EXHIBIT 10.1
Execution Copy
NORTEL NETWORKS CORPORATION,
COMPUTERSHARE TRUST COMPANY OF CANADA,
AND
HOLDERS
FROM TIME TO TIME
--------------------------
PURCHASE CONTRACT AND UNIT AGREEMENT
--------------------------
DATED AS OF JUNE 12, 2002
TABLE OF CONTENTS
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PARTIES...................................................................................1
RECITALS................................................................................. 1
PART I - GENERAL PROVISIONS
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions................................................................2
Acceleration Date..........................................................2
Acceleration Event.........................................................2
Act........................................................................3
Affiliate..................................................................3
Agent......................................................................3
Agreement..................................................................3
Applicable Market Value....................................................3
Authorized Officers........................................................3
Board of Directors.........................................................3
Board Resolution...........................................................3
Business Day...............................................................3
Cash Merger................................................................3
Certificate................................................................3
Closing Price..............................................................4
Common Share Settlement....................................................4
Common Shares..............................................................4
Company....................................................................4
Company Order..............................................................4
Company Request............................................................4
Current Market Price.......................................................4
Custodial Agreement........................................................4
Custodian..................................................................4
Depositary.................................................................4
Early Settlement...........................................................4
Early Settlement Date......................................................4
Early Settlement Rate......................................................4
Early Settlement Upon Cash Merger..........................................4
Early Settlement Upon Cash Merger Date.....................................4
Early Settlement Upon Cash Merger Rate.....................................4
Exchange Act...............................................................4
Expiration Date............................................................4
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Expiration Time............................................................4
Global Certificate.........................................................5
Global Purchase Contract Certificate.......................................5
Global Unit Certificate....................................................5
Holder.....................................................................5
Merger Effective Date......................................................5
Merger Election Date.......................................................5
NYSE.......................................................................5
Officers' Certificate......................................................5
Opinion of Counsel.........................................................5
Outstanding Certificates...................................................5
Outstanding Purchase Contracts.............................................5
Payment Date...............................................................6
Person.....................................................................6
Predecessor Certificate....................................................6
Principal Subsidiary.......................................................6
Purchase Contract..........................................................6
Purchase Contract Certificate..............................................6
Purchase Contract Component................................................6
Purchase Contract Register.................................................6
Purchase Contract Registrar................................................6
Purchased Shares...........................................................6
Record Date................................................................6
Reference Price............................................................7
Reorganization Event.......................................................7
Representatives............................................................7
Responsible Officer........................................................7
Securities.................................................................7
Securities Act.............................................................7
Settlement Date............................................................7
Settlement Rate............................................................7
Stock Transfer Office......................................................7
Threshold Appreciation Price...............................................7
Trading Day................................................................7
Treasury Strip Component...................................................7
Treasury Strips............................................................7
TSX........................................................................7
Underwriting Agreement.....................................................7
Unit.......................................................................7
Unit Certificate...........................................................7
Unit Order.................................................................8
Unit Register..............................................................8
Unit Registrar.............................................................8
Section 1.02. Compliance Certificates and Opinions.......................................8
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Section 1.03. Form of Documents Delivered to Agent.......................................8
Section 1.04. Acts of Holders; Record Dates..............................................9
Section 1.05. Notices, etc., to Agent and the Company...................................10
Section 1.06. Notice to Holders; Waiver.................................................11
Section 1.07. Effect of Headings and Table of Contents..................................11
Section 1.08. Successors and Assigns....................................................12
Section 1.09. Severability Clause.......................................................12
Section 1.10. Benefits of Agreement.....................................................12
Section 1.11. Governing Law.............................................................12
Section 1.12. Legal Holidays............................................................12
Section 1.13. Counterparts..............................................................12
Section 1.14. Inspection of Agreement...................................................12
Section 1.15. Obligations of the Company................................................13
Section 1.16. Force Majeure.............................................................13
Section 1.17. Custody and Audit.........................................................13
Section 1.18. Reports...................................................................14
Section 1.19. Confidential Information..................................................14
Section 1.20. Language..................................................................14
ARTICLE TWO
THE AGENT
Section 2.01. Certain Duties and Responsibilities.......................................14
Section 2.02. Notice of Default.........................................................15
Section 2.03. Certain Rights of Agent...................................................15
Section 2.04. Not Responsible for Recitals..............................................16
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Section 2.05. May Hold Units............................................................16
Section 2.06. Money Held in Custody.....................................................16
Section 2.07. Compensation and Expense..................................................16
Section 2.08. Corporate Agent Required; Eligibility.....................................17
Section 2.09. Resignation and Removal; Appointment of Successor.........................17
Section 2.10. Acceptance of Appointment by Successor....................................19
Section 2.11. Merger, Conversion, Consolidation or Succession to Business...............19
Section 2.12. Preservation of Information; Communications to Holders....................19
Section 2.13. No Obligations of Agent...................................................20
Section 2.14. Agent of the Holders......................................................20
Section 2.15. Tax Compliance............................................................20
Section 2.16. Submission to Jurisdiction; Service of Process............................21
Section 2.17. Limitation of Liability...................................................21
ARTICLE THREE
SUPPLEMENTAL AGREEMENTS
Section 3.01. Supplemental Agreements without Consent of Holders........................22
Section 3.02. Supplemental Agreements with Consent of Holders...........................22
Section 3.03. Execution of Supplemental Agreements......................................23
Section 3.04. Effect of Supplemental Agreements.........................................23
Section 3.05. Reference to Supplemental Agreements......................................23
ARTICLE FOUR
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 4.01. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions...........................................23
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Section 4.02. Rights and Duties of Successor Corporation................................24
Section 4.03. Opinion of Counsel to Agent...............................................24
ARTICLE FIVE
COVENANTS
Section 5.01. Performance Under Purchase Contracts......................................24
Section 5.02. Maintenance of Office or Agency...........................................24
Section 5.03. Company to Reserve Common Shares; Listing of Common Shares................24
Section 5.04. Covenants as to Common Shares.............................................25
Section 5.05. Statements of Officers of the Company as to Default.......................25
Section 5.06. Appointment of Agent of Service of Process................................25
PART II - PURCHASE CONTRACTS
ARTICLE SIX
PURCHASE CONTRACT CERTIFICATE FORMS
Section 6.01. Forms of Purchase Contract Certificates Generally.........................26
ARTICLE SEVEN
PURCHASE CONTRACT CERTIFICATES
Section 7.01. Purchase Contracts: Title and Terms......................................26
Section 7.02. Rights and Obligations Evidenced by the Purchase
Contract Certificates.....................................................27
Section 7.03. Execution, Authentication, Delivery and Dating of
Purchase Contract Certificates............................................27
Section 7.04. Temporary Purchase Contract Certificates..................................28
Section 7.05. Purchase Contract Certificate Registration; Registration of
Transfer and Exchange.....................................................28
Section 7.06. Mutilated, Destroyed, Lost and Stolen Purchase
Contract Certificates.....................................................30
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Section 7.07. Persons Deemed Owners of Purchase Contracts...............................31
Section 7.08. Cancellation of Purchase Contract Certificates............................32
ARTICLE EIGHT
THE PURCHASE CONTRACTS
Section 8.01. Issuance of Common Shares.................................................32
Section 8.02. Delivery of Common Shares.................................................33
Section 8.03. Adjustment of Settlement Rate.............................................34
Section 8.04. Notice of Adjustments and Certain Other Events............................40
Section 8.05. Acceleration Event; Notice................................................41
Section 8.06. Early Settlement..........................................................41
Section 8.07. Early Settlement Upon Cash Merger.........................................42
Section 8.08. No Fractional Shares......................................................44
Section 8.09. Charges and Taxes.........................................................45
Section 8.10. Company to Deal Only With Agent...........................................45
ARTICLE NINE
PURCHASE CONTRACT REMEDIES
Section 9.01. Restoration of Purchase Contract Rights and Remedies......................45
Section 9.02. Rights and Remedies Cumulative for Purchase Contracts.....................45
Section 9.03. Delay or Omission Not Waiver of Purchase Contract Rights and Remedies.....46
Section 9.04. Undertaking for Costs - Purchase Contracts................................46
Section 9.05. Waiver of Stay or Extension Laws for Purchase Contracts...................46
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PART III - UNITS
ARTICLE TEN
UNIT CERTIFICATE FORMS
Section 10.01. Forms of Unit Certificates Generally.....................................46
ARTICLE ELEVEN
THE UNITS
Section 11.01. Units: Title and Terms..................................................47
Section 11.02. Rights and Obligations Evidenced by the Unit Certificates................48
Section 11.03. Execution, Delivery and Dating of Unit Certificates......................48
Section 11.04. Temporary Unit Certificates..............................................49
Section 11.05. Unit Certificate Registration; Registration of Transfer and
Exchange of Unit Certificates............................................49
Section 11.06. Mutilated, Destroyed, Lost and Stolen Unit Certificates..................51
Section 11.07. Persons Deemed Owners of Unit Certificates...............................52
Section 11.08. Cancellation of Unit Certificates........................................53
Section 11.09. Separation and Withdrawal of Treasury Strip Component....................53
Section 11.10. Recreation of Units......................................................54
ARTICLE TWELVE
THE TREASURY STRIPS
Section 12.01. Custodial Arrangement....................................................54
Section 12.02. Instruction Regarding Payment of Amounts Received in
Respect of Treasury Strips...............................................55
Section 12.03. Delivery of Treasury Strips Upon Occurrence of an
Acceleration Event.......................................................55
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Section 12.04. Delivery of Treasury Strips Upon Early Settlement or Early
Settlement Upon Cash Merger..............................................55
ARTICLE THIRTEEN
UNIT REMEDIES
Section 13.01. Restoration of Unit Rights and Remedies..................................55
Section 13.02. Rights and Remedies Cumulative for Units.................................56
Section 13.03. Delay or Omission Not Waiver of Unit Rights and Remedies.................56
Section 13.04. Undertaking for Costs - Units............................................56
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Schedule 1 Treasury Strips
EXHIBIT A Form of Purchase Contract Certificate..............................A-1
EXHIBIT B Form of Unit Certificate...........................................B-1
EXHIBIT C Settlement Instructions............................................C-1
EXHIBIT D Election for Early Settlement......................................D-1
EXHIBIT E Election for Early Settlement Upon Cash Merger.....................E-1
EXHIBIT F Holder's Election for Withdrawal of Treasury Strip Component.......F-1
EXHIBIT G Holder's Instruction to Agent and Custodian........................G-1
EXHIBIT H Unit Order.........................................................H-1
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PARTIES
PURCHASE CONTRACT AND UNIT AGREEMENT, dated as of June 12, 2002, among
NORTEL NETWORKS CORPORATION, a Canadian corporation (the "Company"),
COMPUTERSHARE TRUST COMPANY OF CANADA, acting as purchase contract agent (the
"Agent") for Holders from time to time, except when acting as Purchase Contract
Registrar and Unit Registrar for the Company, and HOLDERS from time to time.
Capitalized terms used herein have those meanings ascribed to them in Section
1.01.
RECITALS
WHEREAS, on and from the date hereof the Holders from time to time and
the Company have entered into this Agreement, under which the Company has agreed
to issue and deliver Common Shares to such Holders pursuant to the Purchase
Contracts on the Settlement Date or, at the option of any Holder, on an Early
Settlement Date or Early Settlement Upon Cash Merger Date, in consideration for
the purchase price of $22,542.53 per Purchase Contract paid by the initial
Holders to the Company on the original issue date of the Purchase Contracts; and
WHEREAS, simultaneously with entering into the Purchase Contracts with
the Company, the initial Holders will have acquired Treasury Strips, as
contemplated in the prospectus supplement relating to the Units dated June 6,
2002, which will have been delivered to the Custodian in accordance with the
Custodial Agreement; and
WHEREAS, for the convenience of the Holders, the Holders wish to
appoint the Agent to instruct the Custodian as to who the Holders are on the
Unit Register and the manner by which all payments with respect to the Treasury
Strips that are received by the Custodian are to be made to Holders and to
administer all deliveries made on settlement of the Purchase Contracts; and
WHEREAS, the Company acknowledges such appointment and agrees to make
all deliveries under the Purchase Contracts to the Agent, to give all notices to
Holders to the Agent and to otherwise deal with the Agent as agent for the
Holders, all as set forth herein; and
WHEREAS, the Company has appointed the Agent to act as Purchase
Contract Registrar and Unit Registrar for the Company; and
WHEREAS, the Company acknowledges, and the Agent and the Holders agree,
that the Agent's duties to the Holders in respect of the Treasury Strips
evidenced by Units as set forth in this Agreement are only for convenience of
the Holders, and that the Company shall not have any obligations or
responsibilities with respect to the administration, custody or any payments of
the Treasury Strips and further that substantially all of the duties and
responsibilities of the Agent contemplated in this Agreement are in respect of
the Purchase Contracts and the Units insofar as they evidence the Purchase
Contracts and the administration thereof; and
WHEREAS, to accurately reflect the obligations and rights of the
parties hereto as their interest appear, this Agreement is divided into three
distinct parts, whereby Part I sets forth general provisions that are applicable
to the parties hereto, Part II sets forth provisions that address the
obligations and rights of the parties hereto with respect to the Purchase
Contracts and
Part III sets forth provisions that address the obligations and rights of the
Agent and the Holders (but not the Company) when such Holders own Purchase
Contracts evidenced by Units;
NOW THEREFORE, in consideration of the premises and the purchase of the
Units by the Holders thereof, it is mutually agreed as follows:
PART I - GENERAL PROVISIONS
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 1.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(3) all references to "$" herein shall mean United States
dollars.
"Acceleration Date" means the date, if any, on which an Acceleration
Event occurs.
"Acceleration Event" means the occurrence of any of the following
events on or after August 15, 2002 (except as provided below): (i) a decree,
judgment, or order by a court having jurisdiction in the premises shall have
been entered adjudging the Company a bankrupt or insolvent or approving as
properly filed a petition seeking reorganization, readjustment, arrangement,
composition or similar relief for the Company under any bankruptcy, insolvency
or other similar applicable law or ordering the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the Company or
of a substantial part of its property, or for the winding up or liquidation of
its affairs, and such decree, judgment or order shall have remained in force for
a period of 60 consecutive days; or any substantial part of the property of the
Company shall be sequestered or attached and shall not be returned to the
possession of the Company or released from such attachment whether by filing of
a bond or stay or otherwise within 60 consecutive days thereafter; or (ii) the
Company shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or shall file
a petition or answer or consent seeking reorganization, readjustment,
arrangement, composition or similar relief under any bankruptcy, insolvency or
other similar applicable law or the Company shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency for it or of a substantial
part of its property, or shall make an assignment for the benefit of creditors,
2
or shall be unable, or admit in writing its inability, to pay its debts
generally as they become due, or corporate action shall be taken by the Company
in furtherance of any of the aforesaid actions. The occurrence of any of the
above events before August 15, 2002 shall not constitute an Acceleration Event
when it occurs, but if such event is continuing on August 15, 2002, it shall
constitute an Acceleration Event on that date.
"Act" when used with respect to any Holder, has the meaning specified
in Section 1.04(a).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this Agreement until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean the
Person who is then the Agent hereunder.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 8.01(b).
"Authorized Officers" means, with respect to the Company, any two of
the President and Chief Executive Officer, the Chief Legal Officer, the Chief
Financial Officer or any one of the aforesaid together with any one of the
Corporate Secretary, the Controller, the Treasurer, any Assistant Secretary, any
Assistant Controller or any Assistant Treasurer.
"Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Corporate Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification
and delivered to the Agent.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which the NYSE, the TSX or banking institutions or trust companies in The City
of New York or The City of Toronto are authorized or obligated by law or
executive order to be closed.
"Cash Merger" has the meaning specified in Section 8.07(a).
"Certificate" means a Unit Certificate or a Purchase Contract
Certificate.
3
"Closing Price" has the meaning specified in Section 8.01(b).
"Common Share Settlement" has the meaning specified in Section 8.02.
"Common Shares" means the Common Shares, without nominal or par value,
of the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this Agreement until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Company Order" or "Company Request" means a written order or request
signed in the name of the Company by its Authorized Officers.
"Current Market Price" has the meaning specified in Section 8.03(a)(7).
"Custodial Agreement" means the custodial agreement, dated as of June
12, 2002, between the Agent and the Custodian.
"Custodian" means the Person named as the "Custodian" under the
Custodial Agreement.
"Depositary" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Units or Purchase Contracts as
contemplated by Section 7.05(h).
"Early Settlement" has the meaning specified in Section 8.06(a).
"Early Settlement Date" has the meaning specified in Section 8.06(a)
"Early Settlement Rate" has the meaning specified in Section 8.06(b).
"Early Settlement Upon Cash Merger" has the meaning specified in
Section 8.07(a).
"Early Settlement Upon Cash Merger Date" has the meaning specified in
Section 8.07(a).
"Early Settlement Upon Cash Merger Rate" has the meaning specified in
Section 8.07(a)(ii).
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and any statute successor thereto, in each case as amended from time
to time.
"Expiration Date" has the meaning specified in Section 1.04(f).
"Expiration Time" has the meaning specified in Section 8.03(a)(6).
4
"Global Certificate" means a Global Purchase Contract Certificate or a
Global Unit Certificate.
"Global Purchase Contract Certificate" means a Purchase Contract
Certificate that evidences all or part of the Purchase Contracts and is
registered in the name of a Depositary or a nominee thereof.
"Global Unit Certificate" means a Unit Certificate that evidences all
or part of the Units and is registered in the name of a Depositary or a nominee
thereof.
"Holder" means a Person in whose name a Unit evidenced by a Unit
Certificate is registered in the Unit Register or a Person in whose name a
Purchase Contract evidenced by a Purchase Contract Certificate is registered in
the Purchase Contract Register.
"Merger Effective Date" has the meaning specified in Section 8.07(a).
"Merger Election Date" has the meaning specified in Section 807(a)(i).
"NYSE" has the meaning specified in Section 8.01(b).
"Officers' Certificate" means a certificate signed on behalf of the
Company by Authorized Officers.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company and includes one or
more opinions by one or more legal counsel.
"Outstanding Certificates" means, as of the date of determination, all
Certificates theretofore authenticated, executed and delivered under this
Agreement, except:
(i) Certificates theretofore cancelled by the Agent or
delivered to the Agent for cancellation; and
(ii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on behalf of the Holder
and delivered pursuant to this Agreement, other than any such
Certificate in respect of which there shall have been presented to the
Agent proof satisfactory to it that such Certificate is held by a bona
fide purchaser.
