<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
(MARK ONE)
<TABLE>
<C> <S>
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 001-13875
------------------------
WORLDPAGES.COM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0549396
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
390 SOUTH WOODS MILL ROAD, 63017
SUITE 260, ST. LOUIS, MISSOURI (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (314) 205-8668
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
$.0001 PAR VALUE COMMON STOCK NEW YORK STOCK EXCHANGE, INC.
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by references in Part III of this Form 10-K or any amendment to
this Form 10-K. /X/
The aggregate market value of the common stock held by nonaffiliates of the
registrant, based upon the closing price of such stock on March 24, 2000 as
reported by the New York Stock Exchange, was approximately $301.8 million.
The number of shares outstanding of the registrant's common stock as of
March 24, 2000 was approximately 44,005,253 shares.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of WorldPages' Notice of Annual Meeting and Proxy Statement
to be filed with the Commission pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934 in connection with the Company's 2000 Annual Meeting of
Shareholders are incorporated by reference in Part III, Items 11-12 of this
Annual Report on Form 10-K.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Business.................................................... 3
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 6
Item 4. Submission of Matters to a Vote of Security Holders......... 7
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters....................................... 8
Item 6. Selected Financial Data..................................... 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 17
Item 8. Financial Statements and Supplementary Data................. 18
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 18
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 19
Item 11. Executive Compensation...................................... 20
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 25
Item 13. Certain Relationships and Related Transactions.............. 27
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 28
</TABLE>
2
<PAGE>
PART I
WORLDPAGES.COM, INC. CHANGED ITS NAME FROM ADVANCED COMMUNICATIONS GROUP,
INC. (ADVANCED) IN FEBRUARY 2000. THE NEW NAME WAS CHOSEN TO REFLECT THE
COMPANY'S NEW FOCUS ON ITS INTERNET STRATEGY AND ITS WEBSITE, WORLDPAGES.COM.
REFERENCES TO WORLDPAGES.COM OR WORLDPAGES INCLUDE THE HISTORICAL OPERATIONS
CONDUCTED UNDER THE NAME ADVANCED.
This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. When used in
this Form 10-K the words "anticipates," "intends," "plans," "believes,"
"expects," "estimates" and similar expressions are intended to identify
forward-looking statements. Such statements, including, but not limited to, the
Company's projections and estimates regarding cash flows, capital expenditures
and planned service offerings, are based upon management's beliefs, as well as
on assumptions made by and information currently available to management, and
involve various risks and uncertainties, certain of which are beyond the
Company's control. The Company's actual results could differ materially from
those expressed in any forward-looking statements made by or on behalf of the
Company.
ITEM 1. BUSINESS
GENERAL
WorldPages.com, Inc. is a leading provider of Internet infrastructure
services, including online directories, content, e-commerce, advertising and web
site production. WorldPages.com's mission is to facilitate transactions between
buyers and sellers worldwide by establishing the premier Internet directory and
print yellow pages business. WorldPages.com operates a web site that is intended
to bring buyers and sellers together to transact business. WorldPages.com
intends to capitalize on the competitive advantage of having its dedicated sales
agents and the sales force of its affiliates assist local businesses and
national advertisers in a cost-effective way to reach consumers on the internet.
WorldPages.com's services include web site design, production and hosting, and
advertising.
Through its worldpages.com web site, WorldPages.com hosts and promotes
branded web sites and an on-line Internet directory search engine for consumers
and business users. The worldpages.com on-line search engine has the white and
yellow pages directory content at its core. Users can search for basic name,
address and telephone numbers for 117 million U.S. and Canadian white and yellow
pages listings, plus related content such as location mapping and driving
directions. The web site includes weather forecasts, directories of toll free
numbers, 9 million e-mail address directories, international directories,
government information directories and related yellow pages guidelines for
categories including restaurants, computers, attorneys, entertainment, travel
and automotive. The web site also contains content including news, stock quotes,
sports, auctions and newspaper style classified advertisements. PC Magazine
named WorldPages.com one of the top 100 web sites in January 1999.
WorldPages.com hosts more than 350,000 web sites and enhanced listings.
WorldPages.com intends to be the premier provider of online directories,
local commerce, advertising solutions and Web services by:
- providing consumers with a powerful, content-rich experience that includes
quick access to the most accurate and comprehensive information including
listings, maps, directions, news, weather, sports and other information on
thousands of topics;
- providing businesses with a fast, cost-effective approach to extend their
business to Internet opportunities and to enhance their business prospects
by participating in a highly trafficked on-line directory;
3
<PAGE>
- providing local and national businesses an opportunity to place
advertisements that are targeted to a local, regional, or international
audience based on the geography and content being accessed by consumers
motivated to purchase.
WorldPages.com is the exclusive electronic directory for the AltaVista and
Excite portals and WorldPages.com has strategic partnerships with industry
leaders such as Microsoft, Monster.com, Mapquest, Oracle, Prodigy and Sun
Microsystems. WorldPages.com has established a series of partnerships with
independent yellow pages publishers to re-sell its Internet and advertising
services to small and medium-sized businesses.
Additionally, WorldPages.com provides Internet advertising products and web
site hosting services to small businesses and national advertisers.
WorldPages.com's services include domain name registration and assisting its
customers with branding their products and services.
WorldPages.com intends to market its Internet directory website service to
its yellow pages customers in its target markets. WorldPages.com has found that
this service provides an opportunity not only to provide customers with web
page design and support, but also to expand into web based advertising and
electronic commerce.
WorldPages.com, through its yellow pages publishing subsidiaries Great
Western and Pacific Coast Publishing, is also one of the largest independent
yellow pages publishers in the United States. It publishes and distributes
approximately 7 million yellow pages directories annually in 42 markets in
Arizona, California, Oklahoma, Oregon, Texas, Utah and Washington.
WorldPages.com's print revenues are derived from advertising space sold in its
directories which are produced and distributed annually in each market. Revenues
are derived from local, regional and, to a lesser extent, national advertisers.
WorldPages.com has historically increased revenues by increasing the number
and size of advertisements in recurring directories and by introducing new
directories in new markets. WorldPages.com has targeted new directories and
markets that are contiguous to its existing markets in order to utilize its
established sales infrastructure and its brand name recognition. WorldPages.com
will also consider growth through acquisitions of other independent yellow
pages publishers that fit into its strategic plans. WorldPages.com sells
advertising to over 80,000 customers in its print directories.
WorldPages.com enters markets being serviced by one telephone utility with
little or no competition from independent yellow pages publishers.
WorldPages.com then scopes the market differently than the local telephone
utility by providing one directory for areas that would be covered by multiple
telephone utility directories, offers advertising at significantly lower prices
to local businesses and offers features not included in the telephone utility's
directory, including color maps, coupons, neighborhood and community guides,
emergency listings and government listings. For example, in a particular market,
WorldPages.com can produce one directory providing the same market coverage as
four directories distributed by the local telephone service provider, that
includes white pages listings for local businesses and residences.
When WorldPages.com expands into a new market, it typically seeks to attract
targeted customers by producing and publishing a complete directory in which it
gives away advertising space to customers which is referred to as a prototype
directory. After the advertisers have had an opportunity to experience the
reception of the new directory and the response to their advertisements in the
marketplace, WorldPages.com will sell the advertising in the second and
subsequent years. Because of this strategy, WorldPages.com may have substantial
expenses relating to its first directory in a new market with no corresponding
revenues. In 1999, WorldPages.com incurred net costs of $3.1 million related to
the prototype directory in the Austin, Texas market. WorldPages.com believes
that this strategy improves the success of launching a new directory and builds
stronger customer relationships and customer loyalty than it could otherwise
achieve by selling the advertising for a new directory.
4
<PAGE>
WorldPages.com's day-to-day operations, including all order processing art
production, web site design, credit and collections and management training
functions, are conducted at its facilities in San Francisco, California;
Amarillo, Texas; and Tacoma, Washington.
WorldPages.com currently publishes and distributes directories in the
following markets through its publishing subsidiaries:
<TABLE>
<S> <C>
Alvin Friendswood Pearland Region, Texas Monterey, California
Amarillo, Texas North Channel, Texas
Arlington, Texas North East Tarrant County, Texas
Austin, Texas Ogden, Utah
Baytown, Texas Olympia, Washington
Beaverton, Oregon Pasadena, Texas
Clear Lake, Texas Portland, Oregon
Denton, Texas Provo, Utah
Enid, Oklahoma Salem, Oregon
Fort Worth, Texas Salt Lake City, Utah
Gig Harbor, Washington Santa Cruz, California
Grand Prairie, Texas Seattle, Washington
Humble, Texas South King County, Washington
Irving, Texas Spokane, Washington
Killeen, Texas Tacoma, Washington
Kitsap County, Washington Temple, Texas
Lawton, Oklahoma Tucson, Arizona
Lewis County, Washington Tulsa, Oklahoma
Linn/Benton, Oregon Vancouver, Washington
Longview/Kelso, Washington Waco, Texas
Lufkin, Texas Wichita Falls, Texas
</TABLE>
COMPETITION
WorldPages.com operates in the Internet services market which is very
competitive and rapidly changing. WorldPages.com's Internet services competes,
or expects to compete, with many directory services providers, content
providers, Web site production service providers and other Internet information
service providers. WorldPages.com's Internet operations also competes with
traditional media for advertising and sponsorship business.
WorldPages.com's Yellow Pages operations compete largely with telephone
utilities and, to a lesser extent, other independent yellow pages publishers.
