (SUBJECT
TO ADJUSTMENT UNDER SECTION 2A AND SECTION 15 OF THE WARRANT AGREEMENT,
DATED AS OF MAY 31, 1996, BETWEEN THE COMPANY AND THE BANK OF NEW YORK, AS
WARRANT AGENT) SO TRANSFERRED.
By accepting a Warrant Certificate bearing the legend above, each holder shall
be bound by all of the terms and provisions of the Warrant Agreement (a copy of
which is available on request to the Company or the Warrant Agent) as fully and
effectively as if such holder had signed the same.
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The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring June 12, 2006, entitling the holder
upon exercise to receive Common Shares of the Company (the "Common Shares"), and
are issued or to be issued pursuant to a Warrant Agreement, dated as of May 31,
1996 (the "Warrant Agreement"), duly executed and delivered by the Company to
The Bank of New York, as Warrant Agent (the "Warrant Agent"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
Warrants may be exercised at any time on or after 9:00 a.m., New
York, New York time on December 9, 1996 and on or prior to the close of business
on June 12, 2006. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in the form of cash or certified or official
bank check or official bank cashier's check payable to the order of the Company,
at the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of Common Shares issuable upon the exercise
of each Warrant shall be adjusted. No fractions of a Common Share will be issued
upon the exercise of any Warrant, but the Company will pay the cash value
thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by a legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
42
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ Common Shares and
herewith tenders payment for such shares to the order of Petersburg Long
Distance, Inc. in the amount of $____ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be
registered in the name of _____________________, whose address is
______________________ and that such shares be delivered to ________________
whose address is ___________.
If said number of shares is less than all of the Common Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_________________, whose address is ______________, and that such Warrant
Certificate be delivered to _______________, whose address is
___________________.
Date: ____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Warrant) Signature
Guarantee:
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto Insert Taxpayer Identification No.
_______________________________________
_______________________________________
Please print or typewrite name and address including zip code of assignee the
within Warrant Certificate and all rights there under, hereby irrevocably
constituting and appointing
_______________________________________
attorney to transfer the Warrants evidenced by said Warrant Certificate (the
"Warrants") on the books of the Company with full power of substitution in the
premises.
In connection with any transfer of the Warrants occurring prior to
the date which is the earlier of (i) the date of an effective Registration or
(ii) three years after the later of the original issuance of the Warrants or the
last date on which the Warrants were held by an affiliate of the Company, the
undersigned confirms, that without utilizing any general solicitation or general
advertising:
Check One
(a) the Warrants are being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
(b) the Warrants are being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Warrant Certificate and the Warrant Agreement.
43
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Warrants in the name of any Person other than the
holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 7(c) of the Warrant Agreement shall
have been satisfied.
Date: NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of the
within-mentioned instrument
in every particular, without
alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Warrant for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned ' s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
NOTICE: To be executed by an executive officer
44
EXHIBIT B
FORM OF WARRANT SHARES LEGEND
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (2) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B)
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND THE PROVINCES OF CANADA."