"Outstanding Purchase Contracts" means, as of the date of
determination, all Purchase Contracts evidenced by then outstanding Purchase
Contract Certificates or outstanding Unit Certificates, except: (i) Purchase
Contracts evidenced by outstanding Purchase Contract Certificates or outstanding
Unit Certificates for which the Holder has exercised its right to Early
Settlement in accordance with Section 8.06, (ii) Purchase Contracts evidenced by
outstanding Purchase Contract Certificates or outstanding Unit Certificates for
which the Holder has exercised its right to Early Settlement Upon Cash Merger in
accordance with Section 8.07, and (iii) if an Acceleration Event has occurred;
provided, however, that in determining whether the Holders of the requisite
number of Purchase Contracts have given any request, demand,
5
authorization, direction, notice, consent or waiver hereunder, Purchase
Contracts owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Purchase Contracts
which the Agent actually knows to be so owned shall be so disregarded. Purchase
Contracts so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Agent the
pledgee's right so to act with respect to such Purchase Contracts and that the
pledgee is not the Company or any Affiliate of the Company.
"Payment Date" means August 15 and February 15 of each year, commencing
August 15, 2002 and ending August 15, 2005.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Certificate" of any particular Certificate means every
previous Certificate evidencing all or a portion of the rights and obligations
of the Holder under the Units or Purchase Contracts evidenced thereby; and, for
the purposes of this definition, any Certificate authenticated and delivered
under Section 7.06 or 11.06 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Certificate shall be deemed to evidence the same
rights and obligations of the Holder as the mutilated, destroyed, lost or stolen
Certificate.
"Principal Subsidiary" means Nortel Networks Limited, a Canadian
corporation.
"Purchase Contract" means a prepaid forward purchase contract, (i)
which is an agreement of purchase and sale, obligating the Company to issue and
deliver to the Holder, and entitling the Holder to receive, a number of Common
Shares equal to the Settlement Rate on the terms and subject to the conditions
set forth in Article Eight hereof, and (ii) which may or may not be evidenced by
a Unit. As used herein, "Purchase Contract" refers to Purchase Contracts
evidenced by Unit Certificates and/or Purchase Contract Certificates, as the
context may require.
"Purchase Contract Certificate" means a certificate evidencing the
rights of a Holder in respect of the number of Purchase Contracts specified in
such certificate.
"Purchase Contract Component" has the meaning specified in
Section 11.02.
"Purchase Contract Register" and "Purchase Contract Registrar" have the
respective meanings specified in Section 7.05(a).
"Purchased Shares" has the meaning specified in Section 8.03(a)(6).
"Record Date" for the amounts payable on any Payment Date means the
fifteenth day (whether or not a Business Day), as the case may be, next
preceding such Payment Date; provided, however, to the extent such amounts are
payable on a Payment Date with respect to a Global Certificate, the "Record
Date" shall mean the Business Day immediately prior to such Payment Date.
6
"Reference Price" means $1.410 per Common Share.
"Reorganization Event" has the meaning specified in Section 8.03(b).
"Representatives" means Credit Suisse First Boston Corporation, ▇.▇.
▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc, acting as representatives
for the underwriters named in the Underwriting Agreement.
"Responsible Officer" means, when used with respect to the Agent, any
officer or officers of the Agent assigned by the Agent to administer its stock
transfer matters.
"Securities" has the meaning specified in Section 8.03(a)(4).
"Securities Act" means the United States Securities Act of 1933, as
amended, and any statute successor thereto, in each case as amended from time to
time.
"Settlement Date" means August 15, 2005.
"Settlement Rate" has the meaning specified in Section 8.01(a).
"Stock Transfer Office" means (i) the principal office of the Agent in
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ at which at any particular time its stock transfer
business shall be administered, which office at the date hereof is located at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and (ii) the offices
of the Agent or its Affiliate, Computershare Trust Company, Inc., located in New
York, New York, which office at the date hereof is located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇.
"Threshold Appreciation Price" means $1.692 per Common Share.
"Trading Day" has the meaning specified in Section 8.01(b).
"Treasury Strip Component" has the meaning specified in Section 11.02.
"Treasury Strips" means the zero-coupon United States Treasury
securities in the face amounts, and with the maturity dates, specified in
Schedule 1 hereto.
"TSX" means the Toronto Stock Exchange.
"Underwriting Agreement" means the underwriting agreement relating to
the Units dated June 6, 2002 between the Company and the several underwriters
named therein.
"Unit" means and evidences the ownership by a Holder of (i) one
Purchase Contract and (ii) six Treasury Strips of $1,000 denomination each that
mature from February 15, 2003 through August 15, 2005 and a pro rata portion of
Treasury Strips maturing on August 15, 2002, as specified in Schedule 1 hereto.
"Unit Certificate" means a certificate evidencing the rights of a
Holder in respect of the number of Units specified on such certificate.
7
"Unit Order" means a written order, substantially in the form of
Exhibit H hereto, signed in the name of the Company by its Authorized Officers
solely in connection with the execution of Units by the Agent.
"Unit Register" and "Unit Registrar" have the respective meanings
specified in Section 11.05(a).
Section 1.02. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and an Opinion
of Counsel addressed to the Company and the Agent stating that, in the opinion
of such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless
8
such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his or her certificate or opinion is based are erroneous. Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Company stating that the information with respect to such factual matters
is in the possession of the Company unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.04. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 2.01) conclusive in favor of the Agent and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his or her authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Agent deems sufficient.
(c) The ownership of Units shall be proved by the Unit Register, and
the ownership of Purchase Contracts shall be proved by the Purchase Contract
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Unit or Purchase Contract shall bind
every future Holder of the same Unit or Purchase Contract and the Holder of
every Certificate evidencing such Unit or Purchase Contract issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.
9
(e) The Agent may set any day as a record date for the purpose of
determining the Holders entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Agreement to be given, made or taken by Holders. With respect
to any such action, the Agent shall set such a record date if requested to do so
by the Holders of at least 10% of the Outstanding Certificates, and with respect
to any such action that relates to any of the Purchase Contracts, the Agent
shall set such a record date if requested to do so by the Company. If any record
date is set pursuant to this paragraph, the Holders on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined in the next paragraph) by Holders of the requisite
number on such record date. Nothing in this paragraph shall be construed to
prevent the Agent from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite number on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Agent shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to each Holder
in the manner set forth in Section 1.06.
(f) With respect to any record date set pursuant to this Section, the
Agent (or, in the case of a record date requested by the Company or the Holders
of at least 10% of the Outstanding Certificates, the Company or such Holders,
respectively) may designate any date as the "Expiration Date" whereby any action
as described in this Section must be taken on or prior to such date for such
action to be effective and from time to time may change the Expiration Date to
any earlier or later date; provided that no such change shall be effective
unless notice of the proposed new Expiration Date is given to the Agent in
writing (in the case of a record date requested by the Company or the Holders of
at least 10% of the Outstanding Certificates), and to each Holder in the manner
set forth in Section 1.06, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date set pursuant
to this Section, the Agent shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right and, if applicable, the right of the Company or the Holders
of at least 10% of the Outstanding Certificates to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
Section 1.05. Notices, etc., to Agent and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the
Agent at Computershare Trust Company of Canada, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇,
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: Manager, Client Servicing, or at
any other address previously furnished in writing by the Agent to the
Holders and the Company, or
(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the
Company at Nortel Networks Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Attention: Corporate Secretary, or
at any other address previously furnished in writing to the Agent by
the Company, or
(3) the Custodian by the Agent or by any Holder shall be
sufficient for any purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, to the Custodian at
Citibank, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇, Vice President, 24th Floor, Zone 5 or at any other
address previously furnished in writing by the Custodian to the Agent
and the Holders.
Section 1.06. Notice to Holders; Waiver
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Unit Register or Purchase
Contract Register, as the case may be, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Agent, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then notice shall be deemed to have been duly given if published in an English
language newspaper of general circulation in each of the United States and
Canada, currently expected to be The Wall Street Journal (U.S. Eastern Edition)
and The Globe and Mail (National Edition), respectively, or such other method of
notification as shall be made with the approval of the Agent shall constitute a
sufficient notification for every purpose hereunder.
Section 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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Section 1.08. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.09. Severability Clause.
In case any provision in this Agreement or in the Units or Purchase
Contracts shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof and thereof shall not in any
way be affected or impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Units or Purchase Contracts,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders, any benefits or any legal or
equitable right, remedy or claim under this Agreement. The Holders from time to
time shall be beneficiaries of this Agreement and shall be bound by all of the
terms and conditions hereof and of the Units or Purchase Contracts evidenced by
their Certificates by their acceptance of delivery thereof.
Section 1.11. Governing Law.
This Agreement, the Units and Purchase Contracts shall be governed by
and construed in accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Early Settlement Date, any Early Settlement Upon
Cash Merger Date or the Settlement Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or of the Certificates)
Purchase Contracts shall not be performed and Early Settlement or Early
Settlement Upon Cash Merger shall not be effected on such date, but the Purchase
Contracts shall be performed, or Early Settlement or Early Settlement Upon Cash
Merger effected, as applicable, on the next succeeding Business Day with the
same force and effect as if made on such Early Settlement Date, Early Settlement
Upon Cash Merger Date or Settlement Date, as the case may be; provided, that no
interest shall accrue or be payable for the period from and after any such Early
Settlement Date, Early Settlement Upon Cash Merger Date or Settlement Date, as
the case may be.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at
the Stock Transfer Office for inspection by any Holder.
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Section 1.15. Obligations of the Company.
The Company undertakes to perform, with respect to the Purchase
Contracts, such obligations and only such obligations as are specifically set
forth in this Agreement, and no implied covenants or obligations of any other
kind or for any other purpose shall be read into this Agreement against the
Company, including, without limitation, with respect to the Units or Treasury
Strips. For the avoidance of doubt, the Company's obligations in this Agreement
are limited to those expressly stated in Parts I and II of this Agreement, and
the Company shall assume no responsibility in any respect for, including the
accuracy or performance of, any of the provisions set forth in Part III of this
Agreement; provided, however, the Company acknowledges that each Unit evidences
ownership of a Purchase Contract, which shall be settled in accordance with
Article Eight hereunder, and, as a convenience to the Holders, the Company shall
authorize the Agent to execute Purchase Contracts evidenced by Unit Certificates
that also evidence Treasury Strips.
Section 1.16. Force Majeure.
The Company and the Agent shall not be liable to the other, or held in
breach of this Agreement, if prevented, hindered, or delayed in the performance
or observance of any provision contained herein by reason of act of God, riots,
acts of war, epidemics, governmental action or judicial order, earthquakes, or
any other similar causes (including, but not limited to, mechanical, electronic
or communication interruptions, disruptions or failures). Performance times
under this Agreement shall be extended for a period of time equivalent to the
time lost because of any delay that is excusable under this Section.
Section 1.17. Custody and Audit.
Unless otherwise instructed by the Company, all correspondence
including Holder account inquiry letters shall be retained for a period of two
(2) years after completion of the services requested by such correspondence. The
Company and the Agent (acting as Purchase Contract Registrar and Unit Registrar)
shall meet periodically to agree on mutually acceptable retention periods for
all other documents.
The Company shall have the right through its internal auditors or
independent auditors, to examine, audit or inspect all records, documentation,
ledgers, registers, books of account, share certificate inventories and other
information maintained by the Agent (acting as Purchase Contract Registrar and
Unit Registrar) which relates in any way to the services provided under this
Agreement.
Upon the termination of this Agreement the Agent (acting as Purchase
Contract Registrar and Unit Registrar) shall deliver the registers, ledgers,
books of account, copies of documentation, Holder correspondence, share
certificate inventories and all other retained documents with respect to its
services to the Company or to such party as the Company may direct and shall
certify to the Company the delivery of all such materials in its possession
under the hand of the Authorized Officers. The Company shall acknowledge receipt
or delivery of the materials under the hand of any officer.
13
Section 1.18. Reports.
The Agent (acting as Purchase Contract Registrar and Unit Registrar)
shall prepare and submit to the Company at least semi-annually, and such other
times as the Company may request, reports on duties performed and services
provided to Holders. Such reports shall be prepared in a manner which will
provide the Company the ability to analyze transactions on an aggregate,
geographic and quantitative basis. The Agent (acting as Purchase Contract
Registrar and Unit Registrar) shall respond to reasonable requests for
additional Holder information as the Company may require from time to time.
Section 1.19. Confidential Information.
The Agent (acting as Purchase Contract Registrar and Unit Registrar)
shall hold in confidence throughout the term of this Agreement, including any
renewal period, and for a period of three years thereafter and shall not, unless
required by law, court proceeding or order of any regulatory authority or
authorized third parties having a bona fide need to know for purposes in
connection with this Agreement, any information related to the Holder accounts
or services provided hereunder. In any case the Agent (acting as Purchase
Contract Registrar and Unit Registrar) is entitled to communicate Holder
information to such Holders or if legally required to do so.
The Agent (acting as Purchase Contract Registrar and Unit Registrar)
shall take reasonable steps to ensure that neither it nor any of its employees
having access to information related to the Holder accounts or services provided
hereunder uses such information for any other purpose except in accordance with
the terms of this Agreement.
Section 1.20. Language.
The parties hereto confirm their express wish that this Agreement and
all documents and agreements directly or indirectly relating hereto be drawn up
in the English language. Les parties reconnaissent leur volonte expresse que la
presente entente ainsi que tous les documents et contrats s'y rattachant
directement ou indirectement soient rediges en anglais.
ARTICLE TWO
The Agent
Section 2.01. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the
Units, the Treasury Strips and the Purchase Contracts, such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Agent; and
(2) The Agent shall exercise the degree of care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances, and, in the
14
absence of bad faith or negligence on its part, shall not be obligated in
any particular circumstance, unless a reasonably prudent person would in
such circumstance, to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order or other paper or
document, provided that in the case of any certificates or opinions which
are specifically required by any provisions hereof to be furnished to the
Agent, the Agent shall be under a duty to determine whether or not they
conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own willful misconduct, except that:
(1) this paragraph (b) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
Section 2.02. Notice of Default.
Within 90 days after the Agent has actual knowledge of the occurrence
of any breach by the Company hereunder, the Agent shall transmit by mail to all
Holders, as their names and addresses appear in the Unit Register and Purchase
Contract Register, respectively, notice of such breach hereunder, unless such
breach shall have been cured or waived.
Section 2.03. Certain Rights of Agent.
Subject to the provisions of Section 2.01:
(a) the Agent may act and rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent or order
or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Company Order or
Company Request, and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
15
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other
evidence is specifically prescribed herein) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Agent, in its discretion, may make reasonable further inquiry
or investigation into such facts or matters related to the execution and
delivery of the Purchase Contracts as it may see fit, and, if the Agent
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(f) the Agent may execute any of its powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and
the Agent shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder.
(g) The Agent shall retain the right not to act and shall not be liable
for refusing to act unless it shall have received clear instructions and
documentation and sufficient time to give effect to such instructions and
documentation.
Section 2.04. Not Responsible for Recitals.
The Agent assumes no responsibility for the correctness of the recitals
contained herein.
Section 2.05. May Hold Units.
Any Unit Registrar, Purchase Contract Registrar, or any agent of the
Company or the Agent, in its individual or any other capacity, may become the
owner of Units or Purchase Contracts and may otherwise deal with the Company
with the same rights it would have if it were not Unit Registrar, Purchase
Contract Registrar, or such agent, or the Agent.
Section 2.06. Money Held in Custody.
All money held by the Agent hereunder shall be held by it as agent for
the Holders entitled to such money. The Agent shall be under no obligation to
invest or pay interest on any money received by it hereunder.
Section 2.07. Compensation and Expense.
(a) The Agent shall be paid by the Company upon demand:
16
(1) full compensation for all services to be rendered by the Agent
(in its capacity as Purchase Contract Registrar and Unit Registrar)
hereunder during the term of this Agreement; and
(2) for all expenses to be incurred by the Agent in its capacity as
Purchase Contract Registrar and Unit Registrar hereunder (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel during the term of this Agreement).
(b) The Agent acknowledges receipt from Credit Suisse First Boston
Corporation on behalf of the Holders of Units on the date hereof of:
(1) payment of its full compensation in advance for all services to
be rendered by the Agent (in its capacity as Agent for the Holders)
hereunder during the term of this Agreement; and
(2) payment in advance for all expected expenses to be incurred by
the Agent (in its capacity as Agent for the Holders) hereunder (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel during the term of this Agreement).
(c) In no event shall the Agent resign or fail to perform its duties
(i) as Agent for the Holders because of any insufficiency of compensation or
expense prepayments; or (ii) as Purchase Contact Registrar and Unit Registrar
because of any insufficiency of compensation or expense reimbursements without
providing the Company with prior 30-day written notice of such insufficiency,
and such insufficiency is continuing after such 30-day notice period.
Section 2.08. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business in Canada or any province of Canada and
authorized under such laws to carry on the business of a trust company and
having a Stock Transfer Office in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, if there be such a
corporation in Toronto, Ontario qualified and eligible under this Article and
willing to act on reasonable terms. If at any time the Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 2.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 2.10.
(b) The Agent may resign at any time by giving written notice thereof
to the Company and the Holders of the Outstanding Certificates 60 days prior to
the effective date of such resignation. If the instrument of acceptance by a
successor Agent required by Section 2.10 shall not have been delivered to the
Agent within 30 days after the giving of such notice of
17
resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority of the Outstanding Purchase Contracts delivered to the Agent and the
Company.
(d) If at any time,
(1) the Agent shall cease to be eligible under Section 2.08 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(2) the Agent shall become incapable of acting or shall be adjudged
bankrupt or insolvent or a receiver of the Agent or of its property shall
be appointed or any public officer shall take charge or control of the
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, may remove the Agent, or (ii) any
Holder who has been a bona fide Holder of a Unit or a Purchase Contract for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company shall promptly appoint a successor Agent and shall comply with the
applicable requirements of Section 2.10. If no successor Agent shall have been
so appointed by the Company and accepted appointment in the manner required by
Section 2.10, any Holder who has been a bona fide Holder for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, prompt notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first class mail, postage prepaid, to all Holders as their names and addresses
appear in the Unit Register and Purchase Contract Register, respectively. Each
notice shall include the name of the successor Agent and the address of its
Stock Transfer Office.
(g) Upon the appointment of a successor Agent pursuant to this Article,
the predecessor Agent shall promptly deliver to the successor Agent any
remaining portion of the compensation and expenses received in advance by the
predecessor Agent pursuant to either Section 2.07(b) or this Section 2.09(g) (to
the extent such compensation and expenses were paid for the Agent's services
hereunder as Agent for the Holders), such portion to be equal to the product of
the aggregate amount paid to it under 2.07(b) or this Section 2.09(g) and a
fraction, whose numerator is the number of days remaining until the Settlement
Date and whose denominator is the number of days remaining until the Settlement
Date plus the number of days such predecessor Agent has performed the duties
hereunder.