WorldPages.com's largest competitors in its markets are Southwestern Bell, U S
West and GTE Corporation. There are no significant independent publishers in
WorldPages.com's current markets. Competitive local exchange carriers are
telecommunications companies that compete with local telephone utilities. Some
competitive local exchange carriers compete with WorldPages.com by partnering
with or acquiring independent publishers to allow their existing sales force to
market a more complete complement of telecommunications services and to create
or strengthen their brand name. One such carrier has recently acquired
independent publishers within its service areas. WorldPages.com believes that as
competition to provide local telephone service in the United States matures, the
presence of competitive local exchange carriers in the yellow pages directory
business will increase.
DISCONTINUED BUSINESSES OF WORLDPAGES.COM AND DISPOSAL OF TELECOMMUNICATIONS
OPERATIONS
WorldPages.com completed its initial public offering in February 1998, at
which time it acquired eight telecommunications service providers and Great
Western Directories, a yellow pages publisher.
5
<PAGE>
WorldPages.com established a regional competitive local exchange carrier that
provided integrated communications services to business and residential
customers located in the Midwestern region of the United States.
WorldPages.com's integrated communications services included local, long
distance, Internet access, cellular and enhanced voice and data services.
WorldPages.com's telecommunications operations focused primarily on small and
medium size businesses in Kansas, Minnesota, Nebraska, North Dakota, Oklahoma,
South Dakota and Texas. As of December 31, 1998, WorldPages.com had over 125,000
local access lines in service and provided integrated communications services to
over 60,000 customers. Since its initial public offering in February 1998,
WorldPages.com faced liquidity problems that prevented it from implementing its
plans and realizing its goals of becoming a regional competitive local exchange
carrier. In April 1999, WorldPages.com executed a letter of intent which
provided for the acquisitions of YPtel, Web YP and Big Stuff and the changing of
its name, business focus, strategy and direction. As part of the restructuring,
and to stop the losses generated by its telecommunications operations and to
better position itself to obtain the capital it would need to implement its new
strategy, WorldPages.com decided to sell its telecommunications operations. In
short, WorldPages.com, decided to concentrate on the growth potential in
developing itself as an Internet directory company by leveraging the experience
and assets of its yellow pages operations. WorldPages.com sold its
telecommunications services operations to Ionex Telecommunications, Inc., on
November 19, 1999 and completed the acquisitions of YPtel, Web YP and Big Stuff
on February 23, 2000.
Before restatement to reflect its telecommunications segment as discontinued
operations, WorldPages.com had pro forma revenues of $114.2 million and pro
forma earnings before interest, taxes, depreciation, amortization and
stock-based compensation of $.4 million for the year ended December 31, 1998.
WorldPages.com's telecommunications operations were operated primarily through
four subsidiaries. In addition, WorldPages.com employed assets in the
telecommunications business that it held directly.
EMPLOYEES
At December 31, 1999, the pro forma combined Company had 766 employees, of
which approximately 400 were in the sales function. In June 1998, union
certification was granted to sales personnel at three offices in Washington.
WorldPages.com is currently negotiating a collective bargaining agreement with
the Communication Workers of America for these employees. Management believes
that its relations with its employees are good.
ITEM 2. PROPERTIES
WorldPages.com leases its corporate headquarters in St. Louis, Missouri, its
offices in Tacoma, Washington, and various sales offices throughout its
geographic territory. WorldPages.com also owns an office building in Amarillo,
Texas. The expiration of any lease would not have a material adverse effect in
the business or financial condition of WorldPages.com. WorldPages.com believes
sufficient office space is available at reasonable rental rates in the locations
in which it operates and moving from one location to another in any market area
would not materially interrupt or interfere with WorldPages.com's business.
ITEM 3. LEGAL PROCEEDINGS
According to the terms of the stock purchase agreement, as amended, between
WorldPages.com and Ionex Telecommunications, WorldPages.com has agreed to remain
liable and to indemnify Ionex Telecommunications for any losses, costs and
expenses arising out of any claims or lawsuits which WorldPages.com either knew
or should have known existed prior to the closing of the sale of the
telecommunications subsidiaries.
6
<PAGE>
LORETTA R. CROSS, CHAPTER 7 TRUSTEE FOR TOTAL NATIONAL TELECOMMUNICATIONS, INC.
V. LOU ZANT & TELECOM RESOURCES, INC.
Loretta R. Cross, Chapter 7 Trustee for Total National
Telecommunications, Inc., filed an Adversary Proceeding July 15, 1999 against
Lou Zant and Telecom Resources, Inc., in the United States Bankruptcy Court for
the Southern District of Texas. Telecom Resources was a wholly-owned subsidiary
of WorldPages.com and is one of the telecommunications operations sold to Ionex
Telecommunications. The trustee's complaint seeks recovery of $2.6 million from
Telecom Resources as a fraudulent conveyance under the Bankruptcy Code. The
complaint is based on an October 1, 1996 stock purchase agreement in which Total
World Telecommunications, Inc., the parent of Total National Telecommunications,
agreed to purchase all the stock of NETTouch Communications, Inc., from Telecom
Resources and Mr. Zant. The trustee's complaint alleges that Total National
Telecommunications provided the funds to Total World Telecommunications to
complete and close the stock purchase and that Total National Communications
never received any consideration for its funds. Telecom Resources intends to
vigorously defend the action.
In addition, as is the case with many companies, WorldPages.com faces
exposure to actual or potential claims and lawsuits involving its business and
assets. WorldPages.com is currently party to a number of lawsuits consisting of
ordinary, routine litigation incidental to the business of WorldPages.com.
WorldPages.com believes that any liabilities resulting from such claims should
not have a material adverse effect on WorldPages.com's financial position,
liquidity or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
WorldPages.com did not submit any matter to a vote of its stockholders
during the quarter ended December 31, 1999.
7
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(A) PRINCIPAL MARKET
WorldPages.com's common stock is traded on the New York Stock Exchange under
the symbol "WPZ". WorldPages.com is authorized to issue 180,000,000 shares of
common stock, par value $.0001 per share and 20,000,000 shares of preferred
stock, par value $.0001 per share. At March 24, 2000, 44,005,253 shares of
common stock were outstanding and one share of Class B voting Preferred Stock
were issued and outstanding.
(B) STOCK PRICE AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
MARKET PRICE
------------------- DIVIDENDS
HIGH LOW PER SHARE
-------- -------- ---------
<S> <C> <C> <C>
1998
1st Quarter (from February 18, 1998)............. $17.50 $12.69 --
2nd Quarter...................................... 16.00 6.63 --
3rd Quarter...................................... 12.94 4.88 --
4th Quarter...................................... 7.19 3.00 --
1999
1st Quarter...................................... $ 7.00 $ 3.94 --
2nd Quarter...................................... 13.00 4.75 --
3rd Quarter...................................... 9.50 6.63 --
4th Quarter...................................... 13.63 6.00 --
</TABLE>
No dividends have been paid on common stock since WorldPages.com's
inception. It is WorldPages.com's current intention to retain its earnings, if
any, to finance the growth of its business and for general corporate purposes
and WorldPages.com expects that it will not pay any dividends for the
foreseeable future. WorldPages.com's credit facilities restrict dividend
payments.
(C) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
As of March 24, 2000, there were 240 owners of record of common stock. On
that date, the closing price of WorldPages.com's common stock was $9.00.
(D) RECENT SALES OF UNREGISTERED SECURITIES
On October 26, 1999, WorldPages.com entered into the Amended and Restated
YPtel Agreement, the Amended and Restated Web YP Agreement and the Amended and
Restated Big Stuff Agreement. On June 3, 1999, WorldPages.com entered into the
note redemption agreements. Collectively, these agreements provided for the
issuance of up to 23,851,281 shares of WorldPages.com common stock. On
February 23, 2000, 19,545,454 of the 23,851,281 shares, having an agreed-upon
value of $5.50 per share, were issued or were reserved for issuance as
acquisition consideration for the acquisitions by WorldPages.com of YPtel
Corporation, Web YP, Inc. and Big Stuff, Inc. Also on that date, approximately
2,863,637 shares, having an agreed-upon value of $5.50 per share, were issued
upon the redemption of the 5% Subordinated Notes and 1,090,909 shares, having an
agreed-upon value of $5.50 per share, were issued in exchange for the
cancellation of $6.0 million in principal amount of indebtedness of Web YP and
Big Stuff. Additionally, the Amended and Restated YPtel Agreement called for the
issuance of 351,281 shares of common stock issuable upon the exercise of
warrants and
8
<PAGE>
options granted to officers, directors and employees of YPtel and to three
curent and former non-employee directors of WorldPages.com.
<TABLE>
<CAPTION>
SECURITIES TO BE IDENTITY OF PERSONS OR ENTITIES TO
ISSUED PURPOSE OF ISSUANCE WHOM SECURITIES ARE TO BE ISSUED
- -------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
15,000,000 Shares of Shares of WorldPages.com common Some of these shares will be issued
WorldPages.com stock to be issued in connection to YPtel stockholders directly. At
Common Stock with the acquisition of YPtel, the option of YPtel stockholders
having an agreed upon value of who are Canadian residents under
$5.50 per share the Canadian federal income tax
laws, other shares may be issued to
such stockholders upon exchange of
Class A Special Shares of ACG
Exchange Company, a wholly-owned
unlimited liability company
subsidiary of WorldPages.com.
3,090,909 Shares of Shares of WorldPages.com common Richard O'Neal and Dick Reid, who
WorldPages.com stock to be issued in connection are the current shareholders of
Common Stock with the acquisition of Web YP, Web YP, and those persons and
having an agreed upon value of entities who hold options and
$5.50 per share warrants to purchase common stock
of Web YP who exercise their
options and warrants prior to
closing. If all of the Web YP
employees and the warrant holders
exercise their options and warrants
prior to the acquisition of Web YP
by WorldPages.com, each of Messrs.
O'Neal and Reid will receive
approximately 940,564 shares or
approximately 3.9% of the
23,851,281 shares of WorldPages.com
common stock to be issued.
1,454,545 Shares of Shares of WorldPages.com common Richard O'Neal and Dick Reid, the
WorldPages.com stock to be issued in connection shareholders of Big Stuff, will
Common Stock with the acquisition of Big Stuff, each receive approximately 727,273
having an agreed upon value of shares or approximately 3.1% of the
$5.50 per share 23,851,281 shares of WorldPages.com
common stock to be issued
2,863,637 Shares of Shares of WorldPages.com common Richard O'Neal and four other
WorldPages.com stock to be issued in redemption of former stockholders of Great
Common Stock principal and interest on Western who received notes as
indebtedness owed by partial consideration for their
WorldPages.com, having an agreed shares of Great Western. The
upon value of $5.50 per share percentage of indebtedness owned to
Mr. O'Neal was redeemed for
1,603,636 or approximately 6.7% of
the shares of WorldPages.com common
stock to be issued.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
SECURITIES TO BE IDENTITY OF PERSONS OR ENTITIES TO
ISSUED PURPOSE OF ISSUANCE WHOM SECURITIES ARE TO BE ISSUED
- -------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
1,090,909 Shares of Shares of WorldPages.com common Based on the loans made to Web YP
WorldPages.com stock to be issued in exchange for and Big Stuff by Messrs. O'Neal and
Common Stock the cancellation of indebtedness Reid
owed by Web YP and Big Stuff,
having an agreed upon value of
$5.50 per share
75,000 Warrants to Replace warrants to purchase YPtel Wilmot Matthews (1)-30,000;
Purchase common shares granted to current Nicholas J. Ross (1)-10,000; George
WorldPages.com directors and a current officer of Anderson (1)-10,000; Max Gotlieb
Common Stock YPtel (1)-20,000; Robert Flynn (1)-5,000
186,281 Options to Replace director and employee stock Douglas McIntyre (1)(2)-103,781;
Purchase options to purchase YPtel common John Woodall (2)-40,000; Jay Cramer
WorldPages.com shares (2)-15,000; Wes Rice (2)-15,000;
Common Stock Don Russell (2)-12,500
90,000 Warrants to Compensation to two current and one Robert F. Benton (3)-30,000; Rod K.
Purchase former non-employee directors of Cutsinger (3)-30,000; Marvin C.
WorldPages.com WorldPages.com for negotiating the Moses (3)-30,000
Common Stock YPtel, Web YP and Big Stuff
acquisition agreements
351,281 Shares of Shares of WorldPages.com common
WorldPages.com stock issuable upon exercise of the
Common Stock above options and warrants which
replaced warrants to purchase
common shares granted to the
directors, officers and employees
of YPtel and two current and one
former non-employee directors of
WorldPages.com, all of whom are
identified in the three rows
immediately above, with reference
to footnotes (1), (2) and (3)
1 Share of Share issued to provide YPtel Trustee under the Exchange and
WorldPages.com stockholders who are Canadian Voting Trust Agreement
Class B Preferred residents under the Canadian
Stock federal income tax laws holding
Class A Special Shares the right
to vote their indirect holdings in
WorldPages.com
ACG Exchange Company Allow YPtel stockholders who are YPtel stockholders who are resident
Class A Special residents under the Canadian under the Canadian federal income
Shares federal income tax laws to defer tax laws and who seek tax deferral
taxes on exchange of their shares
of YPtel common stock
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
SECURITIES TO BE IDENTITY OF PERSONS OR ENTITIES TO
ISSUED PURPOSE OF ISSUANCE WHOM SECURITIES ARE TO BE ISSUED
- -------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
WorldPages.com Shares of WorldPages.com common YPtel stockholders who are
Common Stock stock having an agreed upon value residents under the Canadian
of $5.50 per share issuable upon federal income tax laws and who
exchange of Class A Special Shares take Class A Special Shares of ACG
of ACG Exchange Company (See above) Exchange Company for tax deferral
purposes and who subsequently
exchange them for WorldPages.com
common stock.
ACG Holding Allow WorldPages.com to own ACG WorldPages.com
Company (4) Common Holding Company
Shares
ACG Exchange Company Allow ACG Holding Company (5) to ACG Holding Company
Common Shares own ACG Exchange Company
</TABLE>
- ------------------------
(1) These individuals are directors or officers of YPtel.
(2) These individuals are employees of YPtel.
(3) Messrs. Benton and Cutsinger are non-employee directors of WorldPages.com.
Mr. Moses is a former non-employee director of WorldPages.com.
(4) ACG Holding Company is WorldPages.com's direct, wholly-owned unlimited
liability company subsidiary formed under the laws of Nova Scotia to hold
the shares of ACG Exchange Company, ACG Holding Company's direct,
wholly-owned unlimited liability company subsidiary formed under the laws of
Nova Scotia to issue the Class A Special Shares.
(5) For tax reasons, ACG Holding Company will own 99% of ACG Exchange Company
and 1 + USA V Acquisition Corp., a wholly-owned subsidiary of
WorldPages.com, will own the remaining 1% of ACG Exchange Company.
All of the securities listed in the table above were issued in transactions
exempt from registration under Section 4(2) of the Securities Act of 1933, as
amended.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA COMBINED(1)
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------
1999 1998 1999 1998 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues...................... $ 88,966 $ 82,524 $ 49,987 $ 38,090 $ --
Expenses:
Printing, distribution and
listings.................. 21,427 18,220 13,440 8,670 --
Sales and marketing......... 23,776 19,465 11,464 8,976 --
General and
administrative............ 36,827 32,841 20,529 16,689 2,071
Depreciation and
amortization.............. 14,487 14,658 4,695 4,190 3
Stock-based compensation.... -- 3,141 -- 1,760 870
----------- ----------- ----------- ----------- -----------
Income (loss) from
operations.................. (7,551) (5,801) (141) (2,195) (2,944)
Other income (expense):
Interest expense............ (7,951) (4,739) (4,766) (1,845) (256)
Other....................... 122 685 75 177 --
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before income
taxes....................... (15,380) (9,855) (4,832) (3,863) (3,200)
Income tax expense
(benefit)................... (882) 1,394 (1,465) (91) --
----------- ----------- ----------- ----------- -----------
Net income (loss) from
continuing operations..... (14,498) (11,249) (3,367) (3,772) (3,200)
Loss from discontinued
operations, net of
tax benefit of $4,007 and
$6,368, respectively........ (7,328) (7,507) (7,378) (7,507) --
Loss on sale of discontinued
operations, net of
tax benefit of $8,145 (51,800) -- (51,800) -- --
----------- ----------- ----------- ----------- -----------
Net loss...................... $ (73,676) $ (18,756) $ (62,545) $ (11,279) $ (3,200)
=========== =========== =========== =========== ===========
Basic and diluted income
(loss) per share from:
Continuing operations....... $ (.34) $ (.26) $ (.17) $ (.20) $ (.39)
Discontinued operations..... (.17) (.18) (.37) (.41) --
Sale of discontinued
operations................ (1.20) -- (2.60) -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) per
share..................... $ (1.71) $ (.44) $ (3.14) $ (.61) $ (.39)
=========== =========== =========== =========== ===========
Weighted average common shares
outstanding................. 43,189 42,889 19,956 18,594 8,230
=========== =========== =========== =========== ===========
</TABLE>
12
<PAGE>
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA COMBINED (1) DECEMBER 31,
------------------------- ---------------------------------------
1999 1998 1999 1998 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current assets................ $ 43,819 $ 72,864 $ 20,194 $ 34,431 $ --
Working capital (deficit)..... 1,983 27,593 (17,193) 9,453 (5,239)
Total assets.................. 305,944 401,042 109,059 187,622 2,695
Short-term borrowings......... 16,545 3,239 24,000 17,117 3,141
Long-term debt................ 35,276 54,462 -- 17,233 --
Stockholders' equity
(deficit)................... 228,487 287,481 71,672 131,584 (2,544)
</TABLE>
- ------------------------
(1) The pro forma combined data gives effect to the acquisitions of YPtel
Corporation, Web YP, Inc. and Big Stuff, Inc. and related transaction as if
they had occurred on January 1, 1998, or in the case of Balance Sheet Data
as of December 31, 1999 and 1998.
ITEM 7. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The following table sets forth, for the periods presented, certain actual
and pro forma information relating to the continuing operations of WorldPages,
expressed as a percentage of revenues, excluding prototype directories and
stock-based compensation expense:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
PRO FORMA PRO FORMA
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Directory revenues.......................................... 100.0% 100.0% 100.0%
Cost of services:
Printing, distribution and publishing..................... 21.7 23.5 23.4
Sales and marketing....................................... 21.8 22.8 24.1
General and administrative................................ 41.4 40.8 42.2
Depreciation and amortization............................. 9.7 10.1 10.3
----- ----- -----
Operating income from continuing operations................. 5.4% 2.8% 0%
===== ===== =====
</TABLE>
Prior to February 1998, WorldPages had not conducted any operations other than
those relating to the IPO. Consequently, the actual financial statements
included herein relate only to the parent company prior to February 18, 1998,
but include the results of Great Western in continuing operations for the period
after February 18, 1998. Certain pro forma operating information is presented
for comparative purposes as if the IPO and the acquisition of Great Western had
occurred on January 1, 1998. The pro forma operating information does not
purport to represent the results of operations of WorldPages that would have
actually occurred if the IPO and the acquisition of Great Western had in fact
occurred on the date stated above. Since Great Western and WorldPages were not
under common control or management, historical combined results of operations
may not be comparable to, or indicative of, future performance.