18
Section 2.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent (with a copy to each Holder of Outstanding
Certificates) an instrument accepting such appointment, and thereupon the
resignation or removal of the predecessor Agent shall become effective and such
successor Agent, without any further act, deed or conveyance, shall become
vested with all the rights, powers, agencies and duties of the predecessor
Agent; but, on the request of the Company or the successor Agent, such
predecessor Agent shall execute and deliver an instrument transferring to such
successor Agent all the rights and powers of the predecessor Agent and shall
duly assign, transfer and deliver to such successor Agent all property and money
held by such retiring Agent hereunder. Each such successor Agent whose office is
not located in New York, New York shall execute and deliver to the Company an
appointment of an agent of such successor Agent for service of process in the
Borough of Manhattan in The City of New York substantially on the terms of
Section 2.16.
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 2.11. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Agent may be amalgamated, merged or
converted or with which it may be consolidated, or any corporation resulting
from any amalgamation, merger, conversion or consolidation to which the Agent
shall be a party, or any corporation succeeding to or purchasing all or
substantially all the stock transfer and/or corporate trust business of the
Agent, shall be the successor of the Agent hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Certificates shall have been executed, but not
delivered, by the Agent then in office, any successor by amalgamation, merger,
conversion or consolidation to such Agent may adopt such execution and deliver
the Certificates so executed with the same effect as if such successor Agent had
itself executed such Certificates.
Section 2.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Unit Registrar and Purchase Contract Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent and furnish to the Agent reasonable proof that each such
applicant has owned a Purchase Contract for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Purchase Contracts and is
19
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Agent shall, within five Business Days
after the receipt of such application, afford such applicants access to the
information preserved at the time by the Agent in accordance with Section
2.12(a).
(c) Every Holder, by receiving and holding Certificates, agrees with
the Company and the Agent that none of the Company, the Agent nor any agent of
any of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 2.12(b), regardless of the source from which such information was
derived.
(d) The Agent agrees to forward to Holders as soon as reasonably
practicable any notices or other communications addressed to Holders (including
tax information) that it receives from the Company.
Section 2.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement or the
Custodial Agreement, the Agent assumes no obligations and shall not, in any
event, be subject to any liability under this Agreement, the Custodial Agreement
or any Purchase Contract in respect of the obligations of the Company or the
Holder thereunder.
Section 2.14. Agent of the Holders.
Except when the Agent is acting in its capacity as the Purchase
Contract Registrar or the Unit Registrar hereunder (whereby it acts in its
capacity as agent of the Company), the Agent shall be acting solely as agent of
the Holders in connection with this Agreement, the Purchase Contracts and the
Units and does not assume any fiduciary obligation or relationship of agency or
trust for or with the Company.
Section 2.15. Tax Compliance.
(a) Upon instructions of the Company, the Agent shall prepare such tax
returns as are requested by the Company and, on behalf of the Company, file such
returns.
(b) The Agent shall comply with any direction received from the Company
with respect to the application of such requirements to matters specifically
involving the Purchase Contracts, and may for purposes of this Agreement rely on
any such direction in accordance with the provisions of Section 2.01(a)(2)
hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available on
request to the Company or to its authorized representative (in the case of such
requirements in connection with the Purchase Contracts) and to any Holder of
Outstanding Certificates or to its authorized representative.
20
Section 2.16. Submission to Jurisdiction; Service of Process.
The Agent hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
Custodial Agreement or the transactions contemplated hereby or thereby. The
Agent irrevocably appoints Computershare Trust Company, Inc., currently located
at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or its successors or assigns,
as its authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to the
Agent, by the person serving the same to such address, shall be deemed in every
respect effective service of process upon the Agent in any such suit or
proceeding. The Agent shall provide to the Company evidence of acceptance of
such appointment concurrent with execution of this Agreement.
Section 2.17. Limitation of Liability.
(a) The Agent, when acting as Purchase Contract Registrar or Unit
Registrar, shall not incur any liability in refusing in good faith to effect any
transfer which in its judgment is improper or unauthorized, or in carrying out
honestly and in good faith, with due diligence and without negligence, any
transfer which in its judgment is proper or authorized. The Agent shall be fully
indemnified and held harmless by the Company in all cases where the Agent has
acted in accordance with the foregoing or with the Company's instructions.
(b) The Company hereby undertakes to indemnify and hold harmless the
Agent, its affiliates, their current and former directors, officers, employees
and agents from and against any and all claims, demands, losses, penalties,
costs, expenses, fees and liabilities, including, without limitation, legal fees
and expenses, directly or indirectly arising out of, in connection with, or in
respect of, Parts I and II of this Agreement and the Agent's role as Unit
Registrar in Part III of this Agreement, except where same results directly and
principally from negligence, willful misconduct or bad faith on the part of the
Agent. For the avoidance of doubt, the Company shall not indemnify the Agent for
its role as Agent for the Holders under Part III of this Agreement, except for
its role as Unit Registrar.
(c) The Agent shall be under no obligation to prosecute or defend any
action or suit arising out of its relationship with the Company under this
Agreement which may involve expense or liability, but will do so at the request
of the Company provided that the Company furnishes an indemnity satisfactory to
the Agent against any expense or liability which might be incurred.
(d) The Agent shall give prompt and timely notice to the Company of all
demands, claims, assessments, proceedings, suits and actions made against the
Agent arising in consequences of, arising from or in any way relating to this
Agreement. The Company agrees that its obligation to indemnify the Agent
hereunder shall accrue and become enforceable without prior demand or any other
precedent action or proceeding, and shall survive the resignation or removal of
the Agent or the termination of this Agreement.
21
(e) The Agent (acting as Purchase Contract Registrar or Unit Registrar)
shall incur no responsibility or liability in regards to any claims, demands,
losses, penalties, expenses, fees, costs and liabilities, including without
limitation, legal fees and expenses, in regards to any and all claims regarding
the assets deposited with the Agent (acting as Purchase Contract Registrar or
Unit Registrar) or for any action taken or not taken in connection with or under
this Agreement, except where same results directly and principally from its
negligence, willful misconduct or bad faith.
(f) Under no circumstances whatsoever shall the Agent (acting as
Purchase Contract Registrar or Unit Registrar) be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits) even if the Agent (acting as Purchase Contract
Registrar or Unit Registrar) has been advised of the possibility of such loss or
damage.
ARTICLE THREE
Supplemental Agreements
Section 3.01. Supplemental Agreements without Consent of Holders.
Without the consent of any Holders, the Company (subject to Section
3.03) and the Agent, at any time and from time to time, may enter into one or
more agreements supplemental hereto, in form satisfactory to the Company
(subject to Section 3.03) and the Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Purchase Contracts; or
(2) to evidence and provide for the acceptance of appointment hereunder
by a successor Agent; or
(3) to make provision with respect to the rights of Holders pursuant to
the requirements of Section 8.06(b); or
(4) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein, or to
make any other provisions with respect to such matters or questions arising
under this Agreement, but in each case only (a) with respect to matters
involving the Purchase Contracts and (b) to the extent such action does not
adversely affect the rights or obligations of the Holders.
Section 3.02. Supplemental Agreements with Consent of Holders.
Except as set forth in Section 3.01, without the consent of the Holder
of each Outstanding Purchase Contract affected thereby, the Company and the
Agent shall not enter into any agreement or agreements supplemental hereto for
the purpose of modifying in any manner any of the terms of this Agreement, the
Units or the Purchase Contracts.
22
Section 3.03. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 2.01) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement.
Section 3.04. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
Section 3.05. Reference to Supplemental Agreements.
Certificates executed and delivered after the execution of any
supplemental agreement pursuant to this Article may, and shall if required by
the Agent, bear a notation in form approved by the Agent, acting on an Opinion
of Counsel, as to any matter provided for in such supplemental agreement. If the
Agent shall so determine (or, in the case of any supplemental agreement
affecting the Purchase Contracts, if the Company shall so request), new
Certificates so modified as to conform, in the opinion of the Agent, acting on
an Opinion of Counsel, and (if such Certificates were prepared at the Company's
request) the Company, to any such supplemental agreement may be prepared,
executed and delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE FOUR
Consolidation, Merger, Sale or Conveyance
Section 4.01. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions.
So long as there are any Outstanding Purchase Contracts, the Company
will not amalgamate or merge with any other corporation or enter into any
reorganization or effect any conveyance, transfer or lease of all or
substantially all of the assets of it and its subsidiaries, taken as a whole
(other than with or to the Principal Subsidiary or any other subsidiary of the
Company that was in existence as of June 6, 2002), unless in any such case
either (i) the Company shall be the surviving corporation or one of the
continuing corporations, or (ii) the successor corporation (or the person that
leases or that acquires by conveyance or transfer all or substantially all of
the assets of the Company and its subsidiaries, taken as a whole) expressly
assumes the obligations outstanding of the Company under the Outstanding
Purchase Contracts and this Agreement, and the Company or such successor
corporation is not, immediately after such amalgamation, merger, conveyance,
transfer or lease, in default in the performance of any of such obligations.
23
Section 4.02. Rights and Duties of Successor Corporation.
In case of any such amalgamation, merger, reorganization, conveyance,
transfer or lease and upon any such assumption by the successor corporation,
such successor corporation shall succeed to and be substituted for the Company
with the same effect as if it had been named herein as the Company.
In case of any such amalgamation, merger, reorganization, conveyance,
transfer or lease, such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Units or Purchase Contracts
thereafter to be issued as may be appropriate.
Section 4.03. Opinion of Counsel to Agent.
The Agent, subject to Sections 2.01 and 2.03, may receive addressed to
it an Opinion of Counsel as conclusive evidence that any such amalgamation,
consolidation, merger, reorganization, sale or conveyance, and any such
assumption, complies with the provisions of this Article.
ARTICLE FIVE
Covenants
Section 5.01. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually perform its obligations under the Purchase Contracts in
accordance with the terms of the Purchase Contracts and this Agreement.
Section 5.02. Maintenance of Office or Agency.
The Agent shall maintain in Toronto, Ontario and New York, New York an
office or agency where Certificates may be presented or surrendered for issuance
of Common Shares upon settlement, Early Settlement, Early Settlement Upon Cash
Merger or the occurrence of an Acceleration Event, where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company, the Agent or the Custodian (including with
respect to delivery and payment instructions for Treasury Strips) in respect of
the Units, the Purchase Contracts and this Agreement may be served. The Agent
shall give prompt written notice to the Holders of the location, and any change
in the location, of such office or agency. If at any time the Agent shall fail
to maintain any such required office or agency or shall fail to furnish the
Holders with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Stock Transfer Office.
Section 5.03. Company to Reserve Common Shares; Listing of Common
Shares.
(a) The Company shall at all times prior to the Settlement Date reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Shares
24
the full number of Common Shares issuable upon settlement of all Outstanding
Purchase Contracts.
(b) The Company further covenants that so long as the Common Shares are
listed on the NYSE and the TSX, or each respective successor stock market, the
Company shall cause all Common Shares issuable upon settlement of all Purchase
Contracts to be listed on such stock exchanges.
(c) The Company further covenants to the Holders that, if required
under U.S. federal securities laws, it shall use commercially reasonable efforts
to (1) have in effect a registration statement under the Securities Act covering
the Common Shares to be delivered in respect of the Purchase Contracts being
settled and (2) deliver a related current prospectus in connection therewith, in
each case in a form that may be used in connection with Early Settlement under
Section 8.06 and Early Settlement Upon Cash Merger under Section 8.07.
Section 5.04. Covenants as to Common Shares.
The Company covenants that all Common Shares that are issued upon
settlement of any Outstanding Purchase Contract will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable.
Section 5.05. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in breach in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company is in breach, specifying
all such breaches and the nature and status thereof of which they may have
knowledge.
Section 5.06. Appointment of Agent of Service of Process.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably appoints CT
Corporation System, located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its
authorized agent in the Borough of Manhattan in The City of New York upon which
process may be served in any such suit or proceeding, and agrees that service of
process upon such agent, and written notice of said service to the Company, by
the person serving the same to such address, shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
25
PART II - PURCHASE CONTRACTS
ARTICLE SIX
Purchase Contract Certificate Forms
Section 6.01. Forms of Purchase Contract Certificates Generally.
(a) The Purchase Contract Certificates shall be in substantially the form
set forth in Exhibit A hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by any Depositary therefor,
or as may, consistent herewith, be determined by the Authorized Officers
executing such Purchase Contract Certificates, as evidenced by their execution
of the Purchase Contract Certificates.
(b) The definitive Purchase Contract Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the Authorized Officers executing the
Purchase Contract Certificates, consistent with the provisions of this
Agreement, as evidenced by their execution thereof.
(c) Every Global Purchase Contract Certificate authenticated, executed on
behalf of the Holders and delivered hereunder shall bear a legend in
substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AND UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AND UNIT
AGREEMENT.
ARTICLE SEVEN
Purchase Contract Certificates
Section 7.01. Purchase Contracts: Title and Terms.
The aggregate number of Purchase Contracts (if any) evidenced by Purchase
Contract Certificates authenticated, executed on behalf of the Holders and
delivered hereunder is limited to 25,000 (subject to increase up to a maximum of
28,750 to the extent the over-allotment option of the underwriters under the
Underwriting Agreement is exercised) minus the number of Purchase Contracts
evidenced by Units, except for Purchase Contract Certificates authenticated,
executed and delivered upon registration of transfer of, in exchange for, or in
lieu of, other Purchase Contract Certificates pursuant to Section 3.05, 7.04,
7.05, 7.06 or 8.06.
26
The Purchase Contract Certificates shall be issuable only in registered
form.
Section 7.02. Rights and Obligations Evidenced by the Purchase Contract
Certificates.
Each Purchase Contract Certificate shall evidence the Purchase Contracts
specified therein, with each such Purchase Contract representing the rights of
the Holder under one Purchase Contract. Prior to the Company's issuance and
delivery of Common Shares under the Purchase Contracts, the Purchase Contracts
shall not entitle the Agent or the Holders to any of the rights of a holder of
Common Shares, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as
shareholders of the Company, except to the extent otherwise expressly provided
in this Agreement.
Section 7.03. Execution, Authentication, Delivery and Dating of Purchase
Contract Certificates.
(a) Upon the execution and delivery of this Agreement, and at any time and
from time to time thereafter, the Company may deliver Purchase Contract
Certificates, together with a Company Order, executed by the Company to the
Agent for authentication and delivery, and the Agent (acting as Purchase
Contract Registrar) shall authenticate and deliver them in accordance with this
Agreement. The execution and authentication of the Purchase Contract
Certificates may be by manual or facsimile signature.
(b) Upon receiving notification from the Agent that a Holder has withdrawn
the Treasury Strips from some or all of the Units owned by such Holder in
accordance with Section 11.09, the Company shall execute and deliver to the
Agent, and the Agent (acting as Purchase Contract Registrar) shall authenticate,
a Purchase Contract Certificate, registered in the name of such Holder,
evidencing the same Purchase Contracts as were evidenced by such Units. If the
Holder fails to specify in the notice to the Agent referred to in Section
11.09(a)(1) whether it wants to hold such Purchase Contracts directly in the
form of a definitive Purchase Contract Certificate or as a beneficial owner in a
Global Purchase Contract Certificate, such Purchase Contracts shall be evidenced
by a beneficial interest in a Global Purchase Contract Certificate.
(c) Purchase Contract Certificates shall be manually executed on behalf of
the Company by Authorized Officers. Purchase Contract Certificates bearing the
manual signatures of individuals who were at any time Authorized Officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Purchase Contract Certificates or did not hold such offices at the date
of such Purchase Contract Certificates.
(d) Each Purchase Contract Certificate shall be dated the date of its
authentication.
(e) No Purchase Contract Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose unless there appears on
such Purchase Contract Certificate a certificate of authentication substantially
in the form provided for herein
27
executed by an authorized officer of the Agent (acting as Purchase Contract
Registrar) by manual signature, and such certificate upon any Purchase Contract
Certificate shall be conclusive evidence, and the only evidence, that such
Purchase Contract Certificate has been duly authenticated and delivered
hereunder.
Section 7.04. Temporary Purchase Contract Certificates.
(a) Pending the preparation of definitive Purchase Contract Certificates,
the Company shall execute and deliver to the Agent, and the Agent (acting as
Purchase Contract Registrar) shall authenticate and deliver, in lieu of such
definitive Purchase Contract Certificates, temporary Purchase Contract
Certificates which are in substantially the form set forth in Exhibit A, with
such letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may,
consistent herewith, be determined by the Company, as evidenced by the execution
of the Purchase Contract Certificates.
(b) If temporary Purchase Contract Certificates are issued, the Company
will cause definitive Purchase Contract Certificates to be prepared without
unreasonable delay. After the preparation of definitive Purchase Contract
Certificates, the temporary Purchase Contract Certificates shall be exchangeable
for definitive Purchase Contract Certificates upon surrender of the temporary
Purchase Contract Certificates at the Stock Transfer Office, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Purchase Contract Certificates, the Company shall execute and deliver to the
Agent, and the Agent (acting as Purchase Contract Registrar) shall authenticate
and deliver, in exchange therefor, one or more definitive Purchase Contract
Certificates evidencing the same Purchase Contracts, as the temporary Purchase
Contract Certificate or Purchase Contract Certificates so surrendered. Until so
exchanged, the temporary Purchase Contract Certificates shall in all respects
evidence the same entitlements and the same obligations with respect to the same
Purchase Contracts, evidenced thereby as definitive Purchase Contract
Certificates.
Section 7.05. Purchase Contract Certificate Registration; Registration of
Transfer and Exchange.
(a) The Agent shall keep at the Stock Transfer Office a register (the
"Purchase Contract Register") in which, subject to such reasonable regulations
as it may prescribe, the Agent shall provide for the registration of Purchase
Contract Certificates and of transfers of Purchase Contract Certificates (the
Agent, in such capacity, the "Purchase Contract Registrar").
(b) Upon surrender for registration of transfer of any Purchase Contract
Certificate at the Stock Transfer Office, the Agent shall execute and deliver,
in the name of the designated transferee or transferees, one or more new
Purchase Contract Certificates evidencing the same Purchase Contracts.
(c) At the option of the Holder, Purchase Contract Certificates may be
exchanged for other Purchase Contract Certificates evidencing the same Purchase
Contracts upon surrender of the Purchase Contract Certificates to be exchanged
at the Stock Transfer Office. Whenever any Purchase Contract Certificates are so
surrendered for exchange, the
28
Company shall execute and deliver to the Agent, and the Agent (acting as
Purchase Contract Registrar) shall authenticate and deliver, the Purchase
Contract Certificates which the Holder making the exchange is entitled to
receive.