13
<PAGE>
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999, COMPARED TO THE PRO
FORMA RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
Revenues from continuing operations for the year ended December 31, 1999,
increased 5.6% to $50.0 million from pro forma $47.3 million in 1998.
Approximately $.8 million of the increase is due to the introduction of a
prototype directory in the Austin, Texas market in the second quarter of 1999
and approximately $.6 million of the increase is due to the first sold year
publication of a directory in the North Channelview, Texas market. Excluding new
and prototype directories, revenues increased 3.0% to $48.6 million. The
increase in revenue from recurring directories is due to a combination of
increased advertising revenue from existing customers and incremental sales from
new customers.
Printing, distribution and listing costs for the year ended December 31,
1999, increased $2.1 million to $13.4 million from pro forma $11.3 million in
1998. The increase is due to $2.8 million of costs related to the Austin, Texas
prototype directory incurred during the second quarter of 1999. Excluding
prototype directories, printing, distribution, and listing costs decreased 5.0%
to $10.5 million. As a percent of sales, printing, distribution and listing
costs of recurring directories decreased to 21.7% of sales in 1999 from 23.5% in
1998. The decrease is due to negotiating lower costs from printers and outside
service providers for certain directories offset partially by higher costs on
certain other directories.
Sales and marketing costs for the year ended December 31, 1999, increased to
$11.5 million from pro forma $10.8 million in 1998. The increase is principally
due to $.7 million of costs related to the Austin, Texas prototype directory.
Excluding prototype directories, sales and marketing costs were $10.6 million.
As a percent of sales, sales and marketing costs decreased to 21.8% of sales in
1999 from 22.8% in 1998. The decrease in the expense rate is due to lower
incentive compensation and trade expenses resulting from restructured incentive
compensation and trade programs.
General and administrative expenses increased $1.3 million, or 6.6%, to
$20.5 million for the year ended December 31, 1999, from pro forma
$19.2 million in 1998. The increase is partially due to $.4 million of expenses
related to the Austin, Texas prototype directory. Excluding prototype
directories, general and administrative expenses increased 4.5% to
$20.1 million. As a percentage of revenues, general and administrative expenses
were 41.4% of sales for the year ended December 31, 1999, and 40.8% of pro forma
sales in the year ended December 31, 1998. The increase in the expense rate is
due to increases in the bad debt reserve and salaries and wages, which is
partially offset by operating efficiencies.
Depreciation and amortization was approximately $4.7 million in the year
ended December 31, 1999, and $4.8 million in pro forma 1998. Depreciation and
amortization is principally amortization of goodwill and customer lists
resulting from the acquisition of Great Western.
Interest expense for the year ended December 31, 1999, was approximately
$4.8 million, an increase of $2.8 million from interest expense of pro forma
$2.0 million in 1998. The increase is due to higher debt from borrowings under
Great Western's revolving credit facility used to finance WorldPages' operating
losses and growth in the discontinued telecommunications segment. No interest
expense has been allocated to discontinued operations.
Income tax benefit of $1.5 million was recognized for the year ended
December 31, 1999, compared to pro forma income tax expense of $.7 million in
1998. The decrease is due to lower taxable income in 1999 than in 1998.
WorldPages' effective tax rate is substantially higher than statutory tax rates
principally because amortization of goodwill and customer lists is not
deductible for tax purposes.
Net loss from continuing operations was $3.4 million, or $.17 per share, for
the year ended December 31, 1999, compared to pro forma net loss from continuing
operations of $3.0 million, or $.15 per share in the comparable period of 1998.
The decrease in net loss was primarily due to the improved operating leverage in
printing, distribution and listings and an income tax benefit.
14
<PAGE>
Earnings before interest, taxes, depreciation and amortization and
stock-based compensations (EBITDA) is a commonly used measure and is presented
to assist in understanding WorldPages' operating results. However, it is not
intended to represent cash flow or results of operations in accordance with
generally accepted accounting principles. EBITDA decreased to $4.6 million for
the year ended December 31, 1999, from pro forma EBITDA of $6.0 million in the
comparable period of 1998, due to the previously mentioned Austin, Texas
prototype directory. Excluding net prototype costs of $3.1 million associated
with the Austin, Texas directory and the results of the first year sold
publication in the North Channelview, Texas market, EBITDA increased to
$7.3 million for the year ended December 31, 1999, an increase of 21.1%.
DISCONTINUED OPERATIONS
Net loss from discontinued operations was $28.3 million for the period from
January 1, 1999 to November 19,1999, compared to net loss from discontinued
operations of $13.9 million in the year ended 1998. Approximately $16.9 million
of these net losses were included in the estimated loss on sale and were charged
against the reserve established in the first quarter of 1999.
Revenues from discontinued telecommunications services increased 28.8% to
$86.2 million in 1999 compared to $59.6 million in 1998. The increase in
telecommunications revenue is due to increased local service revenue as
WorldPages implemented aggressive sales and marketing of local services in
addition to long-distance services. WorldPages' local service revenues in 1999
were $46.3 million compared to 1998 local service revenues of $19.1 million.
PRO FORMA RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 COMPARED TO
THE YEAR ENDED
DECEMBER 31, 1997
Pro forma directory revenues for the year ended December 31, 1998 increased
9.5% to $47.3 million from $43.2 million in 1997. WorldPages distributed
twenty-three directories in 1998 and twenty-four directories in 1997. Two
directories, which accounted for $.9 million of revenue in 1997, were
discontinued in 1998. This decrease in revenue was offset by $2.6 million of
revenue from another directory that was recognized in 1998 but not in 1997
because the timing of distribution resulted in WorldPages recognizing no revenue
in 1997, pursuant to its revenue recognition policy. WorldPages does not
recognize revenue from a directory until a directory is substantially delivered.
Excluding the impact of these nonrecurring directories, pro forma revenues from
recurring directories increased 5.7%.
Pro forma printing, distribution and listing costs increased $1.2 million,
or 11.9%, to $11.3 million from $10.1 million in 1997. The increase is due in
part to $.2 million of costs related to a prototype directory. As a percent of
sales, pro forma printing, distribution and listing costs, excluding prototype
directories, increased to 23.5% of sales in 1998 from 23.4% in 1997. The
increase is due to increased costs from printers and outside service providers.
Pro forma sales and marketing costs increased to $10.8 million from $10.4
million in 1997. As a percent of sales, pro forma sales and marketing costs
decreased to 22.8% of sales in 1998 from 24.1% in 1997. The decrease is due to
higher pro forma directory revenues in 1998.
Pro forma general and administrative expenses for the year ended
December 31, 1998, increased to $19.2 million from $18.3 million in 1997. The
increase in gross dollars is due primarily to the direct costs associated with
the higher sales volume. As a percentage of total revenues, pro forma general
and administrative costs were 40.8% in 1998, and 42.2% in 1997. The decrease in
the expense rate in 1998 is due to economies of scale realized from the higher
sales volume.
Pro forma depreciation and amortization was approximately $4.8 million in
1998 and $4.5 million in 1997. Pro forma depreciation and amortization includes
approximately $4.2 million of amortization in both periods relating to
intangible assets resulting from the acquisition of Great Western.
15
<PAGE>
Stock-based compensation expense of $1.8 million was recognized in the year
ended December 31, 1998, compared to $.9 million in 1997. This expense relates
to 300,000 stock options issued in December 1997. The options vested equally
over a three-month period from the date of the grant. These amounts represent
the total compensation expense based on the estimated fair market value of the
options on the date of the grant and the exercise price. Pro forma interest
expense was approximately $2.0 million in 1998 compared to $.8 million in 1997.
The increase in interest expense is due to borrowings under WorldPages'
revolving credit agreement used for general corporate purposes including
financing the telecommunications operations and 1998 capital expenditures.
Pro forma income tax expense was $.7 million in 1998 compared to
$1.0 million income tax expense in 1997. The decrease in income tax expense is
due to higher operating losses in 1998 than in 1997.
Pro forma net loss from continuing operations was $3.0 million, or $.15 per
share, in 1998, compared to pro forma net loss of $2.6 million, or $.13 per
share, in 1997. The increase in net loss was primarily due to the aforementioned
increase in stock-based compensation expense.
Pro forma EBITDA was $6.0 million for the year ended December 31, 1998, an
increase from $4.5 million in 1997. The increase is primarily due to higher pro
forma directory revenues in 1998.
WorldPages did not complete the acquisition of Great Western and the
telecommunications subsidiaries until February 18, 1998; therefore, actual
results include only the activity of Great Western from February 18, 1998 to
December 31, 1998. For the year ended December 31, 1998, actual loss from
operations was $2.2 million and net loss from continuing operations was $3.8
million, or $.20 per share. WorldPages had no operating revenues in 1997 and was
engaged principally in activities relating to the IPO.
LIQUIDITY AND CAPITAL RESOURCES
WorldPages' working capital at December 31, 1999 was negative $17.2 million
and its ratio of current assets to current liabilities was .54. These amounts
include current maturities of long-term debt of $17.0 million and short-term
borrowings under Great Western's revolving credit facility of $7.0 million. In
connection with the acquisitions of YPtel, Web YP and Big Stuff, $15.0 million
of the current maturities due in February 2000 were converted into approximately
2,840,909 shares of common stock. Further, WorldPages refinanced its existing
revolving credit facility prior to its expiration in May 2000 as described
below. Excluding both the $15.0 million in notes which were converted to equity
and the $7.0 million credit facility which has been refinanced, WorldPages'
working capital at December 31, 1999, was $4.6 million.