(d) All Purchase Contract Certificates issued upon any registration of
transfer or exchange of a Purchase Contract Certificate shall evidence the
ownership of the same Purchase Contracts and be entitled to the same
entitlements and subject to the same obligations, under this Agreement as the
Purchase Contracts evidenced by the Purchase Contract Certificate surrendered
upon such registration of transfer or exchange.
(e) Every Purchase Contract Certificate presented or surrendered for
registration of transfer or for exchange shall (if so required by the Agent) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Agent (acting as Purchase Contract Registrar) duly executed,
by the Holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made for any registration of transfer or
exchange of a Purchase Contract Certificate, but the Agent (acting as Purchase
Contract Registrar) may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Purchase Contract Certificates,
other than any exchanges pursuant to Sections 3.05, 7.05(b), and 7.06 not
involving any transfer. Notwithstanding the foregoing or any other provision in
this Agreement or any schedule of fees, the Agent (acting as Purchase Contract
Registrar) may seek such additional compensation, costs and expenses from any
Holder for any additional time, effort, responsibility, cost, and/or expense
incurred or expended by the Agent (acting as Purchase Contract Registrar),
including without limitation for any rush transfer request, in order to comply
with any function as Agent (acting as Purchase Contract Registrar).
(g) Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent (acting as Purchase Contract
Registrar) shall not be obligated to authenticate and deliver, any Purchase
Contract Certificate presented or surrendered for registration of transfer or
for exchange on or after the Settlement Date or the Acceleration Date. In lieu
of delivery of a new Purchase Contract Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall, if the
Settlement Date or the Acceleration Event has occurred, deliver the Common
Shares issuable upon settlement of the Purchase Contracts evidenced by such
Purchase Contract Certificate.
(h) The provisions of clauses (1), (2), (3), (4) and (5) below shall apply
only to Global Purchase Contract Certificates:
(1) Each Global Purchase Contract Certificate executed and authenticated
under this Agreement shall be registered in the name of the Depositary
designated for such Global Purchase Contract Certificate or a nominee thereof
and delivered to such Depositary or a nominee thereof or custodian therefor,
and each such Global Purchase Contract Certificate shall constitute a single
Purchase Contract Certificate for all purposes of this Agreement.
29
(2) No Global Purchase Contract Certificate may be exchanged in whole or
in part for Purchase Contract Certificates registered, and no transfer of a
Global Purchase Contract Certificate in whole or in part may be registered,
in the name of any Person other than the Depositary for such Global Purchase
Contract Certificate or a nominee thereof unless (A) such Depositary (i) has
notified the Agent that it is unwilling or unable to continue as Depositary
for such Global Purchase Contract Certificate or (ii) has ceased to be a
clearing agency registered under the Exchange Act or (B) there shall have
occurred and be continuing a breach by the Company in respect to its
obligations under this Agreement.
(3) Subject to clause (2) above, any exchange of a Global Purchase
Contract Certificate for other Purchase Contract Certificates may be made in
whole or in part, and all Purchase Contract Certificates issued in exchange
for a Global Purchase Contract Certificate or any portion thereof shall be
registered in such names as the Depositary for such Global Purchase Contract
Certificate shall direct.
(4) Every Purchase Contract Certificate authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Purchase Contract Certificate or any portion thereof, whether pursuant to
this Section, Section 7.04, 7.06 or 8.06 or otherwise, shall be executed on
behalf of the Holders and delivered in the form of, and shall be, a Global
Purchase Contract Certificate, unless such Purchase Contract Certificate is
registered in the name of a Person other than the Depositary for such Global
Purchase Contract Certificate or a nominee thereof.
(5) The rights of each beneficial owner of a Global Purchase Contract
Certificate, whereby ownership and transfers are maintained and made through
book entries by the Depositary, shall be exercised only through the
Depositary and shall be limited to those established by law and agreements
between such beneficial owners and the Depositary and/or its participants.
Section 7.06. Mutilated, Destroyed, Lost and Stolen Purchase Contract
Certificates.
(a) If any mutilated Purchase Contract Certificate is surrendered to the
Agent, the Company shall execute and deliver to the Agent, and the Agent (acting
as Purchase Contract Registrar) shall authenticate and deliver in exchange
therefor, a new Purchase Contract Certificate, evidencing the same Purchase
Contracts and bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Agent (i) evidence
to the Company's and the Agent's satisfaction of the destruction, loss or theft
of any Purchase Contract Certificate, and (ii) such security, indemnity or
surety at the cost of the Holder as may be required by the Company, in its sole
discretion, or the Agent, in its sole discretion, to save the Agent, the Company
and any of their respective agents harmless, then, in the absence of notice to
the Company or the Agent that such Purchase Contract Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent (acting as Purchase Contract Registrar) shall authenticate
and deliver to the Holder, in lieu of any such
30
destroyed, lost or stolen Purchase Contract Certificate, a new Purchase Contract
Certificate, evidencing the same Purchase Contracts and bearing a number not
contemporaneously outstanding.
(c) Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent (acting as Purchase Contract
Registrar) shall not be obligated to authenticate and deliver to the Holder, any
Purchase Contract Certificate on or after the Settlement Date or the
Acceleration Date. In lieu of delivery of a new Purchase Contract Certificate,
upon satisfaction of the applicable conditions specified above in this Section
and receipt of appropriate registration or transfer instructions from such
Holder, the Agent shall, if the Settlement Date or the Acceleration Event has
occurred, deliver the Common Shares issuable in respect of the Purchase
Contracts evidenced by such Purchase Contract Certificate.
(d) Upon the issuance of any new Purchase Contract Certificate under this
Section, the Agent (acting as Purchase Contract Registrar) may require the
payment by the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Agent or the Custodian) connected therewith.
(e) Every new Purchase Contract Certificate issued pursuant to this Section
in lieu of any destroyed, lost or stolen Purchase Contract Certificate shall
constitute an original additional contractual obligation of the Company and of
the Agent, whether or not the destroyed, lost or stolen Purchase Contract
Certificate shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement.
(f) The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
settlement of mutilated, destroyed, lost or stolen Purchase Contract
Certificates.
Section 7.07. Persons Deemed Owners of Purchase Contracts.
(a) Prior to due presentment of a Purchase Contract Certificate for
registration of transfer, the Company and the Agent, and any agent of the
Company or the Agent, may treat the Person in whose name such Purchase Contract
Certificate is registered as the owner of the Purchase Contracts evidenced
thereby and for all other purposes whatsoever, and neither the Company nor the
Agent, nor any agent of the Company or the Agent, shall be affected by notice to
the contrary.
(b) Notwithstanding the foregoing, with respect to any Global Purchase
Contract Certificate, (i) nothing herein shall prevent the Company, the Agent or
any agent of the Company or the Agent, from giving effect to any written
certification, proxy or other authorization furnished by any Depositary (or its
nominee), as a Holder, with respect to such Global Purchase Contract Certificate
or impair, as between such Depositary and owners of beneficial interests in such
Global Purchase Contract Certificate, the operation of customary practices
governing the exercise of rights of such Depositary (or its nominee) as Holder
of such Global Purchase Contract Certificate and (ii) the Company, the Agent and
any agent of the
31
Company or the Agent shall be entitled to deal with the Depositary for all
purposes of this Agreement as the sole Holder of the Purchase Contracts
evidenced by Global Purchase Contract Certificates and shall have no obligation
to the beneficial owners of such Global Purchase Contract Certificates.
Section 7.08. Cancellation of Purchase Contract Certificates.
(a) All Purchase Contract Certificates surrendered for delivery of Common
Shares on or after the Settlement Date, on or after the occurrence of an
Acceleration Event or pursuant to an Early Settlement or an Early Settlement
Upon Cash Merger or in connection with the registration of transfer or exchange
shall, if surrendered to any Person other than the Agent, be delivered to the
Agent (acting as Purchase Contract Registrar) and, if not already cancelled,
shall be promptly cancelled by it. The Company may at any time deliver to the
Agent (acting as Purchase Contract Registrar) for cancellation any Purchase
Contract Certificates previously executed and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Purchase Contract
Certificates so delivered shall be promptly cancelled by the Agent(acting as
Purchase Contract Registrar). No Purchase Contract Certificates shall be
executed and delivered in lieu of or in exchange for any Purchase Contract
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Purchase Contract Certificates held
by the Agent (acting as Purchase Contract Registrar) shall be disposed of in
accordance with the Agent's customary policies.
(b) If the Company or any Affiliate of the Company shall acquire any
Purchase Contract Certificate, such acquisition shall not operate as a
cancellation of such Purchase Contract Certificate unless and until such
Purchase Contract Certificate is delivered to the Agent (acting as Purchase
Contract Registrar) cancelled or for cancellation.
ARTICLE EIGHT
The Purchase Contracts
Section 8.01. Issuance of Common Shares.
(a) Each Purchase Contract is an agreement of purchase and sale which shall
obligate the Company to issue on the Settlement Date, in consideration of the
purchase price of $22,542.53 per Purchase Contract paid by the initial Holders a
number of Common Shares equal to the Settlement Rate, unless an Acceleration
Event, an Early Settlement or an Early Settlement Upon Cash Merger occurs on or
prior to the Settlement Date. The "Settlement Rate" is equal to: (i) if the
Applicable Market Value (as defined below) is greater than the Threshold
Appreciation Price, 16,885.93 Common Shares per Purchase Contract; (ii) if the
Applicable Market Value is less than or equal to the Threshold Appreciation
Price but is greater than the Reference Price, a number of Common Shares per
Purchase Contract equal to $28,571.00 divided by the Applicable Market Value;
and (iii) if the Applicable Market Value is less than or equal to the Reference
Price, 20,263.12 Common Shares per Purchase Contract, in each case subject to
adjustment as provided in Section 8.03. As provided in Section 8.08, no
fractional Common Share will be issued upon settlement of Purchase Contracts. On
the Settlement Date, the Company shall
32
calculate the Settlement Rate as aforesaid and provide a written notice to the
Agent setting forth the Settlement Rate and the calculation thereof in
reasonable detail.
(b) The "Applicable Market Value" means the average of the Closing Prices
per Common Share on each of the twenty consecutive Trading Days ending on the
third Trading Day immediately preceding the Settlement Date. The "Closing Price"
of the Common Shares on any date of determination means the closing sale price
during regular trading hours (or, if no closing price is reported, the last
reported sale price) of the Common Shares on the New York Stock Exchange (the
"NYSE") on such date or, if the Common Shares are not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Common Shares are so
listed, or if the Common Shares are not so listed on a United States national or
regional securities exchange, as reported by The Nasdaq Stock Market, or, if the
Common Shares are not so reported, the last quoted bid price for the Common
Shares in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if such bid price is not available, the
market value of the Common Shares on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company. A "Trading Day" means a day on which the Common Shares (A) are not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) have
traded at least once on any national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Shares.
Section 8.02. Delivery of Common Shares.
Unless an Acceleration Event shall have occurred on or prior to the
Settlement Date, on the Settlement Date, subject to Section 8.03(b), the Agent
shall notify the Company of the number of Common Shares to be delivered in
respect of Outstanding Purchase Contracts pursuant to the Settlement Rate and
all amounts to be paid in respect of any fractional shares and the Company shall
deliver or cause to be delivered to the Agent, for the benefit of the Holders of
the Outstanding Purchase Contracts, one or more certificates representing such
number of Common Shares registered in the name of the Agent (or its nominee) as
custodian for the Holders (such certificates for Common Shares, together with
any dividends or distributions with respect thereto for which a record date and
payment date for such dividend or distribution has occurred after the Settlement
Date, being hereinafter referred to as the "Common Share Settlement") to which
the Holders are entitled hereunder. Subject to the foregoing, upon surrender of
a Certificate to the Agent on or after the Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor that number of
whole Common Shares which such Holder is entitled to receive pursuant to the
provisions of this Article (after taking into account all Purchase Contracts,
including those evidenced by Units, then held by such Holder) together with cash
in lieu of fractional shares as provided in Section 8.08 and any dividends or
distributions with respect to such shares constituting part of the Common Share
Settlement, but without any interest thereon, and the Certificate so surrendered
shall forthwith be cancelled. Such shares shall be registered in the name of the
Holder or the Holder's designee as specified in the settlement instructions on
the Certificate. For the avoidance of doubt, no Holder shall be entitled to any
dividends or distributions with respect to the Common Shares for which the
record date occurs prior to the Settlement Date.
33
If any Common Shares issued in respect of a Purchase Contract are to be
registered in the name of a Person other than the Person in whose name the
Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Certificate evidencing such
Purchase Contract or has established to the satisfaction of the Agent that such
tax either has been paid or is not payable.
Section 8.03. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Share Splits, Etc.
(1) Share Dividends. If the Company shall after the date of this
Agreement pay a dividend or make a distribution to all holders of the
outstanding Common Shares in Common Shares, the Settlement Rate in effect
at the opening of business on the date following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate 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 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 increase to become effective immediately after the
opening of business on the day following the date fixed for such
determination. If any dividend or distribution of the type described in
this Section 8.03(a)(1) is declared but not so paid or made, the Settlement
Rate shall again be adjusted to the Settlement Rate which would then be in
effect if such dividend or distribution had not been declared.
(2) Share Purchase Rights. If the Company issues rights or warrants to
all or substantially all holders of its outstanding Common Shares that
entitle the holders of its Common Shares for a period expiring within 60
days after the record date for the determination of shareholders entitled
to receive such rights or warrants, to subscribe for or purchase Common
Shares, or securities convertible into Common Shares, at a price per share
less than the Current Market Price on the date fixed for the determination
of shareholders entitled to receive such rights or warrants (other than
pursuant to a dividend reinvestment plan), the Settlement Rate shall be
adjusted so that the same shall equal the rate determined by dividing such
Settlement Rate in effect at the opening of business on the date following
the date fixed for such determination 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 shares which
the aggregate offering price of the total number of shares so offered would
purchase at such Current Market Price, and of which the denominator shall
be the number of Common Shares outstanding on the close of business on the
date fixed for such determination plus the number of additional Common
Shares so offered for subscription or purchase. Such increase shall become
effective immediately after the opening of business on the day following
the date fixed for the determination. To the extent that Common Shares are
not delivered pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants the Settlement Rate shall be
readjusted to be the Settlement Rate which
34
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
Common Shares actually delivered. If such rights or warrants are not so
issued, the Settlement Rate shall again be adjusted to be the Settlement
Rate which would then be in effect if such date fixed for the determination
of shareholders entitled to receive such rights or warrants had not been
fixed. In determining whether any rights or warrants entitle the holders to
subscribe for or purchase Common Shares at less than such Current Market
Price, and in determining the aggregate offering price of such Common
Shares, there shall be taken into account any consideration received for
such rights or warrants, with the value of such consideration, if other
than cash, to be determined by the Board of Directors.
(3) Share Splits; Reverse Splits. If the outstanding Common Shares
shall be subdivided into a greater number of Common Shares, the Settlement
Rate in effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
increased, and, conversely, if the outstanding Common Shares shall be
combined into a smaller number of Common Shares, the Settlement Rate in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(4) Debt or Asset Distributions. If the Company shall, by dividend or
otherwise, distribute to all holders of its Common Shares shares of any
class of capital stock of the Company (other than any dividends or
distributions to which Section 8.03(a)(1) applies) or evidences of its
indebtedness, cash or other assets (including securities, but excluding (i)
any rights or warrants of a type referred to in Sections 8.03(a)(1) or
8.03(a)(2), (ii) rights described in the second succeeding paragraph of
this Section 8.03(a)(4) (including rights distributed to all holders of its
Common Shares pursuant to a shareholder rights plan) and (iii) dividends
and distributions paid exclusively in cash) (the foregoing hereinafter in
this Section 8.03(a)(4) called the "Securities"), then, in each such case,
the Settlement Rate shall be increased so that the same shall be equal to
the rate determined by dividing the Settlement Rate in effect immediately
prior to the close of business on the record date with respect to such
distribution by a fraction of which the numerator shall be the Current
Market Price 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 Securities so distributed applicable to one Common Share and the
denominator shall be such Current Market Price, such increase to become
effective immediately prior to the opening of business on the day following
the record date; provided, however, that in the event the then fair market
value (as so determined by the Board of Directors) of the portion of the
Securities so distributed applicable to one Common Share is equal to or
greater than the Current Market Price on the record date, in lieu of the
foregoing adjustment, the Company may elect to deliver to each Holder on
the Settlement Date upon settlement of a Purchase Contract the amount of
Securities such Holder would have received as a holder of Common Shares
immediately prior to such record date. If such dividend or distribution is
not so paid or made, the Settlement Rate
35
shall again be adjusted to be the Settlement Rate which would then be in
effect if such dividend or distribution had not been declared. If the Board
of Directors determines the fair market value of any distribution for
purposes of this Section 8.03(a)(4) by reference to the actual or when
issued trading market for any securities comprising all or part 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
Section 8.03(a)(5) to the extent possible.
Rights or warrants distributed by the Company to all holders of Common
Shares entitling the holders thereof to subscribe for or purchase shares of
the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a
specified event or events: (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, shall be deemed not to have
been distributed for purposes of this Section 8.03(a)(4) (and no adjustment
to the Settlement Rate under this Section 8.03(a)(4) shall be made).
For purposes of this Section 8.03(a)(4) and Sections 8.03(a)(1) and
(2), any dividend or distribution to which this Section 8.03(a)(4) is
applicable that also includes Common Shares, or rights or warrants to
subscribe for or purchase Common Shares to which Section 8.03(a)(2) applies
(or both), shall be deemed instead to be (1) a dividend or distribution of
the evidences of indebtedness, assets, shares of capital stock, rights or
warrants other than such Common Shares or rights or warrants to which
Section 8.03(a)(2) applies (and any Settlement Rate increase required by
this Section 8.03(a)(4) with respect to such dividend or distribution shall
then be made) immediately followed by (2) a dividend or distribution of
such Common Shares or such rights or warrants (and any further Settlement
Rate increase required by Sections 8.03(a)(1) and (2) with respect to such
dividend or distribution shall then be made, except that (A) the record
date of such dividend or distribution shall be substituted as "the date
fixed for the determination of shareholders entitled to receive such
dividend or other distribution," "record date fixed for such determination"
and "record date" within the meaning of Section 8.03(a)(1) and as "the date
fixed for the determination of shareholders entitled to receive such rights
or warrants," "the record date fixed for the determination of the
shareholders entitled to receive such rights or warrants" and "such record
date" within the meaning of Section 8.03(a)(2) and (B) 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 Section 8.03(a)(1)).
(5) Cash Distributions. If the Company shall, by dividend or
otherwise, distribute to all holders of its Common Shares cash (excluding
any cash that is distributed in a Reorganization Event to which Section
8.03(b) applies or as part of a distribution referred to in paragraph (4)
of this Section) in an aggregate amount that, combined together with (i)
the aggregate amount of any other such all cash distributions to all
holders of its Common Shares within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment pursuant
to this paragraph (5) or paragraph (6) of this Section has been made and
(ii) the aggregate of any cash plus the
36
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) of
consideration payable in respect of any tender offers (within the meaning
of U.S. federal securities laws) by the Company or any of its subsidiaries
for all or any portion of the Common Shares concluded within the 12 months
preceding the date of payment of such distribution and in respect of which
no adjustment pursuant to this paragraph (5) of this Section has been made,
exceeds 15% of the product of the Current Market Price on the date for the
determination with respect to such distribution times the number of Common
Shares outstanding on such date, then, and in each such case, immediately
after the close of business on such date of determination, the Settlement
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Settlement Rate in effect immediately prior to the close of
business on the date fixed for determination by a fraction (i) the
numerator of which is the Current Market Price on the date fixed for such
determination less an amount equal to the quotient of (x) the excess of
such combined amount over such 15% and (y) the number of Common Shares
outstanding on such date for determination and (ii) the denominator of
which shall be equal to the Current Market Price per Common Share on such
date of determination; provided, however, that if the portion of the cash
so distributed applicable to one Common Share is equal to or greater than
the Current Market Price of the Common Shares on the record date, in lieu
of the foregoing adjustment, the Company may elect to deliver to each
Holder upon settlement of a Purchase Contract an amount of cash equal to
the cash and the fair market value of the non-cash consideration (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) such Holder would have
received as a holder of Common Shares immediately prior to such record
date.
(6) Tender Offers. If a tender or exchange offer within the
meaning of the U.S. securities laws made by the Company or any subsidiary
of the Company for all or any portion of the Common Shares expires and such
tender or exchange offer (as amended upon the expiration thereof) requires
the Company or such subsidiary to pay to shareholders (based on the
acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of Purchased Shares, as hereinafter defined) an aggregate
consideration that has a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that combined together with (I) the aggregate of the cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as
of the expiration of such tender or exchange offer, of consideration
payable in respect of any other tender or exchange offer, by the Company or
any subsidiary of the Company for all or any portion of the Common Shares
expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made and (II) the
aggregate amount of any distributions to all holders of the Common Shares
made exclusively in cash within 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (5) of this Section or this paragraph (6) has been made, exceeds
15% of the product of the Current Market Price per Common Share as of the
last time (the "Expiration Time") tenders could have been made pursuant to
such tender or exchange offer (as it may be amended) times the number of
Common Shares outstanding
37
(including any tendered shares) at the Expiration Time, then, and in each
such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, the Settlement Rate shall be adjusted so
that the same shall equal the rate determined by dividing the Settlement
Rate immediately prior to close of business on the date of the Expiration
Time by a fraction (i) the numerator of which shall be equal to (A) the
product of (I) the Current Market Price per Common Share on the date of the
Expiration Time and (II) the number of Common Shares outstanding (including
any tendered shares) at the Expiration Time less (B) the amount of cash
plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of
Purchased Shares, and (ii) the denominator of which shall be equal to the
product of (A) the Current Market Price per Common Share as of the
Expiration Time and (B) the number of Common Shares outstanding (including
any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares").
(7) "Current Market Price". The "Current Market Price" per
Common Share on any day means the average of the daily Closing Prices per
Common Share for the ten consecutive Trading Days immediately prior to the
date in question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Settlement
Rate occurs during such ten consecutive Trading Days, the Closing Price for
each Trading Day prior to the "ex" date for such other event shall be
adjusted by dividing such Closing Price by the same fraction by which the
Settlement Rate is so required to be adjusted as a result of such other
event, (2) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Settlement Rate occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question,
the Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by dividing such Closing Price by the
reciprocal of the fraction by which the Settlement Rate is so required to
be adjusted as a result of such other event, and (3) if the "ex" date for
the issuance or distribution requiring such computation is prior to the day
in question, after taking into account any adjustment required pursuant to
clause (1) or (2) 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 (as determined by the Board of
Directors, 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
Common Share as of the close of business on the day before such "ex" date.
For purposes of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which the
Common Shares trade regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to any
subdivision or combination of Common Shares, means the first date on which
the Common Shares trade regular way on such exchange or in such market
after the time at which such subdivision or combination becomes effective,
and (3) when used with respect to any tender or exchange offer means the
first date on
38
which the Common Shares trade regular way on such exchange or in such
market after the Expiration Time of such offer. Notwithstanding the
foregoing, whenever successive adjustments to the Settlement Rate are
called for pursuant to this Section 8.03(a), such adjustments shall be made
to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 8.03(a) and to avoid unjust or
inequitable results as determined in good faith by the Board of Directors
(whose determination shall be conclusive and described in a Board
Resolution).
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
If any of the following events occur: (i) any reclassification or change of the
outstanding Common Shares (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any amalgamation, arrangement, consolidation,
merger, share exchange or combination of the Company with another corporation
(other than with or into the Principal Subsidiary or any other subsidiary of the
Company that was in existence as of June 6, 2002) as a result of which holders
of Common Shares shall be entitled to receive shares of stock, securities or
other property or assets (including cash) with respect to or in exchange for
such Common Shares, or (iii) any sale or conveyance of the properties and assets
of the Company as an entirety or substantially as an entirety to any other
corporation as a result of which holders of Common Shares shall be entitled to
receive shares of stock, securities or other property or assets (including cash)
with respect to or in exchange for such Common Shares (other than to the
Principal Subsidiary or any other subsidiary of the Company that was in
existence as of June 6, 2002) (any such event, a "Reorganization Event"), the
Company may, in its sole discretion, elect to deliver to each Holder on the
Settlement Date, with respect to each Purchase Contract, the kind and amount of
shares of stock, other securities or other property or assets (including cash)
receivable upon such Reorganization Event by a Holder of the number of Common
Shares issuable upon settlement of the Purchase Contract if the Settlement Date
had occurred immediately prior to such Reorganization Event, assuming such
holder of Common Shares did not exercise his or her rights of election, if any,
as to the kind or amount of securities, cash or other property receivable upon
such Reorganization Event (provided that, if the kind or amount of securities,
cash or other property receivable upon such Reorganization Event is not the same
for each Common Share in respect of which such rights of election have not been
exercised ("non-electing share"), then, for the purposes of this Section
8.03(b), the kind and amount of securities, cash or other property receivable
upon such Reorganization Event for each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares). In the event of such a Reorganization Event, the Person formed by such
amalgamation, consolidation, merger or exchange or the Person which acquires the
assets of the Company or, in the event of a liquidation or dissolution of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Agent an agreement supplemental hereto
providing that the Holders of each Outstanding Purchase Contract shall have the
rights provided by this Section 8.03. Such supplemental agreement shall provide
for adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. If, in the case of any such
Reorganization Event, the stock or other securities and assets receivable
thereupon by a holder of Common Shares includes shares of stock or other
securities and assets of a corporation other than the successor or purchasing
corporation, as the case may be, in such Reorganization Event, then such
supplemental agreement shall also be executed by such other corporation and
shall contain such additional provisions to protect the
39
interests of the Holders of each Outstanding Purchase Contract as the Board of
Directors shall reasonably consider necessary by reason of the foregoing. The
above provisions of this Section shall similarly apply to successive
Reorganization Events. If the Company fails to make the election referred to in
the first sentence of this paragraph (b), each Holder will have the right to
early settle its Purchase Contracts on the same basis and in accordance with the
same procedures as provided for under Section 8.07, whether or not the
Reorganization Event is a Cash Merger for purposes of Section 8.07(a) and the
Company shall comply with the notification and election procedures provided for
in Section 8.07 mutatis mutandis.
(c) Calculating Adjustment of Settlement Rate. All calculations under this
Article shall be made by the Company, and adjustments to the Settlement Rate
will be calculated to the nearest 1/10,000th of a share. No adjustment in the
Settlement Rate will be required unless such adjustment would require an
increase or decrease of at least one percent in the Settlement Rate; provided,
however, that any adjustments which by reason of the foregoing are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment. If an adjustment is to be made to the Settlement Rate pursuant to
paragraph (1), (2), (3), (4), (5) or (6) of Section 8.03(a), an adjustment shall
also be made to the Applicable Market Value solely to determine which of clauses
(i), (ii) or (iii) of the definition of Settlement Rate in Section 8.01(a) will
apply on the Settlement Date. Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction, the numerator of which shall be the
Settlement Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5) or (6) of Section 8.03(a) and the denominator of which shall
be the Settlement Rate immediately before such adjustment, provided that if such
adjustment to the Settlement Rate is required to be made pursuant to the
occurrence of any of the events contemplated by paragraph (1), (2), (3), (4),
(5) or (6) of Section 8.03(a) during the period taken into consideration for
determining the Applicable Market Value, appropriate and customary adjustments
shall be made to the Settlement Rate.
Section 8.04. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance with
Section 8.03 and prepare and transmit to the Agent an Officers' Certificate
setting forth the adjusted Settlement Rate, the method of calculation
thereof in reasonable detail, and the facts requiring such adjustment and
upon which such adjustment is based; and
(ii) within ten Business Days following the occurrence of an event
that permits or requires an adjustment to the Settlement Rate pursuant to
Section 8.03 (or if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written notice to the Agent
of the occurrence of such event and a statement in reasonable detail
setting forth the method by which the adjustment to the Settlement Rate was
determined and setting forth the adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or responsibility to
any Holder of Purchase Contracts or Units to determine whether any facts exist
which may require
40
any adjustment of the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed in making the same. The Agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any Common Shares, or of any
securities or property, which may at the time be issued or delivered under any
Purchase Contract; and the Agent makes no representation with respect thereto.
The Agent shall not be responsible for any failure of the Company to issue,
transfer or deliver any Common Shares pursuant to a Purchase Contract or to
comply with any of the duties, responsibilities or covenants of the Company
contained in this Article.
Section 8.05. Acceleration Event; Notice.
If an Acceleration Event occurs, the Purchase Contracts and the obligations
and rights of the Company and the Holders thereunder shall immediately and
automatically accelerate, without the necessity of any notice or action by any
Holder, the Agent or the Company. Upon the occurrence of an Acceleration Event,
the Company shall give written notice to the Agent and to the Holders of
Purchase Contracts in accordance with Sections 1.05 and 1.06. Upon and after the
occurrence of an Acceleration Event, the Holders will be entitled to receive
from the Company 20,263.12 Common Shares per Purchase Contract, which number
shall be adjusted in the same manner and at the same time as the Settlement Rate
is adjusted.
Section 8.06. Early Settlement.
(a) Commencing August 15, 2002, and subject to and upon compliance with the
provisions of this Section 8.06 at the option of the Holder of Purchase
Contracts (including Purchase Contracts evidenced by Units), Purchase Contracts
may be settled early ("Early Settlement") as provided herein. In order to
exercise the right to effect Early Settlement with respect to any Purchase
Contracts (including Purchase Contracts evidenced by Units), the Holder of the
Certificate evidencing such Purchase Contracts shall deliver such Certificate to
the Agent at the Stock Transfer Office duly endorsed for transfer in blank with
the form of Election for Early Settlement on the reverse thereof duly completed.
If the foregoing requirements are first satisfied with respect to Purchase
Contracts at or prior to 5:00 p.m., Toronto time, on a Business Day, such day
shall be the "Early Settlement Date" with respect to such Purchase Contracts and
if such requirements are first satisfied after 5:00 p.m., Toronto time, on a
Business Day or on a day that is not a Business Day, the "Early Settlement Date"
with respect to such Purchase Contracts shall be the next succeeding Business
Day. The Agent shall promptly notify the Company of the Early Settlement and
such notification shall include the number of Common Shares to be issued and
delivered pursuant to Section 8.06(b) and the names in which the Common Shares
are to be registered.
(b) Upon Early Settlement of Purchase Contracts (including Purchase
Contracts evidenced by Units) by a Holder, the Company shall issue, and such
Holder shall be entitled to receive, a number of Common Shares upon settlement
of each Purchase Contract as to which Early Settlement is effected equal to the
Early Settlement Rate. The "Early Settlement Rate" shall initially be equal to
16,011.04 Common Shares per Purchase Contract for the period on or after August
15, 2002 and prior to February 15, 2003 and 16,885.93 Common Shares per Purchase
Contract for the period on or after February 15, 2003 and shall be adjusted in
the same manner and at the same time as the Settlement Rate is adjusted. As
promptly as practicable after
41
Early Settlement of Purchase Contracts in accordance with the provisions of this
Section 8.06, the Company shall issue and shall deliver to the Agent at the
Stock Transfer Office a certificate or certificates for the full number of
Common Shares issuable upon such Early Settlement together with payment in lieu
of any fraction of a share, as provided in Section 8.08.
(c) The Company shall cause the Common Shares issuable upon Early
Settlement of Purchase Contracts to be issued and delivered to the Agent, for
delivery to the Holder thereof or its designee, no later than the third Business
Day after receipt of notification pursuant to Section 8.06(a) from the Agent.
(d) Upon Early Settlement of any Purchase Contracts, and subject to receipt
of the Common Shares from the Company, the Agent shall, in accordance with the
instructions provided by the Holder thereof on the applicable form of Election
for Early Settlement on the reverse of the Certificate evidencing the related
Units or Purchase Contracts, as the case may be, deliver the full number of
Common Shares issuable upon such Early Settlement together with payment in lieu
of any fraction of a share, as provided in Section 8.08.
(e) In the event that Early Settlement is effected with respect to Purchase
Contracts evidenced by less than all the Units or Purchase Contracts evidenced
by a Certificate, upon such Early Settlement the Company shall execute and
deliver to the Agent, and the Agent shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units or
Purchase Contracts as to which Early Settlement was not effected.
(f) Notwithstanding the foregoing, no election for Early Settlement by any
Holder will be permitted at any time during which an effective registration
statement under the Securities Act and a related current prospectus covering the
Common Shares to be delivered in respect of the Purchase Contracts being settled
is required under the U.S. federal securities laws but is not available.
Section 8.07. Early Settlement Upon Cash Merger. (a) Commencing August 15,
2002, upon any amalgamation, arrangement, consolidation, merger or other
reorganization event with respect to the Company of the type described in clause
(ii) of Section 8.03(b) in which all of the Common Shares outstanding
immediately prior to such event are exchanged for or converted into
consideration at least 30% of the value of which (such 30% determination based
on a valuation provided by a nationally recognized investment banking firm
selected by the Company) consists of cash or cash equivalents (any such event a
"Cash Merger"), the Company shall be required to offer the Holder of each
Purchase Contract the right to settle the Purchase Contract prior to the
Settlement Date (an "Early Settlement Upon Cash Merger" and the date on which
such early settlement occurs, which shall occur immediately prior to the Merger
Effective Date (as defined below), the "Early Settlement Upon Cash Merger Date")
as provided herein; provided, however, that no Early Settlement Upon Cash Merger
shall be permitted if on the Early Settlement Upon Cash Merger Date an effective
registration statement under the Securities Act and a related current prospectus
covering Common Shares to be delivered in respect of the Purchase Contracts
being settled is required under the U.S. federal securities laws but is not
available. The Company or, at the request and expense of the Company, the Agent,
shall give all Holders of Purchase Contracts notice of any proposed Cash Merger
and of the right of Early Settlement Upon Cash Merger arising as a result
thereof at least 25 days prior to the date on
42
which the Cash Merger is to become effective (the "Merger Effective Date"). The
Company shall also deliver a copy of such notice to the Agent and the Custodian.
Each such notice shall contain:
(i) the date, which shall be not more than five Business Days prior to
the Merger Effective Date, by which the Early Settlement Upon Cash Merger
right must be exercised (the "Merger Election Date");
(ii) an explanation of how the Settlement Rate in effect as a result
of such Cash Merger will be calculated, which shall be calculated in
accordance with Section 8.01(a) hereof, by substituting for the Applicable
Market Value the volume-weighted average trading price of the Common Shares
on the NYSE during regular trading hours for the five Trading Days ending
on the Trading Day immediately preceding the Merger Election Date or, if
the Common Shares are not listed for trading on the NYSE on the Merger
Election Date, the market value of the Common Shares on such date as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Company (the "Early Settlement Upon Cash
Merger Rate");
(iii) to the extent known to the Company, the kind and amount of
securities, cash and other property receivable pursuant to the Cash Merger
by the holders of Common Shares; and
(iv) the instructions a Holder must follow to exercise the Early
Settlement Upon Cash Merger right.
(b) To exercise the Early Settlement Upon Cash Merger right, a Holder shall
deliver to the Agent at the Stock Transfer Office on or before 5:00 p.m., New
York City time on the Merger Election Date specified in the notice (i) the
Certificate(s) evidencing the Units or Purchase Contracts, as applicable, with
respect to which the Early Settlement Upon Cash Merger right is being exercised
duly endorsed in blank with the form of Election for Early Settlement Upon Cash
Merger on the reverse thereof duly completed and (ii) payment of any transfer or
similar taxes payable in connection with the issuance of Common Shares to any
person than the Holder (if applicable).
(c) Effective on the Early Settlement Upon Cash Merger Date, the exercising
Holder or its designee shall become a holder of Common Shares and shall be
entered on the register for the Common Shares as the registered holder of that
number of Common Shares deliverable under such Holder's Purchase Contracts for
which such Early Settlement Upon Cash Merger was exercised, determined with
reference to the Settlement Rate (determined in accordance with Section
8.07(a)(ii)) (with the intent that such Holder or its designee shall participate
in the Cash Merger as the registered holder of such Common Shares) and the
Company (or the successor to the Company resulting from the Cash Merger) shall,
as promptly as practicable following the Merger Effective Date, deliver or cause
to be delivered such Holder's or its designee's Common Share certificates, in
accordance with Section 8.02. In the event an Early Settlement Upon Cash Merger
right is exercised by a Holder in accordance with
43
the terms hereof, all references herein to Settlement Date shall be deemed to
refer to such Early Settlement Upon Cash Merger Date.
(d) Upon the Early Settlement Upon Cash Merger of any Purchase Contracts,
the Agent shall instruct the Custodian to transfer to the Holder the Treasury
Strips evidenced by any Units that also evidence such Purchase Contracts in
accordance with the instructions provided by the Holder thereof on the
applicable form of Election for Early Settlement Upon Cash Merger on the reverse
of the Certificate evidencing the related Units, or Purchase Contracts, as
applicable.
(e) In the event that Early Settlement Upon Cash Merger is effected with
respect to Purchase Contracts evidenced by fewer than all the Units evidenced by
a Certificate, upon such Early Settlement Upon Cash Merger the Company (or the
successor to the Company resulting from the Cash Merger) shall execute and the
Agent shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Units, or as applicable the
Purchase Contracts, as to which Early Settlement Upon Cash Merger was not
effected.