In anticipation of the proposed acquisition of YPtel, Web YP and Big Stuff,
and to provide working capital to finance the telecommunications subsidiaries
until their planned sale, on May 14, 1999, Great Western, the wholly-owned
yellow pages publishing subsidiary of WorldPages, entered into a $40.0 million
revolving loan agreement with Bank of America National Trust and Savings
Association, now known as Bank of America, N.A. Great Western used a portion of
the new credit facility to retire WorldPages' existing $25.0 million credit
facility. The balance of the new credit facility was, subject to various
restrictions, for the general working capital needs and other corporate purposes
of WorldPages and Great Western and for the working capital needs of the
telecommunications operations prior to their contemplated sale.
On November 19, 1999, WorldPages sold, in a stock sale, its four
wholly-owned subsidiaries which provided telecommunications services to Ionex
Telecommunications, Inc., formerly known as Compass Telecommunications, Inc.
Those four wholly-owned subsidiaries were Feist Long Distance, Inc., FirsTel,
Inc., Telecom Resources, Inc., and Valu-Line of Longview, Inc. In addition,
prior to the sale of the wholly-owned subsidiaries, WorldPages transferred its
telecommunications operations related assets and
16
<PAGE>
liabilities to those subsidiaries. WorldPages received cash of $42.6 million,
which represents the $49.8 million purchase price less a preliminary working
capital, and other adjustments, of $7.2 million.
The net sale proceeds from the sale of the telecommunications subsidiaries
were used to reduce the balance of the credit facility and to pay certain
outstanding liabilities of WorldPages. In addition, the revolving loan agreement
was amended by Great Western, WorldPages and Bank of America to reduce the
credit facility to $15.0 million. At December 31, 1999, WorldPages had borrowed
$7.0 million under this facility. The amended credit facility was for the
general working capital needs of WorldPages and Great Western and up to
$2.0 million was available to be loaned to Web YP and Big Stuff.
On February 23, 2000, in connection with the closing of its acquisitions of
YPtel Corporation, Big Stuff, Inc. and Web YP, Inc., WorldPages replaced its
prior credit facility with a financing package consisting of $60 million of
senior revolving loan with Bank of America, N.A. and $20 million of 5%
convertible debentures issued to institutional investors led by funds managed by
Palladin Group, L.P. Approximately $53 million of the financing package has been
used to refinance existing indebtedness. The additional $27 million will be used
for working capital needs and other general corporate purposes. The senior
revolving credit facility bears interest at LIBOR plus a spread of 1.5% to 3.5%
or the prime rate plus a spread of up to 1.25% and expires in February 2005. The
convertible debentures, which are due in February 2006, are convertible into
shares of WorldPages' common stock at a conversion price of $15.63 per share,
subject to adjustment at the end of every six-month period during the first two
years of the term of the debentures. The holders of the debentures also received
warrants to purchase 572,350 shares of WorldPages' common stock at an exercise
price of $18.47 per share. The convertible debentures also provide for options
to issue up to an additional $10 million of convertible debentures under similar
terms and conditions.
WorldPages' management believes that its cash flows from its yellow pages
business and the remaining cash available under its line of credit, as amended,
will be sufficient to fund its current operations.
YEAR 2000
In the fourth quarter of 1999, WorldPages completed its Year 2000 project.
WorldPages experienced no material issues in the transition to January 1, 2000.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
WorldPages is exposed to minimal market risks based on its current holdings
and use of financial instruments. WorldPages does not hold or issue any
financial instruments for trading, hedging or speculative purposes. Financial
instruments held for other than trading purposes do not impose a material market
risk.
WorldPages is exposed to interest rate risk, as additional financing is
periodically needed due to the operating losses and capital expenditures
associated with establishing and expanding WorldPages' business. WorldPages is
exposed to interest rate risk on amounts borrowed against its credit facility as
of December 31, 1999. Advances against the facility periodically renew, at which
point the borrowings are subject to the then current market interest rates,
which may differ from the rates WorldPages is currently paying on its
borrowings. There is no cap on the interest rate payable on WorldPages'
revolving credit facility. If the interest rates on WorldPages' revolving credit
facility were to increase by 10% over December 31, 1999 levels, WorldPages'
annual interest expense would increase by approximately $380,000.
WorldPages' business and operations are also exposed to market risks
resulting from changes in commodity prices for paper, WorldPages' principal raw
material. Certain commodity grades of paper, including the grade WorldPages uses
for its yellow pages directories, may be volatile. A 10% increase in
17
<PAGE>
the cost of directory grade paper used by WorldPages over December 31, 1999
levels, would result in an increase in WorldPages' annual operating costs of
approximately $476,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information that are
required to be included pursuant to this Item 8 are listed in Item 14 under the
caption "(a)1. Financial Statements" in this Annual Report on Form 10-K,
together with the respective pages in this Annual Report on Form 10-K where such
information is located. The financial statements and supplementary financial
information specifically referenced in such list are incorporated in this Item 8
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
WorldPages has never filed a Current Report on Form 8-K to report a change
in accountants because of a disagreement over accounting principles or
procedures, financial statement disclosure or otherwise.
18
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of WorldPages, their ages, positions
with WorldPages and their business experience as of the closing of the
acquisitions of YPtel, Web YP and Big Stuff in February 2000, are set forth
below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH WORLDPAGES AND PRIOR BUSINESS EXPERIENCE
---- -------- ------------------------------------------------------
<S> <C> <C>
George Anderson 61 Director of WorldPages beginning February 2000; term expires
at annual meeting of stockholders in 2000. Director of
YPtel since November 1998; Managing director of Country
Club Stock LLC, a gold products promotion company, since
1995; prior thereto, Mr. Anderson held various position
with the NYNEX Information Resources Co. since 1965, most
recently as Vice President of Sales and President of
National Marketing Services.
Rod K. Cutsinger 56 Founder of WorldPages; Director of WorldPages since
November 1998 and from its inception in September 1997
until May 1998; term expires at the annual meeting of
stockholders in 2000. Equity interest owner of CPFF and
Consolidation Partners. Since 1970, Mr. Cutsinger has been
an investor in other businesses.
Robert Flynn 66 Director of WorldPages beginning February 2000; term expires
at the annual meeting of stockholders in 2001. Director of
YPtel since November 1998. Retired. From 1996 to 1997,
Senior Advisor for CSC Index, a management consulting
firm. From June 1990 to December 1995, Chairman and Chief
Executive Officer of Nutrasweet Company. Director of
Northwestern University; STANTEC and Applied
Microbiology, Inc.
Wilmot L. Matthews 63 Director of WorldPages beginning February 2000; term expires
at the annual meeting of stockholders in 2002. Chairman of
the Board of YPtel from November 1998 to February 2000.
President of Marjad Inc., a personal investment company.
Director of Renaissance Energy Ltd., Denbury Resources
Inc., West Jet Airlines, Ltd. and Vice Chairman of the
Board of Nesbitt Burns Inc. from 1994 until 1996.
David M. Mitchell 51 Director of WorldPages beginning February 1998; term expires
at the annual meeting of stockholders in 2001. Investor in
telephone businesses since 1982 when he founded National
Telephone Exchange which he sold, along with two other
telephone companies, to U.S. Long Distance in 1991. Former
co-owner of Valu-Line of Longview, Inc., one of the
Company's telecommunications subsidiaries, until it was
acquired by WorldPages in February 1998.
Richard O'Neal 58 Chairman and Chief Executive Officer of WorldPages beginning
November 9, 1998; term expires at the annual meeting of
stockholders in 2002 and director and President--Directory
Services Group of WorldPages, since February 18, 1998;
founder and President of Great Western Directories from
1984 until it was sold to WorldPages in 1998.
Michael A. Pruss 34 Vice President, Secretary and Chief Financial Officer of
WorldPages since October 1, 1999; Vice President and
Controller of WorldPages from April 1998 to September 30,
1999. Corporate Controller for Falcon Products, Inc. from
January 1996 to April 1998. Various positions with Argosy
Gaming Company from April 1993 to January 1996, most
recently as Director of Financial Reporting. Auditor with
Arthur Andersen LLP from July 1987 to April 1993.
</TABLE>
19
<PAGE>
RESTRUCTURING OF WORLDPAGES BOARD OF DIRECTORS AND APPOINTMENT OF DIRECTORS
Pursuant to the agreements by which WorldPages acquired YPtel Corporation,
the board of directors of WorldPages immediately following the closing of the
acquisitions of YPtel, Web YP and Big Stuff was restructured so that three
directors were appointed by the board of directors of WorldPages prior to the
acquisitions of YPtel, Web YP and Big Stuff and three directors were appointed
by Imperial Capital Limited, a Canadian company that acted as custodian for
certain of the YPtel shareholders. When two experienced Internet executives are
identified, the reconstituted WorldPages board would increase the size of the
board and appoint these two individuals to the WorldPages board.