(f) If (1) a Holder of Purchase Contracts does not elect to exercise its
Early Settlement Upon Cash Merger right, or (2) if a Holder of Purchase
Contracts exercises its Early Settlement Upon Cash Merger right but the Cash
Merger does not occur for any reason, then such Holder's Purchase Contracts will
not be settled and will remain outstanding.
(g) Notwithstanding the foregoing, no election for Early Settlement Upon
Cash Merger by any Holder will be permitted at any time during which an
effective registration statement and current prospectus covering the Common
Shares to be delivered in respect of the Purchase Contracts being settled is
required under the U.S. federal securities laws but is not available.
Section 8.08. No Fractional Shares.
No fractional Common Shares or scrip representing fractional Common Shares
shall be issued or delivered upon settlement on the Settlement Date, upon Early
Settlement, upon Early Settlement Upon Cash Merger or upon an Acceleration
Event. If Certificates evidencing more than one Purchase Contract are
surrendered for settlement at one time by the same Holder, the number of full
Common Shares to be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered by that Holder. Instead of any fractional Common Share which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Settlement Date, upon Early Settlement, upon Early Settlement Upon Cash Merger
or upon an Acceleration Event, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal to the value
of such fractional shares at the Closing Price per share on the Trading Day
immediately preceding the Settlement Date, the Early Settlement Date, the Early
Settlement Upon Cash Merger Date or upon an Acceleration Event, respectively.
Such payment shall be regarded as a purchase price adjustment in respect of the
purchase price of Common Shares under a Purchase Contract. The Company shall
provide the Agent from time to time with
44
sufficient funds to permit the Agent to make all cash payments required by this
Section 8.08 in a timely manner.
Section 8.09. Charges and Taxes.
The Company shall pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the Common Shares pursuant to the Purchase
Contracts; provided, however, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Purchase Contract or any issuance of
a Common Share in a name other than that of the registered Holder of a Unit
Certificate surrendered in respect of the Purchase Contracts evidenced thereby
or a registered Holder of a Purchase Contract Certificate surrendered in respect
of the Purchase Contracts evidenced thereby, other than in the name of the
Agent, as custodian for such Holder, and the Company shall not be required to
issue or deliver such share certificates or Certificates or Common Shares unless
or until the Person or Persons requesting the transfer or 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 or is not due.
Section 8.10. Company to Deal Only With Agent.
All of the Company's obligations hereunder to provide notice or deliver any
Common Shares, money or other property to the Holders shall be fully satisfied
if the Company provides such notice, or delivers such Common Shares, money or
other property, to the Agent, and in no event shall the Company be responsible
for any failure of the Agent to timely perform its obligations under this
Agreement.
ARTICLE NINE
Purchase Contract Remedies
Section 9.01. Restoration of Purchase Contract Rights and Remedies.
If any Holder of Purchase Contracts has instituted any proceeding to
enforce any right or remedy under this Agreement or the related Purchase
Contracts and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to such Holder, then and in every such case,
subject to any determination in such proceeding, the Agent, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.
Section 9.02. Rights and Remedies Cumulative for Purchase Contracts.
Except as otherwise provided with respect to the replacement of mutilated,
destroyed, lost or stolen Purchase Contract Certificates in Section 7.06(f), no
right or remedy herein conferred upon or reserved to the Holders of Purchase
Contracts is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or
45
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.03. Delay or Omission Not Waiver of Purchase Contract Rights and
Remedies.
No delay or omission of any Holder of Purchase Contracts to exercise any
right or remedy shall impair any such right or remedy or constitute a waiver of
any such right. Every right and remedy given by this Article or by law to the
Holders of Purchase Contracts may be exercised from time to time, and as often
as may be deemed expedient, by such Holders.
Section 9.04. Undertaking for Costs - Purchase Contracts.
The Company and the Agent agree, and each Holder of any Purchase Contract
by its acceptance of the related Purchase Contract Certificate evidencing such
Purchase Contract shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Agreement, or in any suit against the Agent for any action taken, suffered
or omitted by it as Agent, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided that
the provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Agent, to any suit instituted by any
Holder or group of Holders, holding in the aggregate more than 10% of the
Outstanding Purchase Contracts, or for enforcement of the right to receive
delivery of Common Shares under the Purchase Contracts.
Section 9.05. Waiver of Stay or Extension Laws for Purchase Contracts.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants made by it
herein or the performance by it of its obligations under this Agreement; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law.
PART III - UNITS
ARTICLE TEN
Unit Certificate Forms
Section 10.01. Forms of Unit Certificates Generally.
(a) The Unit Certificates shall be in substantially the form set forth in
Exhibit B hereto, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange or quotation
system on which the Units are listed or quoted or any Depositary therefor.
46
(b) The definitive Unit Certificates shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the Agent or the Responsible Officer executing the Unit
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
(c) Every Global Unit Certificate executed on behalf of the Holders and
delivered hereunder shall bear a legend in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AND UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AND UNIT
AGREEMENT.
ARTICLE ELEVEN
The Units
Section 11.01. Units: Title and Terms.
(a) Upon and as a consequence of receiving one or more Units evidenced by a
Unit Certificate, the Holder of such Unit Certificate shall thereby:
(i) become a party to this Agreement and the Custodial Agreement;
(ii) confirm and ratify the appointment by such Holder of the Agent
and the Custodian to act for and on behalf of such Holder as set out in
this Agreement and the Custodial Agreement, respectively;
(iii) confirm and ratify any and all acts taken by the Agent or the
Custodian under or as contemplated by this Agreement and the Custodial
Agreement for or on behalf of such Holder including without limitation in
anticipation of such Holder acquiring the Purchase Contract and Treasury
Strips evidenced by such Unit;
(iv) have authorized, consented to and effected for all purposes
contemplated by this Agreement and the Custodial Agreement the creation of
such Units as the evidence of ownership of the Purchase Contract and
Treasury Strips evidenced by it; and
(v) if such Holder is an initial Holder, be deemed to have agreed to
purchase from Credit Suisse First Boston Corporation, as one of the
Representatives, the Treasury Strips relating to the Units evidenced by a
Unit Certificate and to have directed
47
that such Treasury Strips be delivered to the custody of the Custodian in
accordance with the terms of the Custodial Agreement.
(b) The aggregate number of Units evidenced by Unit Certificates executed
on behalf of the Holders and delivered hereunder is limited to 25,000 (subject
to increase up to a maximum of 28,750 to the extent the over-allotment option of
the underwriters under the Underwriting Agreement is exercised) minus the number
of separate Purchase Contracts, except for Unit Certificates executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Unit Certificates pursuant to Section 3.05, 8.06, 11.04, 11.05, 11.06,
11.09 or 11.10.
The Certificates shall be issuable only in registered form and only in
denominations of a single Unit and any integral multiple thereof.
Section 11.02. Rights and Obligations Evidenced by the Unit Certificates.
Each Unit Certificate shall evidence the number of Units specified therein,
with each such Unit evidencing the ownership by the Holder thereof of (a) one
Treasury Strip with a face amount of $1,000 maturing on each Payment Date from
February 15, 2003 through August 15, 2005 and such Holder's pro rata portion of
Treasury Strips that mature on August 15, 2002 (the "Treasury Strip Component"
of such Unit) and (b) one Purchase Contract (the "Purchase Contract Component"
of such Unit). Prior to the Company's issuance and delivery of Common Shares
under the Purchase Contracts, the Units shall not entitle the Agent or the
Holders to any of the rights of a holder of Common Shares, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as shareholders in respect of the meetings of
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as shareholders of the Company, except to
the extent otherwise expressly provided in this Agreement. In no event shall the
Company have any rights or obligations at any time with respect to the Treasury
Strip Component of any Units or with respect to the sale price thereof. In no
event shall the Company have any rights or obligations with respect to the Units
except as explicitly set forth in Parts I and II of this Agreement and in
connection with executing and delivering to the Agent Unit Orders as set forth
in Section 11.03.
Section 11.03. Execution, Delivery and Dating of Unit Certificates.
(a) Upon the execution and delivery of this Agreement, and at any time and
from time to time thereafter, pursuant to a Unit Order advising that the
requirements for the issuance of Units have been satisfied, and solely for the
convenience of Holders, Unit Certificates shall be executed and delivered by the
Agent in accordance with this Agreement. For the avoidance of doubt, the Company
shall have no rights or obligations with respect to the Treasury Strips
evidenced by any Units. The execution of the Unit Certificates may be by manual
or facsimile signature.
(b) On the date hereof, the Agent shall, in accordance with the provisions
of this Agreement, execute and deliver the Unit Certificates pursuant to a Unit
Order, registered in such names and in denominations as directed in writing by
the Representatives.
48
(c) The Unit Certificates shall be manually executed on behalf of the Agent
by a Responsible Officer. Unit Certificates bearing the manual signatures of
individuals who were at any time Responsible Officers of the Agent shall bind
the Agent, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the execution and delivery of such Unit Certificates
or did not hold such offices at the date of such Unit Certificates.
(d) Each Unit Certificate shall be dated the date of its execution.
Section 11.04. Temporary Unit Certificates.
(a) Pending the preparation of definitive Unit Certificates, the Agent
shall execute and deliver, in lieu of such definitive Unit Certificates,
temporary Unit Certificates which are in substantially the form set forth in
Exhibit B with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange or quotation
system on which the Units are listed, or as may, consistently herewith, be
determined by the Agent, as evidenced by the execution of the Unit Certificates.
(b) If temporary Unit Certificates are issued, the Agent will cause
definitive Unit Certificates to be prepared without unreasonable delay. After
the preparation of definitive Unit Certificates, the temporary Unit Certificates
shall be exchangeable for definitive Unit Certificates upon surrender of the
temporary Unit Certificates at the Stock Transfer Office, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Unit
Certificates, the Agent shall execute and deliver in exchange therefor, one or
more definitive Unit Certificates evidencing a like number of Units as the
temporary Unit Certificate or Unit Certificates so surrendered. Until so
exchanged, the temporary Unit Certificates shall in all respects evidence the
same benefits and the same obligations with respect to the Units evidenced
thereby as definitive Unit Certificates.
Section 11.05. Unit Certificate Registration; Registration of Transfer and
Exchange of Unit Certificates.
(a) The Agent shall keep at the Stock Transfer Office a register (the "Unit
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of Unit Certificates and of
transfers of Unit Certificates (the Agent, in such capacity, the "Unit
Registrar").
(b) Upon surrender for registration of transfer of any Unit Certificate at
the Stock Transfer Office, the Agent shall execute and deliver, in the name of
the designated transferee or transferees, one or more new Unit Certificates
evidencing a like number of Units.
(c) At the option of the Holder, Unit Certificates may be exchanged for
other Unit Certificates evidencing a like number of Units upon surrender of the
Unit Certificates to be exchanged at the Stock Transfer Office. Whenever any
Unit Certificates are so surrendered for exchange, the Agent shall execute and
deliver the Unit Certificates which the Holder making the exchange is entitled
to receive.
49
(d) All Unit Certificates issued upon any registration of transfer or
exchange of a Unit Certificate shall evidence the ownership of the same Units
and be entitled to the same entitlements and subject to the same obligations
under this Agreement as the Units evidenced by the Unit Certificate surrendered
upon such registration of transfer or exchange.
(e) Every Unit Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Agent) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Agent duly executed, by the Holder thereof or his attorney duly authorized
in writing.
(f) No service charge shall be made for any registration of transfer or
exchange of a Unit Certificate, but the Agent may require payment from the
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Unit Certificates, other than any exchanges pursuant to Sections 3.05, 11.05(h)
and 11.06 not involving any transfer. Notwithstanding the foregoing or any other
provision in this Agreement or any schedule of fees, the Agent (acting as Unit
Registrar) may seek such additional compensation, costs and expenses from any
Holder for any additional time, effort, responsibility, cost, and/or expense
incurred or expended by the Agent (acting as Unit Registrar), including without
limitation for any rush transfer request, in order to comply with any function
as Agent (acting as Unit Registrar).
(g) Notwithstanding the foregoing, the Agent shall not be obligated to
execute and deliver any Unit Certificate in exchange for any Unit Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Settlement Date or the Acceleration Date. In lieu of delivery of a new
Unit Certificate, upon satisfaction of the applicable conditions specified above
in this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall (i) if the Settlement Date or an Acceleration
Event has occurred, deliver the Common Shares issuable in respect of the
Purchase Contracts evidenced by the Unit Certificate and (ii) if an Acceleration
Event shall have occurred prior to the Settlement Date, direct the Custodian to
deliver the Treasury Strips evidenced by the Unit Certificate to the Holder,
subject to the applicable conditions and in accordance with the applicable
provisions of Article Eight hereof.
(h) The provisions of clauses (1), (2), (3), (4) and (5) below shall apply
only to Global Unit Certificates:
(1) Each Global Unit Certificate executed under this Agreement shall
be registered in the name of the Depositary designated for such Global Unit
Certificate or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Unit
Certificate shall constitute a single Unit Certificate for all purposes of
this Agreement.
(2) No Global Unit Certificate may be exchanged in whole or in part
for Certificates registered, and no transfer of a Global Unit Certificate
in whole or in part may be registered, in the name of any Person other than
the Depositary for such Global Unit Certificate or a nominee thereof unless
(A) such Depositary (i) has notified the Agent that it is unwilling or
unable to continue as Depositary for such Global Unit
50
Certificate or (ii) has ceased to be a clearing agency registered under the
Exchange Act or (B) there shall have occurred and be continuing a breach by
the Company in respect to its obligations under one or more Purchase
Contracts or (C) the Holder has elected (i) to withdraw the Treasury Strip
Component with respect to one or more Units in accordance with Section
11.09 and (ii) to hold the remaining Purchase Contract Component of such
Units in the form of a definitive Purchase Contract Certificate evidencing
the Purchase Contracts.
(3) Subject to clause (2) above, any exchange of a Global Unit
Certificate for other Unit Certificates may be made in whole or in part,
and all Unit Certificates issued in exchange for a Global Unit Certificate
or any portion thereof shall be registered in such names as the Depositary
for such Global Unit Certificate shall direct.
(4) Every Unit Certificate delivered upon registration of transfer of,
or in exchange for or in lieu of, a Global Unit Certificate or any portion
thereof, whether pursuant to this Section 11.05, Section 3.05, 8.06, 11.04,
11.06, 11.09 or 11.10 or otherwise, shall be executed on behalf of the
Holders and delivered in the form of, and shall be, a Global Unit
Certificate, unless such Unit Certificate is registered in the name of a
Person other than the Depositary for such Global Unit Certificate or a
nominee thereof.
(5) The rights of each beneficial owner of a Global Unit Certificate,
whereby ownership and transfers are maintained and made through book
entries by the Depositary, shall be exercised only through the Depositary
and shall be limited to those established by law and agreements between
such beneficial owners and the Depositary and/or its participants.
Section 11.06. Mutilated, Destroyed, Lost and Stolen Unit Certificates.
(a) If any mutilated Unit Certificate is surrendered to the Agent, the
Agent shall execute and deliver in exchange therefor a new Unit Certificate,
evidencing the same number of Units and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Agent (i) evidence to the Agent's
satisfaction of the destruction, loss or theft of any Unit Certificate, and (ii)
such security indemnity or surety at the cost of the Holder as may be required
by the Agent, in its sole discretion, to save the Agent, the Company and any of
their respective agents harmless, then, in the absence of notice to the Agent
that such Unit Certificate has been acquired by a bona fide purchaser, the Agent
shall execute and deliver to the Holder, in lieu of any such destroyed, lost or
stolen Unit Certificate, a new Unit Certificate, evidencing the same number of
Units and bearing a number not contemporaneously outstanding.
(c) Notwithstanding the foregoing, the Agent shall not be obligated to
execute and deliver to the Holder any Unit Certificate on or after the
Settlement Date or the Acceleration Date. In lieu of delivery of a new Unit
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
51
from such Holder, the Agent shall (i) if the Settlement Date or an Acceleration
Event has occurred, deliver the Common Shares issuable upon settlement of the
Purchase Contracts evidenced by such Unit Certificate, or (ii) if an
Acceleration Event shall have occurred prior to the Settlement Date, instruct
the Custodian to deliver the Treasury Strips evidenced by such Unit Certificate
to such Holder, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article Eight hereof.
(d) Upon the issuance of any new Unit Certificate under this Section 11.06,
the Agent may require the payment by the Holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Agent or the Custodian)
connected therewith.
(e) Every new Unit Certificate issued pursuant to this Section 11.06 in
lieu of any destroyed, lost or stolen Unit Certificate shall constitute an
original additional contractual obligation of the Company (to the extent of the
Purchase Contract Component of the Unit evidenced by such Unit Certificate) and
of the Agent, whether or not the destroyed, lost or stolen Unit Certificate (or
such Purchase Contract Component evidenced by such Unit Certificate) shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this Agreement.
(f) The provisions of this Section 11.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or settlement of mutilated, destroyed, lost or stolen Unit
Certificates.
Section 11.07. Persons Deemed Owners of Unit Certificates.
(a) Prior to due presentment of a Unit Certificate for registration of
transfer, the Company (with respect solely to the related Purchase Contracts)
and the Agent, and any agent of the Company (with respect solely to the related
Purchase Contracts) or the Agent, may treat the Person in whose name such Unit
Certificate is registered in the Unit Register as the owner of the Units
evidenced thereby, for the purpose of receiving payments from the Custodian of
amounts on the Treasury Strips, performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not the payment of amounts on the
Treasury Strips constituting a part of the Units evidenced thereby shall be
overdue and notwithstanding any notice to the contrary, and neither the Company
nor the Agent, nor any agent of the Company or the Agent, shall be affected by
notice to the contrary.
(b) Notwithstanding the foregoing, with respect to any Global Unit
Certificate, (i) nothing herein shall prevent the Company (with respect solely
to the related Purchase Contracts), the Agent or any agent of the Company or the
Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Depositary (or its nominee), as a Holder, with
respect to such Global Unit Certificate or impair, as between such Depositary
and owners of beneficial interests in such Global Unit Certificate, the
operation of customary practices governing the exercise of rights of such
Depositary (or its nominee) as Holder of such Global Unit Certificate and (ii)
the Company, the Agent and any agent of the Company or the Agent shall be
entitled to deal with the Depositary for all purposes of this Agreement as the
sole Holder of the Units evidenced by Global Unit Certificates and shall have no
obligations to the beneficial owners of such Global Unit Certificates.
52
Section 11.08. Cancellation of Unit Certificates.
(a) All Unit Certificates surrendered for delivery of Common Shares and
Treasury Strips on or after the Settlement Date, on or after the occurrence of
an Acceleration Event, pursuant to an Early Settlement or an Early Settlement
Upon Cash Merger, pursuant to the separation and withdrawal of the Treasury
Strip Component underlying the Units or in connection with the registration of
transfer or exchange shall, if surrendered to any Person other than the Agent,
be delivered to the Agent and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the Agent for
cancellation any Unit Certificates previously executed and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Unit
Certificates so delivered shall be promptly cancelled by the Agent. No Unit
Certificates shall be executed and delivered in lieu of or in exchange for any
Unit Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Unit Certificates held by the Agent
shall be disposed of in accordance with the Agent's customary policies.
(b) If the Company or any Affiliate of the Company shall acquire any Unit
Certificate, such acquisition shall not operate as a cancellation of such Unit
Certificate unless and until such Unit Certificate is delivered to the Agent
cancelled or for cancellation.
Section 11.09. Separation and Withdrawal of Treasury Strip Component.
(a) Commencing August 15, 2002, a Holder may separate the Treasury Strip
Component from the related Purchase Contract Component in respect of some or all
of the Units held by such Holder and withdraw the Treasury Strip Component from
the custody of the Custodian by (1) delivering the related Units to the Agent
accompanied by a notice to the Agent, substantially in the form of Exhibit F
hereto, (2) specifying in such notice to the Agent whether such Holder wishes to
hold the Purchase Contracts being separated directly in the form of a definitive
Purchase Contract Certificate or as a beneficial owner in a Global Purchase
Contract Certificate, and (3) requesting that the Agent instruct the Custodian
to release the Treasury Strip Component evidenced by such Units, whereupon the
Agent shall promptly give such instruction to the Custodian. Upon receipt of
notification by the Agent from the Custodian that the Holder's Treasury Strips
constituting the Treasury Strip Component of the Units described in the
preceding sentence have been delivered to such Holder, the Agent shall promptly:
(i) cancel the related Units; and
(ii) notify the Company that such Holder has withdrawn its Treasury
Strips from the cancelled Units.
(b) Holders which elect to separate and withdraw the Treasury Strip
Component in accordance with this Section 11.09 shall be responsible for any
fees or expenses payable to the Agent or the Custodian for its services in
connection therewith, and the Company shall not be responsible for any such fees
or expenses.
53
Section 11.10. Recreation of Units.
(a) At any time from and after August 15, 2002 and on or prior to the
fifteenth Business Day immediately preceding the Settlement Date, a Holder of
Purchase Contracts shall have the right to recreate Units in accordance with
this Section 11.10 by (i) delivering such Purchase Contracts to the Agent,
accompanied by a notice to the Agent to instruct the Custodian to accept the
correct amount of Treasury Strips (whereupon the Agent shall instruct the
Custodian to receive, on a specific date for each Unit being recreated, $1,000
face amount of each of the Treasury Strips that would be then remaining as the
Treasury Strip Component of a Unit, each with the same CUSIP number as the
Treasury Strips originally comprising the Treasury Strip Component of the Unit),
and (ii) delivering to the Custodian such proper amount of Treasury Strips. Upon
receipt of the Treasury Strips described in clause (ii) above, the Custodian
shall promptly notify the Agent of the amount and type of such Treasury Strips.
(b) Holders which recreate Units in accordance with this Section 11.10
shall be responsible for any fees or expenses payable to the Agent or the
Custodian for its services in connection therewith, and the Company shall not be
responsible for any such fees or expenses.
(c) For the avoidance of doubt, whether or not a Holder which recreates
Units pursuant to this Section 11.10 fails to effect a book-entry transfer of
the Purchase Contracts or fails to deliver a Purchase Contract Certificate to
the Agent after depositing the Treasury Strips with the Custodian, such Treasury
Strips and any payments made on such Treasury Strips shall continue at all times
to be owned by such Holder and shall be held in the name of the Custodian or its
nominee as agent for such Holder, until such Purchase Contracts are so
transferred or the Purchase Contract Certificate is so delivered, as the case
may be, or, with respect to a Purchase Contract Certificate, such Holder
provides evidence satisfactory to the Company and the Agent that such Purchase
Contract Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company, as set forth in
Section 11.06.
ARTICLE TWELVE
The Treasury Strips
Section 12.01. Custodial Arrangement.
Concurrent with the closing of the offering of the Units under the
Underwriting Agreement, the Agent shall have entered into the Custodial
Agreement with the Custodian to which the Treasury Strips acquired by the
Holders, which are described on Schedule 1 hereto, are to be delivered. On the
date of execution and delivery of this Agreement, Credit Suisse First Boston
Corporation (on behalf of itself and the other underwriters named in the
Underwriting Agreement ) shall have acquired the Treasury Strips, shall have
sold the Treasury Strips to the Holders, and shall have delivered the Treasury
Strips to the Custodian in accordance with the Custodial Agreement. For greater
certainty, by agreeing to subscribe for a Unit, each Holder shall be considered
to have agreed to purchase Treasury Strips from the underwriters named in the
Underwriting Agreement. The Agent shall cause the Custodian or its nominee to be
the holder of security entitlements with regard to such Treasury Strips on the
records of the Federal Reserve Bank of New York for and on behalf of the Holders
of Units. The Agent acknowledges
54
that each Unit shall evidence in part the applicable Holder's ownership of that
Holder's Treasury Strips and that Holder's pro rata portion of Treasury Strips
maturing on August 15, 2002 delivered to and held by the Custodian under the
Custodial Agreement.
Section 12.02. Instruction Regarding Payment of Amounts Received in Respect
of Treasury Strips.
(a) On or prior to each Payment Date the Agent shall inform the Custodian
who the registered Holders of Units are on the Unit Registrar at the close of
business on the Record Date with respect to such Payment Date and the Agent
shall instruct the Custodian to deliver all amounts its receives on the Treasury
Strips maturing on such Payment Date to such Holders.
(b) In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or of the Unit
Certificates) the Agent shall instruct the Custodian to make payments of amounts
received by the Custodian with respect to the Treasury Strips on the next
succeeding Business Day; provided, that no interest shall accrue or be payable
for the period from and after any such Payment Date.
Section 12.03. Delivery of Treasury Strips Upon Occurrence of an
Acceleration Event.
If an Acceleration Event occurs, the Agent shall request from each
registered Holder of Units by written request mailed to such Holder at his
address as it appears in the Unit Register, delivery instructions in respect of
all Treasury Strips owned by such Holder and evidenced by Unit Certificates held
by such Holder. The Agent shall provide such instructions to the Custodian.
Section 12.04. Delivery of Treasury Strips Upon Early Settlement or Early
Settlement Upon Cash Merger.
Commencing August 15, 2002, upon Early Settlement or Early Settlement Upon
Cash Merger by any Holder of any Purchase Contracts evidenced by Units in
accordance with Section 8.06 or Section 8.07, as the case may be, the Agent
shall instruct the Custodian to deliver the Treasury Strips evidenced by such
Units to such Holder in accordance with the instructions provided by such Holder
on the applicable form of Election for Early Settlement or Early Settlement Upon
Cash Merger, as the case may be.
ARTICLE THIRTEEN
Unit Remedies
Section 13.01. Restoration of Unit Rights and Remedies.
If any Holder of Units has instituted any proceeding to enforce any right
or remedy under this Agreement or the Units and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Agent and such Holder shall be
55
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of such Holder shall continue as though no
such proceeding had been instituted.
Section 13.02. Rights and Remedies Cumulative for Units.
Except as otherwise provided with respect to the replacement of mutilated,
destroyed, lost or stolen Unit Certificates in 11.06(f), no right or remedy
herein conferred upon or reserved to the Holders of Units is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 13.03. Delay or Omission Not Waiver of Unit Rights and Remedies.
No delay or omission of any Holder of Units to exercise any right or remedy
shall impair any such right or remedy or constitute a waiver of any such right.
Every right and remedy given by this Article or by law to the Holders of Units
may be exercised from time to time, and as often as may be deemed expedient, by
such Holders.
Section 13.04. Undertaking for Costs - Units.
All parties to this Agreement agree, and each Holder of any Unit by its
acceptance of the related Unit Certificate evidencing such Unit shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Agreement, or in any suit
against the Agent for any action taken, suffered or omitted by it as Agent, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Agent, to any suit instituted by any Holder
or group of Holders, holding in the aggregate more than 10% of the Outstanding
Units, or to any suit instituted by any Holder for the enforcement of any
payment on any Treasury Strip on or after the respective Payment Date therefor
constituting a part of the Units held by such Holder, or for enforcement of the
right to receive delivery of Common Shares under the Purchase Contracts.
56
IN WITNESS WHEREOF, the Company and the Agent have caused this
Agreement to be duly executed as of the day and year first above written and all
Holders of Purchase Contracts or Units shall be become parties hereto upon
acceptance by them of Purchase Contract Certificates or Unit Certificates, as
the case may be, issued in accordance with the terms hereof.
NORTEL NETWORKS CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President, Chief Executive Officer
and Chief Financial Officer
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer
COMPUTERSHARE TRUST COMPANY OF CANADA, AS AGENT
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Professional, Client Services
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Manager, Client Services
Schedule 1
TREASURY STRIPS
AGGREGATE
TREASURY
MATURITY FACE AMOUNT CUSIP ISSUE DATE PURCHASE COST(1) STRIPS(2)
-------- ----------- --------- ---------- ---------------- --------------
August 15, 2002.................. $ (3) ▇▇▇▇▇▇▇▇▇ 8/17/92 $349.19 $10,063,000.00
February 15, 2003................ 1,000 ▇▇▇▇▇▇▇▇▇ 2/15/93 989.08 28,750,000.00
August 15, 2003.................. 1,000 ▇▇▇▇▇▇▇▇▇ 8/15/93 975.93 28,750,000.00
February 15, 2004................ 1,000 ▇▇▇▇▇▇▇▇▇ 2/15/94 959.04 28,750,000.00
August 15, 2004.................. 1,000 ▇▇▇▇▇▇▇▇▇ 8/15/94 939.27 28,750,000.00
February 15, 2005................ 1,000 ▇▇▇▇▇▇▇▇▇ 2/15/95 920.14 28,750,000.00
August 15, 2005.................. 1,000 ▇▇▇▇▇▇▇▇▇ 2/15/86 895.82 28,750,000.00
-------------------
(1) Per Treasury Strip, except for Treasury Strips maturing on August 15, 2002.
(2) As of the date of this Agreement.
(3) Pro rata portion equals $350 per Unit.
EXHIBIT A
NORTEL NETWORKS CORPORATION
PURCHASE CONTRACTS
No. R- Purchase Contracts
--------------- ----------
This Purchase Contract Certificate certifies that ______________ is the
registered Holder of the number of Purchase Contracts set forth above with
Nortel Networks Corporation, a Canadian corporation (the "Company"). Capitalized
terms that are used but not defined herein have those meanings ascribed to them
in the Purchase Contract and Unit Agreement (the "Purchase Contract Agreement"),
dated as of June 12, 2002, among the Company, Computershare Trust Company of
Canada, as purchase contract agent thereunder (the "Agent"), and Holders from
time to time (as defined therein).
Each Purchase Contract evidenced hereby is an agreement of purchase and
sale that obligates the Company to issue, in consideration of the purchase price
paid at the time such Purchase Contract was initially issued by the Company, on
August 15, 2005 (the "Settlement Date"), a number of Common Shares, without
nominal or par value per share ("Common Shares"), of the Company determined by
reference to the Settlement Rate, unless an Acceleration Event, an Early
Settlement or an Early Settlement Upon Cash Merger occurs on or prior to the
Settlement Date, all as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
A-1
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
NORTEL NETWORKS CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
Dated:
This is one of the Purchase Contract Certificates referred to in the
within mentioned Purchase Contract Agreement.
COMPUTERSHARE TRUST COMPANY OF
CANADA, AS AGENT
By:
--------------------------
Authorized Officer
A-2
[Form of Reverse of Purchase Contract Certificate]
Each Purchase Contract evidenced hereby is governed by the Purchase
Contract and Unit Agreement, to which Purchase Contract and Unit Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company, and the Holders and of the terms upon
which the Purchase Contract Certificates are, and are to be, executed and
delivered.
Each Purchase Contract evidenced hereby is an agreement of purchase and
sale that obligates the Company to issue and deliver, on the Settlement Date, a
number of Common Shares of the Company determined by reference to the Settlement
Rate, unless an Acceleration Event, Early Settlement or Early Settlement Upon
Cash Merger occurs on or prior to the Settlement Date. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined below) is greater than
$1.692 per Common Share (the "Threshold Appreciation Price"), 16,885.93 Common
Shares per Purchase Contract; (b) if the Applicable Market Value is less than or
equal to the Threshold Appreciation Price but is greater than $1.410 per Common
Share (the "Reference Price"), a number of Common Shares per Purchase Contract
equal to $28,571.00 divided by the Applicable Market Value and (c) if the
Applicable Market Value is less than or equal to the Reference Price, 20,263.12
Common Shares per Purchase Contract; in each case subject to adjustment as
provided in the Purchase Contract Agreement. No fractional Common Share will be
issued upon settlement of Purchase Contracts, as provided in the Purchase
Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
Common Share on each of the twenty consecutive Trading Days ending on the third
Trading Day immediately preceding the Settlement Date. The "Closing Price" of
the Common Shares on any date of determination means the closing sale price (or,
if no closing sale price is reported, the last reported sale price) of the
Common Shares on the New York Stock Exchange (the "NYSE") on such date or, if
the Common Shares are not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which the Common Shares are so listed, or if the Common
Shares are not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Shares are
not so reported, the last quoted bid price for the Common Shares in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Shares on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Shares (A) are not suspended from trading
on any national or regional securities exchange or association or
over-the-counter market at the close of business and (b) have traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Shares.
If an Acceleration Event occurs, the Company shall give written notice to
the Agent. Upon and after the occurrence of an Acceleration Event, the Holders
will be entitled to receive from the Company 20,263.12 Common Shares per
Purchase Contract, subject to
A-3
adjustment in the same manner and at the same time as the Settlement Rate is
adjusted, as set forth in the Purchase Contract Agreement.
Commencing August 15, 2002 and subject to and upon compliance with the
provisions of the Purchase Contract Agreement, at the option of the Holder
thereof:
(1) Purchase Contracts may be settled early ("Early Settlement"). In
order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts evidenced by this Purchase Contract Certificate, the
Holder of this Purchase Contract Certificate shall deliver this Purchase
Contract Certificate to the Agent at the Stock Transfer Office duly
endorsed for transfer in blank with the form of Election for Early
Settlement set forth below duly completed. Upon Early Settlement of
Purchase Contracts by a Holder, the Holder shall be entitled to receive a
number of Common Shares per Purchase Contract determined by reference to
the Early Settlement Rate. In the event that Early Settlement is effected
with respect to Purchase Contracts underlying less than all the Purchase
Contracts evidenced by a Purchase Contract Certificate, upon such Early
Settlement the Company shall execute and deliver to the Agent, and the
Agent shall authenticate and deliver to the Holder thereof, at the expense
of the Holder, a Purchase Contract Certificate evidencing the Purchase
Contract or Contracts as to which Early Settlement was not effected. The
"Early Settlement Rate" shall initially be equal to 16,011.04 Common Shares
per Purchase Contract for the period from August 15, 2002 and prior to
February 15, 2003 and 16,885.93 Common Shares per Purchase Contract for the
period on or after February 15, 2003 and shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as provided
in the Purchase Contract and Unit Agreement; and
(2) Purchase Contracts may be settled early upon a Cash Merger ("Early
Settlement Upon Cash Merger"). In order to exercise the right to effect an
Early Settlement Upon Cash Merger with respect to any Purchase Contracts
evidenced by this Purchase Contract Certificate, the Holder of this
Purchase Contract Certificate shall deliver this Purchase Contract
Certificate to the Agent at the Stock Transfer Office duly endorsed for
transfer in blank with the form of Election for Early Settlement Upon Cash
Merger set forth below duly completed on or prior to the Merger Election
Date set forth in the notice to Holders. Upon an Early Settlement Upon Cash
Merger of Purchase Contracts by a Holder, the Holder shall be entitled to
receive a number of the Common Shares for each Purchase Contract equal to
the Early Settlement Upon Cash Merger Rate (as defined below). In the event
that Early Settlement Upon Cash Merger is effected with respect to Purchase
Contracts underlying less than all the Purchase Contracts evidenced by a
Purchase Contract Certificate, upon such Early Settlement Upon Cash Merger
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate and deliver to the Holder thereof, at the expense of the
Holder, a Purchase Contract Certificate evidencing the Purchase Contract or
Contracts as to which Early Settlement Upon Cash Merger was not effected.
The "Early Settlement Upon Cash Merger Rate" shall be equal to
(a) if the Applicable Market Value (as defined below) is greater than the
Threshold Appreciation Price, 16,885.93 Common Shares per Purchase Contract; (b)
if the Applicable Market Value is less
A-4
than or equal to the Threshold Appreciation Price but is greater than the
Reference Price, a number of Common Shares per Purchase Contract equal to
$28,571.00 divided by the Applicable Market Value; and (c) if the Applicable
Market Value is less than or equal to the Reference Price 20,263.12 Common
Shares per Purchase Contract; in each case subject to adjustment as provided in
the Purchase Contract Agreement. No fractional Common Share will be issued upon
settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement. For purposes of the calculation of the Cash Merger Early Settlement
Rate, the "Applicable Market Value" shall be the volume-weighted average trading
price of the Common Shares on the NYSE during regular trading hours for the five
Trading Days ending on the Trading Day immediately preceding the Merger Election
Date (as defined in the Purchase Contract Agreement) or, if the Common Shares
are not listed for trading on the NYSE on the Merger Election Date, the market
value of the Common Shares on such date as determined by a nationally recognized
investment banking firm retained for this purpose by the Company.
The Purchase Contract Certificates are issuable only in registered form and
only in denominations of a single Purchase Contract and any integral multiple
thereof. The transfer of any Purchase Contract Certificate will be registered
and Purchase Contract Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Purchase Contract Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Subject to certain limited exceptions, the provisions of the Purchase
Contract Agreement may not be amended without the consent of each of the Holders
of the Outstanding Purchase Contracts affected thereby.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York.
The Purchase Contracts shall not, prior to the settlement thereof and the
issuance and delivery of Common Shares thereunder, entitle the Holder to any of
the rights of a holder of Common Shares.
"$" means U.S. dollars in this Purchase Contract Certificate.
A copy of the Purchase Contract Agreement is available for inspection at
the Stock Transfer Office during business hours of the Agent.
A-5
EXHIBIT B
EQUITY UNITS
EVIDENCING OWNERSHIP OF PURCHASE
CONTRACTS OF NORTEL NETWORKS
CORPORATION AND TREASURY STRIPS
No. R- Units
--------------- ---------------
This Unit Certificate certifies that ______________ is the registered
Holder of the number of Units set forth above. Each Unit evidences the ownership
by the Holder of the Treasury Strips (the "Treasury Strip Component" of this
Unit) and one Purchase Contract of Nortel Networks Corporation, a Canadian
corporation (the "Company") (the "Purchase Contract Component" of this Unit).