In the acquisition agreement by which WorldPages acquired Valu-Line of
Longview, Inc. in February 1998, one of WorldPages' former telecommunications
subsidiaries, WorldPages agreed to place David M. Mitchell on the WorldPages
board. The agreement also obligates WorldPages' board to place Mr. Mitchell on
its slate of nominees for election by the WorldPages common stockholders prior
to the expiration of his then existing term, so long as Mr. Mitchell owns at
least 100,000 shares of common stock at the time of renomination. The WorldPages
board last nominated Mr. Mitchell and he was last elected to a three-year term
as a director at the 1998 Annual Meeting.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS($)
ANNUAL COMPENSATION ----------------------- ----------
---------------------------------------------- (F) (G)
(E) RESTRICTED SECURITIES (H) (I)
(A) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND (B) (C) (D) COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) ($) ($) ($)
- -------------------------- -------- --------- -------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard O'Neal 1999 300,000 -0- -0- -0- -0- -0- -0-
Chairman, Chief 1998 300,000 -0- -0- -0- 225,000(1) -0- -0-
Executive Officer
and President
Michael A. Pruss(2) 1999 100,000 50,000 -0- -0- 50,000 -0- 2,250(7)
Vice President 1998 67,897 -0- -0- -0- 75,000(1) -0- 462(7)
Chief Financial Officer
James F. Cragg(3) 1999 199,038 -0- -0- 223,060 50,000 -0- -0-
Former President and 1998 175,000 87,500 -0- -0- 137,500(4) -0- 808(7)
Chief Operating 1997 -0- 100,000 -0- -0- 425,000(5) -0- -0-
Officer
William H. Zimmer III(6) 1999 185,415 -0- 28,600 117,400 50,000(4) -0- -0-
Former Executive Vice 1998 185,000 47,500 -0- -0- 175,000 -0- 427(7)
President and Chief 1997 -0- 50,000 -0- -0- 350,000(5) -0- -0-
Financial Officer
</TABLE>
- ------------------------------
(1) Includes original stock option awards for 150,000 shares to Mr. O'Neal and
50,000 shares to Mr. Pruss which were cancelled and replaced with new
options in connection with WorldPages' repricing on December 13, 1998. The
replacement options for 75,000 shares to Mr. O'Neal and 25,000 shares to Mr.
Pruss are also included in the total 1998 option awards.
(2) Mr. Pruss was appointed Vice President, Chief Financial Officer, Secretary
and Treasurer effective October 1, 1999. Prior thereto he was Vice President
and Controller since April 1998.
(3) Mr. Cragg was promoted from executive vice president sales and marketing to
president and chief operating officer in November 1998 and subsequently
resigned from those positions and from the WorldPages board effective
June 30, 1999. The value of Mr. Cragg's restricted stock awards at
December 31, 1999, was $517,940.
20
<PAGE>
(4) These options were awarded on December 13, 1998, to replace non-qualified
stock options to purchase twice as many shares originally granted to the
named executive officer.
(5) Stock option awards for 275,000 shares to Mr. Cragg and for 350,000 shares
to Mr. Zimmer granted in 1997 were cancelled and replaced by the options
described in footnote (4) above.
(6) Mr. Zimmer resigned from his position and from the WorldPages board
effective September 30, 1999. "Other Annual Compensation" for Mr. Zimmer in
1999 represents taxable reimbursement of relocation costs. The value of Mr.
Zimmer's restricted stock awards at December 31, 1999 was $272,600.
(7) "All Other Compensation" represents WorldPages' matching contributions under
its Employee Stock Purchase Plan and 401(k) Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information as to options grants in fiscal 1999
to the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
(B) (C) ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION FOR
SECURITIES OPTIONS (D) OPTION TERM(1)
UNDERLYING GRANTED TO EXERCISE OR (E) ----------------------
(A) OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION (F) (G)
NAME GRANTED # FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard O'Neal............... -0- N/A N/A N/A N/A N/A
Michael A. Pruss............. 50,000 12.7 9.00 11/18/09 283,003 717,184
James F. Cragg............... 50,000 12.7 5.88 6/30/00 21,485 43,704
William H. Zimmer III........ 50,000 12.7 5.88 9/30/00 25,388 51,915
</TABLE>
- ------------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and therefore are not intended to forecast
future appreciation, if any, of the stock price of WorldPages. WorldPages
did not use an alternative formula for a grant date valuation, as WorldPages
is not aware of any formula that will determine with reasonable accuracy a
present value based on future unknown factors.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
The following table provides information on the number and value of each
such executive's unexercised options to acquire WorldPages common stock at
December 31, 1999.
<TABLE>
<CAPTION>
(D)
NUMBER OF (E)
SECURITIES UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)(2)
(B) (C) --------------------- ------------------------
(A) SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Richard O'Neal............ -- -- 18,750/56,250 171,188/513,563
Michael A. Pruss.......... -- -- 25,000/50,000 228,250/231,500
James F. Cragg............ -- -- 337,500/0 3,312,375/0
William H. Zimmer III..... 75,000 337,750 150,000/0 1,369,500/0
</TABLE>
- ------------------------------
(1) Calculated using the difference between the actual sales price of the
underlying shares and the exercise price.
(2) Based on the New York Stock Exchange closing price of WorldPages.com common
stock on December 31, 1999 of $13.63.
21
<PAGE>
EMPLOYMENT AGREEMENTS
Upon their employment with WorldPages in December 1997, Messrs. Cragg and
Zimmer entered into six year long employment agreements with WorldPages
providing for their employment at annual base salaries of $175,000 and $185,000,
respectively. The agreements provided for a bonus potential equal to 100% of
base salary for Mr. Cragg and 50% of base salary for Mr. Zimmer. The agreements
also provided for the annual grant of options to purchase up to 50,000 shares of
WorldPages common stock each at the current market price on the date of grant,
if certain targets set by the compensation committee were met.
Under the terms of their respective agreements, Messrs. Cragg and Zimmer
would be entitled to their base salaries for a period of two years if either
were to resign after a change in the ownership or management of WorldPages that
significantly altered their job responsibilities or compensation. Further, under
the terms of the 1997 Stock Awards Plan under which their options were granted,
their options would vest immediately upon their resignation following a change
of control or the termination of their employment other than "with cause" as
defined.
In November 1998, after the resignation of Mr. Anthony from his position as
president and chief executive officer, Mr. Cragg was appointed president and
chief operating officer and his salary was raised to $200,000 per year. In all
other respects, his employment contract remained the same.
When the WorldPages board decided to change its business focus, strategy and
direction, the compensation committee determined that the employment
arrangements of Messrs. Cragg and Zimmer would need to be revised. The
compensation committee recognized that while both might desire to resign given
the restructuring of WorldPages' operations, it was important to provide each of
them with an incentive to remain with the company at least in the short term.
The compensation committee and ultimately the board concluded that the efforts
of Messrs. Cragg and Zimmer would be required until an agreement for the
acquisition of YPtel had been executed and interim financing intended to provide
working capital sufficient until the closing of the acquisitions had been
obtained.
In late April 1999, both Messrs. Cragg and Zimmer executed severance
agreements related to the termination of their employment and their resignations
as directors of WorldPages. The agreements that each entered were similar and
provided that:
- their new employment terms would terminate on the later to occur of:
- June 30, 1999; or
- the signing of the agreement providing for the acquisition of YPtel
by WorldPages.
- the options each had received upon their initial employment with
WorldPages and the performance options which had been awarded to each
of them would vest upon the termination of their employment;
- each had received performance options to purchase 50,000 shares of
WorldPages common stock for 1998.
- upon execution of their respective letter agreements, each would
receive restricted common stock of WorldPages that would be forfeited
if:
- the individual did not remain with WorldPages and fulfill his
employment obligations through the end of the new term; or
- the individual did not sign a mutual release and settlement
agreement with WorldPages.
- Mr. Cragg was awarded 38,000 shares of restricted stock.
- Mr. Zimmer was awarded 20,000 shares of restricted stock.
22
<PAGE>
- the exercise period of their respective options would extend until one
year from the date of the termination of their respective employment,
but no shares purchased upon exercise could be sold within ninety days
of their respective terminations;
- each would receive two years' base salary from the date of their
respective termination of employment with WorldPages; and
- each would be entitled to a performance bonus for the 1999 fiscal year
as approved by WorldPages' board of directors, on a pro-rata basis
based on the effective date of their respective terminations of
employment.
Although the interim financing with the subsidiary of Bank of America
Corporation closed May 14, 1999 and the acquisition agreements were executed
effective June 3, 1999, Mr. Cragg remained with WorldPages through June 30,
1999, at which time he resigned as president, chief operating officer and as a
director of WorldPages. Mr. Zimmer remained with WorldPages through
September 30, 1999, at which time he resigned as executive vice president, chief
financial officer, secretary and treasurer and as a director of WorldPages.
Mr. Richard O'Neal has entered into a three-year employment agreement that
provides for a base salary of $300,000 and a bonus potential of 50% of base
salary. If WorldPages terminates Mr. O'Neal's employment other than for cause,
as defined in his agreement, or if Mr. O'Neal resigns under circumstances that
he reasonably believes were contrived by Great Western to force his resignation,
or after a change in control of WorldPages, Mr. O'Neal shall be entitled to
continue to receive his base salary until the scheduled expiration date of his
employment agreement.
In connection with the sale of FirsTel and Feist Long Distance, WorldPages
paid Messrs. Thurman and Feist $319,217 and $133,407, respectively, in
settlement of WorldPages' obligations to them under their respective employment
agreements.
Mr. Michael A. Pruss entered into an employment agreement with
WorldPages to serve as WorldPages' Chief Financial Officer. The agreement
provides for a two-year term which may be renewed for successive one-year
periods upon the mutual agreement of Mr. Pruss and WorldPages. Under the terms
of the agreement, Mr. Pruss is entitled to a base salary of $130,000 per year
and is eligible for a cash performance bonus of up to 50% of his base salary and
additional option grants to be awarded at the discretion of the compensation
committee of the WorldPages board of directors. Mr. Pruss' employment agreement
provides that if his employment is terminated by WorldPages without cause or due
to a change of control as defined, he will be entitled to receive his base
salary for a period of twelve months following the date of his termination.
DIRECTOR COMPENSATION
Directors of WorldPages who are also employees receive no directors' fees
but are eligible to receive, and have received, grants of stock options under
WorldPages' 1997 Stock Awards Plan. Non-employee directors receive fees of
$1,000 for each board meeting in which they participate in person, and are
reimbursed for expenditures incurred in attending and returning from board
meetings.