Capitalized terms that are used but not defined herein have those meanings
ascribed to them in the Purchase Contract and Unit Agreement (the "Purchase
Contract Agreement"), dated as of June 12, 2002, among the Company,
Computershare Trust Company of Canada, as purchase contract agent thereunder
(the "Agent") and Holders from time to time (as defined therein).
Any amounts received by the Custodian from the U.S. government on the
Treasury Strips on each August 15 and February 15, commencing August 15, 2002
(or in each case if payments on the Treasury Strips are not received on such
date, on the date when such amounts are received by the Custodian) (each a
"Payment Date"), shall be forwarded by the Custodian by wire transfer in same
day funds no later than _______, New York City time, on the Payment Date, to the
Person in whose name this Unit Certificate (or a Predecessor Unit Certificate)
is registered at the close of business on the Record Date with respect to such
Payment Date.
Each Purchase Contract evidenced hereby is an agreement of purchase and
sale that obligates the Company to issue, in consideration of the purchase price
paid at the time such Purchase Contract was initially issued by the Company, on
August 15, 2005 (the "Settlement Date") a number of Common Shares, without
nominal or par value per share ("Common Shares"), of the Company equal to the
Settlement Rate, unless an Acceleration Event, an Early Settlement or an Early
Settlement Upon Cash Merger occurs on or prior to the Settlement Date, all as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
B-1
IN WITNESS WHEREOF, the Agent has caused this instrument to be duly
executed.
COMPUTERSHARE TRUST COMPANY OF CANADA,
AS AGENT
By:
---------------------------------
Name:
Title:
B-2
[Form of Reverse of Unit Certificate]
Each Purchase Contract Component evidenced hereby is governed by the
Purchase Contract Agreement, to which Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company, and the Holders and of the terms upon
which the Unit Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby is an agreement of purchase and
sale that obligates the Company to issue and deliver, on the Settlement Date, a
number of Common Shares of the Company equal to the Settlement Rate, unless an
Acceleration Event, Early Settlement or Early Settlement Upon Cash Merger occurs
on or prior to the Settlement Date. The "Settlement Rate" is equal to (a) if the
Applicable Market Value (as defined below) is greater than $1.692 (the
"Threshold Appreciation Price"), 16,885.93 Common Shares per Purchase Contract,
(b) if the Applicable Market Value is less than or equal to the Threshold
Appreciation Price but is greater than the Reference Price, a number of Common
Shares per Purchase Contract equal to $28,571.00 divided by the Applicable
Market Value and (c) if the Applicable Market Amount is less than or equal to
the Reference Price, 20,263.12 Common Shares per Purchase Contract, in each case
subject to adjustment as provided in the Purchase Contract Agreement. No
fractional Common Share will be issued upon settlement of Purchase Contracts, as
provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Prices per
Common Share on each of the twenty consecutive Trading Days ending on the third
Trading Day immediately preceding the Settlement Date. The "Closing Price" of
the Common Shares on any date of determination means the closing sale price (or,
if no closing price is reported, the last reported sale price) of the Common
Shares on the New York Stock Exchange (the "NYSE") on such date or, if the
Common Shares are not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which the Common Shares are so listed, or if the Common
Shares are not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Shares are
not so reported, the last quoted bid price for the Common Shares in the
over-the-counter market as reported, the last quoted bid price for the Common
Shares in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if such bid price is not available, the
market value of the Common Shares on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Company. A "Trading Day" means a day on which the Common Shares (A) are not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (b) have
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Shares.
If an Acceleration Event occurs, the Company shall give written notice to
the Agent. Upon and after the occurrence of an Acceleration Event, the Holders
will be entitled to received from the Company 20,263.12 Common Shares per
Purchase Contract, subject to adjustment in the same manner and at the same time
as the Settlement Rate is adjusted, as set
B-3
forth in the Purchase Contract Agreement. Upon and after the occurrence of an
Acceleration Event, the Units shall thereafter evidence ownership of the
Treasury Strips forming the Treasury Strip Component of such Units in accordance
with the provisions of the Purchase Contract Agreement.
Commencing August 15, 2002 and subject to and upon compliance
with the provisions of the Purchase Contract Agreement, at the option of the
Holder hereof:
(1) Purchase Contracts evidenced by Units may be settled early ("Early
Settlement"). In order to exercise the right to effect Early Settlement
with respect to any Purchase Contracts evidenced by this Unit Certificate,
the Holder of this Unit Certificate shall deliver this Unit Certificate to
the Agent at the Stock Transfer Office duly endorsed for transfer in blank
with the form of Election for Early Settlement set forth below duly
completed. Upon Early Settlement of Purchase Contracts by a Holder of the
related Units, the Holder shall be entitled to receive (i) a number of
Common Shares on account of each Purchase Contract forming the Purchase
Contract Component of such Units equal to the Early Settlement Rate and
(ii) delivery of that Holder's Treasury Strips forming the Treasury Strip
Component of such Units. The "Early Settlement Rate" shall initially be
equal to 16,011.04 Common Shares per Purchase Contract for the period from
August 15, 2002 and prior to February 15, 2003 and 16,885.93 Common Shares
per Purchase Contract for the period on or after February 15, 2003 and
shall be adjusted in the same manner and at the same time as the Settlement
Rate is adjusted as provided in the Purchase Contract Agreement. In the
event that Early Settlement is effected with respect to Purchase Contracts
underlying less than all the Units evidenced by a Unit Certificate, upon
such Early Settlement the Agent shall execute and deliver to the Holder
thereof, at the expense of the Holder, a Unit Certificate evidencing the
Units as to which Early Settlement was not effected; and
(2) Purchase Contracts evidenced by Units may be settled early upon a
Cash Merger ("Early Settlement Upon Cash Merger"). In order to exercise the
right to effect Early Settlement Upon Cash Merger with respect to any
Purchase Contracts evidenced by this Unit Certificate, the Holder of this
Unit Certificate shall deliver this Unit Certificate to the Agent at the
Stock Transfer Office duly endorsed for transfer in blank with the form of
Election for Early Settlement set forth below duly completed on or prior to
the Merger Election Date set forth in the notice to Holders. Upon Early
Settlement Upon Cash Merger of Purchase Contracts by a Holder of the Units
evidencing ownership of such Purchase Contracts, the Holder shall be
entitled to receive (i) a number of Common Shares per Purchase Contract
forming the Purchase Contract Component of such Units equal to the Early
Settlement Upon Cash Merger Rate and (ii) delivery of that Holder's
Treasury Strips forming the Treasury Strip Component of such Units. In the
event that Early Settlement Upon Cash Merger is effected with respect to
Purchase Contracts evidenced by fewer than all the Units evidenced by a
Unit Certificate, upon such Early Settlement Upon Cash Merger the Agent
shall execute and deliver to the Holder thereof, at the expense of the
Holder, a Unit Certificate evidencing the Units as to which Early
Settlement Upon Cash Merger was not effected,
B-4
The "Early Settlement Upon Cash Merger Rate" shall be equal to (a) if
the Applicable Market Value (as defined below) is greater than the Threshold
Appreciation Price, 16,885.93 Common Shares per Purchase Contract; (b) if the
Applicable Market Value is less than or equal to the Threshold Appreciation
Price but is greater than the Reference Price, a number of Common Shares per
Purchase Contract equal to $28,571.00 divided by the Applicable Market Value;
and (c) if the Applicable Market Amount is less than or equal to the Reference
Price, 20,263.12 Common Shares per Purchase Contract; in each case subject to
adjustment as provided in the Purchase Contract Agreement. No fractional Common
Share will be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement. For purposes of the calculation of the Early
Settlement Upon Cash Merger Rate, the Applicable Market Value shall be the
volume-weighted average trading price of the Common Shares on the NYSE for the
five Trading Days ending on the Trading Day immediately preceding the Merger
Election Date, or if the Common Shares are not listed for trading on the NYSE on
the Merger Election Date, the market value of the Common Shares on such date as
determined by a nationally recognized investment banking firm retained for this
purpose by the Company.
Upon and as a consequence of receiving one or more Units evidenced by
this Unit Certificate, the Holder of such Units shall thereby:
(i) become a party to the Purchase Contract Agreement and the
Custodial Agreement;
(ii) confirm and ratify the appointment by such Holder of the
Agent and the Custodian to act for and on behalf of such Holder as set out
in the Purchase Contract Agreement and the Custodial Agreement,
respectively;
(iii) confirm and ratify any and all acts taken by the Agent or
the Custodian under or as contemplated by the Purchase Contract Agreement
and the Custodial Agreement for or on behalf of such Holder including
without limitation in anticipation of such Holder acquiring the Purchase
Contract and Treasury Strips evidenced by such Unit;
(iv) have authorized, consented to and effected for all purposes
contemplated by the Purchase Contract Agreement and the Custodial Agreement
the creation of the Unit as the evidence of ownership of the Purchase
Contract and Treasury Strips evidenced by it; and
(v) if such Holder is an initial Holder, be deemed to have
agreed to purchase from Credit Suisse First Boston Corporation, as one of
the Representatives, the Treasury Strips relating to such Units evidenced
by this Unit Certificate and to have directed that such Treasury Strips be
delivered to the custody of the Custodian in accordance with the terms of
the Custodial Agreement.
A Holder may separate the Treasury Strip Component from the related
Purchase Contract Component in respect of some or all of the Units evidenced by
this Unit Certificate and withdraw that Holder's Treasury Strips from the
custody of the Custodian in accordance with Section 11.09 of the Purchase
Contract Agreement.
B-5
The Unit Certificates are issuable only in registered form and only in
denominations of a single Unit and any integral multiple thereof. The transfer
of any Unit Certificate will be registered and Unit Certificates may be
exchanged as provided in the Purchase Contract Agreement. The Unit Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents permitted by the Purchase Contract Agreement. No service
charge shall be required for any such registration of transfer or exchange, but
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Subject to certain limited exceptions, the provisions of the Purchase
Contract Agreement may not be amended without the consent of each of the Holders
of the Outstanding Units affected thereby.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Purchase Contracts shall not, prior to the settlement thereof and
the issuance and delivery of Common Shares thereunder, entitle the Holder to any
of the rights of a holder of Common Shares.
"$" means U.S. dollars in this Purchase Contract Certificate.
A copy of the Purchase Contract Agreement is available for inspection
at the Stock Transfer Office during business hours of the Agent.
B-6
EXHIBIT C
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Common
Shares deliverable upon settlement on or after the Settlement Date of the
Purchase Contracts evidenced by the number of [Units evidenced by this Unit
Certificate] [Purchase Contracts evidenced by this Purchase Contract
Certificate] be registered in the name of, and delivered, together with a check
in payment for any fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer or other taxes payable incident thereto.
Dated:
------------------------------ ----------------------------------
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER,
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of
Registered Holder:
------------------------------------ ----------------------------------
Name Name
------------------------------------ ----------------------------------
Address Address
------------------------------------ ----------------------------------
Social Security or other Taxpayer Social Security or other Taxpayer
Identification Number,if any Identification Number, if any
[Delivery Instructions for Treasury Strips upon an Acceleration Event:]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
C-1
EXHIBIT D
ELECTION FOR EARLY SETTLEMENT
The undersigned Holder of this [Unit Certificate] [Purchase
Contract Certificate] hereby irrevocably exercises the option to effect Early
Settlement in accordance with the terms of the Purchase Contract and Unit
Agreement with respect to the Purchase Contracts [evidenced by the number of
Units evidenced by this Unit Certificate] [evidenced by this Purchase Contract
Certificate] specified below. The undersigned Holder directs that a certificate
for Common Shares deliverable upon such Early Settlement be registered in the
name of, and delivered, together with a check in payment for any fractional
share and any [Unit Certificate] [Purchase Contract Certificate] representing
any [Units] [Purchase Contracts] evidenced hereby as to which Early Settlement
of the related Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. [Treasury Strips deliverable upon such Early Settlement will be delivered
in accordance with the delivery instructions set forth below.] If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated:
------------------------------ ----------------------------------
Signature
Number of [Units] [[Purchase Contracts] evidenced hereby as to which Early
Settlement [of the related Purchase Contracts] is being elected:
REGISTERED HOLDER
Please print name and address of Registered Holder:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
If shares or Certificates are to be registered in the name of and delivered to
[and Treasury Strips are to be delivered to] a Person other than the Holder,
please print such Person's name and address:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
[Delivery Instructions for Treasury Strips upon Early Settlement:]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
D-1
EXHIBIT E
ELECTION FOR EARLY SETTLEMENT UPON CASH MERGER
The undersigned Holder of this [Unit Certificate] [Purchase
Contract Certificate] hereby irrevocably exercises the option to effect Early
Settlement Upon Cash Merger in accordance with the terms of the Purchase
Contract and Unit Agreement with respect to the Purchase Contracts [evidenced by
the number of Units evidenced by this Unit Certificate] [evidenced by this
Purchase Contract Certificate] specified below. The undersigned Holder directs
that a certificate for Common Shares deliverable upon such Early Settlement Upon
Cash Merger be registered in the name of, and delivered, together with a check
in payment for any fractional share and any [Unit Certificate] [Purchase
Contract Certificate] representing any [Units] [Purchase Contracts] evidenced
hereby as to which Early Settlement Upon Cash Merger of the related Purchase
Contracts is not effected, to the undersigned at the address indicated below
unless a different name and address have been indicated below. [Upon such Early
Settlement Upon Cash Merger, Treasury Strips will be delivered in accordance
with the delivery instructions set forth below.] If shares are to be registered
in the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.
Dated:
------------------------------ ----------------------------------
Signature
Number of [Units] [[Purchase Contracts] evidenced hereby as to which Early
Settlement Upon Cash Merger [of the related Purchase Contracts] is being
elected:________________________________________________________________________
REGISTERED HOLDER
Please print name and address of Registered Holder:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
If shares or Certificates are to be registered in the name of and delivered to
[and Treasury Strips are to be delivered to] a Person other than the Holder,
please print such Person's name and address:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
[Delivery Instructions for Treasury Strips Upon Early Settlement Upon
Cash Merger:]
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
E-1
EXHIBIT F
HOLDER'S ELECTION FOR WITHDRAWAL
OF TREASURY STRIP COMPONENT
The undersigned Holder of [this Unit Certificate] [these
Units] hereby exercises the option to withdraw the Holder's Treasury Strips in
accordance with the terms of the Purchase Contract Agreement with respect to
such Treasury Strips [evidenced by the number of Units evidenced by this Unit
Certificate] [evidenced by the Units] specified below. The undersigned Holder
directs the Agent to instruct the Custodian to deliver the Holder's withdrawn
Treasury Strips in accordance with the delivery instructions set forth below.
The undersigned Holder directs that [Purchase Contracts] [a Purchase Contract
Certificate], evidencing the remaining Purchase Contract Component related to
the Units from which the Treasury Strips have been withdrawn, be registered in
the name of, and delivered to, the undersigned Holder at the address indicated
below unless a different name and address have been indicated below. The
undersigned Holder directs that [a Unit Certificate] [the Holder's beneficial
ownership in a Global Unit Certificate] representing any Units evidenced hereby
as to which withdrawal of the related Treasury Strips is not effected, be
registered in the name of, and delivered to, [the undersigned Holder at the
address indicated below unless a different name and address have been indicated
below] [The Depository Trust Company or its nominee].
Dated:
------------------------------ ----------------------------------
Signature
Number of Units evidenced hereby as to which withdrawal of the related Treasury
Strips is being elected:
REGISTERED HOLDER
Please print name and address of Registered Holder:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
If Treasury Strips are to be delivered to a Person other than the Holder, please
print such Person's name and address:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:________________
F-1
Delivery Instructions for [Units] [Unit Certificates] for which withdrawal of
the Treasury Strips is not effected.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Delivery Instructions for [Purchase Contracts] [Purchase Contract Certificates]
representing the remaining Purchase Contract Component of the Units from which
the Treasury Strips has been withdrawn.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
F-2
EXHIBIT G
HOLDER'S INSTRUCTION TO AGENT
Computershare Trust Company of Canada,
as Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: Corporate Action
Telecopy ▇▇▇▇▇▇▇▇▇▇
Re: Recreation of Units
The undersigned Holder hereby notifies you that it intends to deliver _______
Treasury Strip Components to Citibank, N.A., as Custodian and _______ Purchase
Contracts to Computershare Trust Company of Canada, as Agent on [insert date]
and the undersigned Holder hereby requests that the Agent instruct the Custodian
to receive such Treasury Strip Components on such date. Subject to receiving
confirmation that the Treasury Strip Components referred to in the preceding
sentence have been received, the undersigned Holder instructs the Agent, in
accordance with Section 11.10 of the Purchase Contract Agreement, dated as of
June 12, 2002 (the "Purchase Contract Agreement"), among Nortel Networks
Corporation, Computershare Trust Company of Canada, as Agent, and the Holders to
recreate the requisite number of Units. The undersigned Holder hereby instructs
the Agent to execute a Unit Certificate representing the requisite number of
Units (or, in the case of a Global Unit Certificate, to increase the number of
Units represented thereby). Capitalized terms used herein but not defined shall
have the meaning set forth in the Purchase Contract Agreement.
Date:___________________ Signature:____________________________________
Signature Guarantee:__________________________
G-1
Please print name and address of Holder:
Name:___________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:
Address:________________________________________________________________________
G-2
EXHIBIT H
FORM OF UNIT ORDER
Computershare Trust Company of Canada
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: Manager, Client Servicing
Dear Sirs:
RE: EXECUTION AND DELIVERY OF UNIT CERTIFICATES
The undersigned hereby confirms that it has been advised by
the Custodian that the Custodian holds Treasury Strips set out in Schedule --
hereto in accordance with the terms of the Custodial Agreement, which Treasury
Strips are owned by Holders and which Treasury Strips are not currently
evidenced by Unit Certificates. The undersigned further advises that it has
issued on the date hereof -- Purchase Contracts (which Purchase Contracts are
not currently evidenced by Purchase Contract Certificates or Unit Certificates).
In accordance with Sections 11.01 and 11.03 of the Purchase Contract and Unit
Agreement, dated as of June 12, 2002 (the "Purchase Contract Agreement"), among
you, us and holders named therein, you are hereby advised that the requirements
for the issuance of Units evidencing Purchase Contracts and Treasury Strips have
been satisfied and therefore that you shall execute and deliver -- Unit
Certificates [if Global Unit Certificates held by DTC: in the name of Cede &
Co., as nominee for The Depository Trust Company,] as evidence of the ownership
by Holders of the Purchase Contracts and Treasury Strips. Capitalized terms used
herein but not defined shall have the meaning set forth in the Purchase Contract
Agreement.
Date:________________________ NORTEL NETWORKS CORPORATION
By:______________________________
By:______________________________
H-1