Non-employee directors also receive options to purchase shares of WorldPages
common stock pursuant to the 1997 Nonqualified Stock Option Plan for
Non-Employee Directors. Non-employee directors elected or appointed to the board
will receive options to acquire 15,000 shares of WorldPages common stock on the
date of their initial election or appointment. Additional non-qualified stock
options to acquire 5,000 shares of WorldPages common stock will thereafter be
awarded to each director on the date of the Annual Meeting of Stockholders at
which he or she is reelected to serve an additional three-year term. In both
cases, the exercise price of the stock options granted is the fair market value
on the date of the grant.
23
<PAGE>
Mr. Todd Feist, who was reelected to the board at the Special Meeting of
Stockholders on February 16, 2000, but who subsequently resigned upon the
acquisition of YPtel, Web YP and Big Stuff, received options to purchase 5,000
shares of WorldPages common stock with an exercise price equal to the closing
price of WorldPages common stock on that date in accordance with the terms of
the Non-Employee Director Plan.
As consideration for their efforts in negotiating the terms of the
acquisitions of YPtel, Web YP and Big Stuff, WorldPages awarded warrants to
purchase 30,000, shares of WorldPages common stock to one current non-employee
director, Mr. Cutsinger and two former non-employee directors, Messrs. Robert F.
Benton and Marvin C. Moses. The warrants have a strike price of $6.96 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Reginald Hollinger, a former managing director and group head of the
Telecommunications Investment Banking Group at PaineWebber Incorporated and a
former member of the Investment Banking Division's Management Committee, was
also a member of the board's compensation committee from February 1998 until his
resignation from the board effective April 30, 1999. PaineWebber is one of
WorldPages' investment banking firms and served as the lead manager in
WorldPages' IPO. Neither WorldPages' board at the time nor Mr. Hollinger, during
the time he served on the WorldPages' board, believed these relationships
affected in any manner his ability to serve on, or fulfill his obligations to
WorldPages and its stockholders as a member of the compensation committee of the
board. To date, WorldPages incurred liabilities to PaineWebber of $1,828,000 for
investment banking services rendered to it in 1999, including $750,000 in
connection with the fairness opinion rendered to WorldPages in connection with
the acquisitions of YPtel, Web YP and Big Stuff. Mr. Hollinger resigned from
PaineWebber on April 30, 1999 to take a position with another firm, at which
time he also resigned from WorldPages' board.
WorldPages' board of directors maintained a compensation committee during
the year ended December 31, 1999. However, due to the need to retain key
employees during 1999 as WorldPages changed its focus, strategy and direction,
the full board made many of the compensation decisions directly and approved
other recommendations regarding compensation which were made to it by the
compensation committee. Employees of WorldPages who were also directors and who
therefore participated in deliberations of the WorldPages board concerning
executive officer compensation are identified below.
- Richard O'Neal, WorldPages Chairman and Chief Executive Officer.
- James F. Cragg, a former director, president and chief operating officer
of WorldPages through June 30, 1999.
- William H. Zimmer, a former director and WorldPages' former chief
financial officer through September 30, 1999.
- Todd Feist, an executive officer of WorldPages until November 19, 1999 and
a member of WorldPages' board of directors through the acquisitions of
YPtel, Web YP and Big Stuff in February 2000.
- Fred Thurman, executive officer of WorldPages until November 19, 1999 and
a member of WorldPages' board of directors through the acquisitions of
YPtel, Web YP and Big Stuff in February 2000.
24
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of WorldPages' common stock as of February 28, 2000, by:
- each director of WorldPages, including the two nominees for election as
directors;
- each of WorldPages' executive officers and former executive officers named
in the Summary Compensation Table, and
- all directors and executive officers of WorldPages as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
----------------------------------
PERCENT OF
NUMBER OF SHARES WORLDPAGES
OF WORLDPAGES COMMON
NAME COMMON STOCK STOCK(15)
- ---- ---------------- -----------
<S> <C> <C>
George Anderson(2).......................................... 25,000(4) *
Robert F. Benton(3)......................................... 47,000(5) *
James F. Cragg.............................................. 422,755(6) 1.0
Rod K. Cutsinger............................................ 5,166,664(7) 11.7
Todd J. Feist(3)............................................ 326,429(8) *
Robert Flynn(2)............................................. 20,000(9) *
Wilmot Matthews(2).......................................... 282,389(10) *
David M. Mitchell........................................... 201,144(11) *
Richard O'Neal.............................................. 5,244,328(12) 11.7
Michael A. Pruss............................................ 28,362(13) *
Fred L. Thurman(3).......................................... 318,745(14) *
William H. Zimmer III....................................... 176,000(15) *
Executive officers and directors as a group
(12 individuals).......................................... 12,258,816(16) 26.8
</TABLE>
- ------------------------
* Percentage of shares beneficially owned is less than 1.0%.
(1) Beneficial ownership includes shares of WorldPages common stock subject to
options, warrants, rights, conversion privileges or similar obligations
exercisable within 60 days for purposes of computing the ownership
percentage of the person or group holding such options, warrants, rights,
privileges or other obligations. Except as noted, each stockholder has sole
voting and dispositive power with respect to all shares of WorldPages common
stock beneficially owned by such stockholder.
(2) Messrs. Anderson, Flynn and Matthews became directors of WorldPages on
February 23, 2000 upon the closing of the acquisitions of YPtel Corporation,
Web YP and Big Stuff.
(3) Messrs. Benton, Feist and Thurman are former directors of WorldPages that
resigned on February 28, 2000 upon the closing of the acquisition of YPtel
Corporation, Web YP and Big Stuff.
(4) Includes 25,000 shares of common stock subject to options and warrants that
are immediately exercisable.
(5) Includes 45,000 shares of common stock subject to stock options that are
immediately exercisable.
(6) Includes 337,500 shares of common stock subject to stock options that are
immediately exercisable.
(7) Includes 4,867,921 shares of common stock owned by Consolidation Partners
Founding Fund L.L.C., a limited liability company in which Mr. Cutsinger and
his wife beneficially own of record 80% of the interests. The remaining
interests are beneficially owned by trusts for the benefit of the
Mr. Cutsinger's two adult children over which Rod K. Cutsinger has sole
voting and dispositive power. These shares are the same shares referenced in
footnote 1 of the table below.
(8) Includes 255,000 shares of common stock subject to stock options that are
immediately exercisable.
(9) Includes 20,000 shares of common stock subject to options and warrants that
are immediately exercisable.
(10) Includes 45,000 shares of common stock subject to options and warrants that
are immediately exercisable.
(11) Includes 20,000 shares of common stock subject to stock options that are
currently exercisable.
25
<PAGE>
(12) Includes warrants to purchase 658,040 shares of common stock. A trustee for
Mr. O'Neal's children owns 189,020 of these non-transferable, ten-year
warrants. Also includes 37,500 shares of common stock subject to stock
options that are immediately exercisable.
(13) Includes 25,000 shares of common stock subject to stock options that are
immediately exercisable.
(14) Includes 13,512 shares of common stock issuable upon exercise of a warrant
at $14.00 per share and 39,498 shares of common stock issuable upon
conversion of a 10% convertible note issued by WorldPages, convertible at
$14.00 per share. Also includes 75,000 shares of common stock subject to
stock options that are immediately exercisable.
(15) Includes 150,000 shares of common stock subject to stock options that are
immediately exercisable.
(16) Includes 1,791,050 shares of common stock which such persons have the right
to acquire upon the exercise of options and warrants that are immediately
exercisable.
The following table sets forth information regarding all persons known to
WorldPages to be the beneficial owner of more than five percent of the common
stock of WorldPages as of February 28, 2000.
<TABLE>
<CAPTION>
PERCENTAGE
OF CLASS
NUMBER AT FEBRUARY 28,
NAME AND ADDRESS OF SHARES 2000
- ---------------- --------- ---------------
<S> <C> <C>
Rod K. Cutsinger.................................... 5,166,664(1) 11.7%
3355 West Alabama, Suite 580
Houston, Texas 77098
Richard O'Neal...................................... 5,244,328 11.7%
2400 Lakeview Drive
Amarillo, Texas 79109
Consolidation Partners Founding Fund L.L.C.......... 4,867,921 11.1%
3355 West Alabama, Suite 580
Houston, Texas 77098
</TABLE>
- ------------------------
(1) Includes 4,867,921 shares of common stock owned by Consolidation Partners
Founding Fund LLC, a limited liability company in which Mr. Rod K. Cutsinger
and his wife beneficially own of record 80% of the interests. The remaining
interests are beneficially owned by trusts for the benefit of the
Cutsingers' two adult children, over which Mr. Rod Cutsinger has sole voting
and dispositive power. These shares are the same shares referenced in
footnote 7 of the immediately preceding table.
26
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Richard A. O'Neal is an officer, director and owner of 50% of the
outstanding voting securities of Big Stuff. During the fiscal year ended
December 31, 1999, WorldPages paid Big Stuff approximately $1.3 million for
yellow pages colorizing services. WorldPages believes that the amount paid to
Big Stuff for colorizing services is equivalent to amounts that it would have
paid an unrelated third party for similar services. Great Western and Big Stuff
have entered into a sales agreement pursuant to which Big Stuff expects to
continue to render the foregoing services to Great Western upon terms and
conditions that WorldPages considers reasonable under the circumstances. Big
Stuff has also agreed to give Great Western the exclusive right to market
WorldPages in its service areas.
WorldPages issued $8.4 million of 5% Subordinated Notes to Mr. O'Neal in
connection with its acquisition of Great Western. The interest incurred on the
5% Subordinated Notes held by Mr. O'Neal during the fiscal year ended
December 31, 1999 was $0.4 million. The principal and accrued interest were
redeemed for 1,603,636 shares of WorldPages common stock in February 2000 at a
redemption price of $5.50 per share. The redemption price was the same value per
share that was agreed upon by WorldPages in connection with the acquisition of
YPtel Corporation, an entity unrelated to WorldPages or its affiliates. Based on
a closing price of WorldPages common stock of $9.00 per share on March 24, 2000,
Mr. O'Neal received stock, which has a market value of $14.4 million in
redemption of the $8.8 million of indebtedness owed by WorldPages to O'Neal.
Further, in connection with WorldPages' acquisition of WebYP, Inc. and
Big Stuff, Inc., Mr. O'Neal received 2,545,152 shares of WorldPages common stock
in exchange for his ownership interest in Web YP and Big Stuff and in exchange
for indebtedness owed to him by WebYP and Big Stuff.
27
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements are included at the indicated
page in this Annual Report on Form 10-K and incorporated in this
Item 14(a)1 by reference:
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Independent Auditors' Report................................ F-1
Consolidated Statements of Operations....................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Changes in Stockholders' Equity
(Deficit)................................................. F-4
Consolidated Statements of Cash Flows....................... F-5
Notes to Consolidated Financial Statements.................. F-6
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
See Schedule II--Valuation and Qualifying Accounts on II-9. No other
schedules are included because they are not applicable or the required
information is shown in the financial statements or notes thereto.
(b) REPORTS ON FORM 8-K
During the quarter ended December 31, 1999, the Company filed a Current
Report on Form 8-K dated December 6, 1999, regarding the sale of its
telecommunications operations to Ionex Telecommunications, Inc.
(c) EXHIBITS
See the Exhibit Index at page II-3 of this Report.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
WorldPages.com, Inc.:
We have audited the accompanying consolidated balance sheets of
WorldPages.com, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the years in the three-year period ended
December 31, 1999. In connection with our audits of the consolidated financial
statements, we also have audited the accompanying financial statement schedule.
These consolidated financial statements and financial statement schedule are the
responsibility of WorldPages.com, Inc.'s management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
WorldPages.com, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
St. Louis, Missouri
February 4, 2000
F-1
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues................................................. $ 49,987 $ 38,090 $ --
Expenses:
Printing, distribution and listings.................... 13,440 8,670 --
Sales and marketing.................................... 11,464 8,976 --
General and administrative............................. 20,529 16,689 2,071
Depreciation and amortization.......................... 4,695 4,190 3
Stock-based compensation............................... -- 1,760 870
---------- ---------- ----------
Income (loss) from operations............................ (141) (2,195) (2,944)
Other income (expense):
Interest expense....................................... (4,766) (1,845) (256)
Other.................................................. 75 177 --
---------- ---------- ----------
Income (loss) from continuing operations before income
taxes.................................................. (4,832) (3,863) (3,200)
Income tax expense (benefit)............................. (1,465) (91) --
---------- ---------- ----------
Net income (loss) from continuing operations............. (3,367) (3,772) (3,200)
Loss from discontinued operations, net of tax benefit of
$4,007 and $6,368, respectively........................ (7,378) (7,507) --
Loss on sale of discontinued operations, net of tax
benefit of $8,145...................................... (51,800) -- --
---------- ---------- ----------
Net loss................................................. $ (62,545) $ (11,279) $ (3,200)
========== ========== ==========
Basic and diluted income (loss) per share from:
Continuing operations.................................. $ (.17) $ (.20) $ (.39)
Discontinued operations................................ (.37) (.41) --
Sale of discontinued operations........................ (2.60) -- --
---------- ---------- ----------
Net income (loss) per share............................ $ (3.14) $ (.61) $ (.39)
========== ========== ==========
Weighted average common shares outstanding............... 19,955,829 18,593,947 8,230,006
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,315 $ 13,734
Accounts receivable (net of allowance of $4,246 in 1999
and $4,014 in 1998)..................................... 14,223 13,317
Deferred costs............................................ 4,482 3,888
Prepaid expenses and other current assets................. 174 94
Deferred taxes............................................ -- 3,398
-------- --------
Total current assets.................................... 20,194 34,431
-------- --------
Property, plant and equipment, net.......................... 1,377 1,134
Intangible assets from business acquisitions, net........... 75,413 81,255
Deferred taxes.............................................. 6,504 --
Other assets, net........................................... 5,571 1,022
Net assets held for sale.................................... -- 69,780
-------- --------
Total other assets...................................... 88,865 153,191
-------- --------
Total assets............................................ $109,059 $187,622
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 9,447 $ 4,844
Short-term debt and current maturities of long-term
debt.................................................... 24,000 17,117
Other current liabilities................................. 3,940 3,017
-------- --------
Total current liabilities............................... 37,387 24,978
Long-term obligations:
Long-term debt............................................ -- 17,233
Deferred tax liabilities.................................. -- 13,827
-------- --------
Total liabilities....................................... 37,387 56,038
-------- --------
Commitments and contingencies...............................
Stockholders' equity (deficit):
Preferred stock, Series A Redeemable Convertible $.0001
par value: 20,000,000 shares authorized; 0 and 142,857
shares issued and outstanding; $2,000 liquidation
preference.............................................. -- 1,122
Common stock, $.0001 par value: 180,000,000 shares
authorized; 20,426,753 and 19,859,262 shares issued and
outstanding, respectively............................... 2 2
Additional paid-in capital................................ 149,438 146,611
Treasury stock; 0 and 234,141 common shares,
respectively............................................ -- (1,013)
Retained earnings (accumulated deficit)................... (77,768) (15,138)
-------- --------
Total stockholders' equity.............................. 71,672 131,584
-------- --------
Total liabilities and stockholders' equity.............. $109,059 $187,622
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK EARNINGS TOTAL
--------------------- PREFERRED ADDITIONAL TREASURY (ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT STOCK PAID-IN CAPITAL STOCK DEFICIT) EQUITY (DEFICIT)
---------- -------- --------- --------------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1996............... 8,227,736 $1 $ -- $ 27 $ -- $ (659) $ (631)
Issuance of stock
options and
warrants........... -- -- -- 1,237 -- -- 1,237
Issuance of stock for
services
performed.......... 4,540 -- -- 50 -- -- 50
Net loss............. -- -- -- -- -- (3,200) (3,200)
---------- -- ------ -------- ------- -------- ---------
Balance, December 31,
1997............... 8,232,276 $1 $ -- $ 1,314 $ -- $ (3,859) $ (2,544)
Issuance of stock
options and
warrants........... -- -- -- 5,862 -- -- 5,862
Issuance of preferred
stock.............. -- -- 1,122 -- -- -- 1,122
Initial public
offering, net of
offering costs..... 8,000,000 1 -- 99,899 -- -- 99,900
Issuance of stock for
acquired
companies.......... 3,861,127 -- -- 39,536 -- -- 39,536
Acquisition of
treasury stock..... (234,141) -- -- -- (1,013) -- (1,013)
Net loss............. -- -- -- -- -- (11,279) (11,279)
---------- -- ------ -------- ------- -------- ---------
Balance, December 31,
1998............... 19,859,262 $2 $1,122 $146,611 $(1,013) $(15,138) $ 131,584
Stock option
exercises.......... 366,634 -- -- 1,705 785 (85) 2,405
Issuance of
restricted stock... 58,000 -- -- -- 228 -- 228
Conversion of
preferred stock.... 142,857 -- (1,122) 1,122 -- -- --
Net loss............. -- -- -- -- -- (62,545) (62,545)
---------- -- ------ -------- ------- -------- ---------
Balance, December 31,
1999............... 20,426,753 $2 $ -- $149,438 $ -- $(77,768) $ 71,672
========== == ====== ======== ======= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(62,545) $(11,279) $(3,200)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization........................... 4,695 4,190 3
Stock-based compensation expense........................ -- 1,760 870
Loss from discontinued operations, net.................. 7,378 7,507 --
Loss on sale of discontinued operations................. 51,800 -- --
Deferred tax provision.................................. (3,718) (6,459) --
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable, net............................ (906) (184) 1
Deferred costs...................................... (594) 639 --
Prepaid expenses and other current assets........... (80) 581 --
Other assets, net................................... (3,161) 1,667 --
Increase (decrease) in:
Accounts payable and accrued liabilities............ 4,603 836 1,950
Other current liabilities........................... 923 706 --
-------- -------- -------
Net cash used in continuing operating activities.... (1,605) (36) (376)
Net cash used in discontinued operations............ (41,370) (8,812) --
-------- -------- -------
Net cash used in operating activities............... (42,975) (8,848) (376)
-------- -------- -------
Cash flows from investing activities:
Cash paid for businesses acquired, net of cash acquired... -- (83,256) --
Additions to property, plant and equipment, net........... (3,906) (16,738) --
Cash from sale of discontinued operations................. 43,127 10,000 --
-------- -------- -------
Net cash provided by (used in) investing
activities........................................ 39,221 (89,994) --
-------- -------- -------
Cash flows from financing activities:
Borrowings of long-term debt.............................. 52,883 17,000 2,566
Repayment of long-term debt............................... (62,338) (2,979) --
Increase in deferred offering costs....................... (780) (1,218) (2,223)
Proceeds from stock option exercises...................... 1,570 -- --
Proceeds from common stock issuance, net of offering
costs................................................... -- 99,900 --
Acquisition of treasury stock............................. -- (127) --
-------- -------- -------
Net cash provided by (used in) financing
activities........................................ (8,665) 112,576 343
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents....................................... (12,419) 13,734 (33)
Cash and cash equivalents--beginning of year................ 13,734 -- 33
-------- -------- -------
Cash and cash equivalents--end of year...................... $ 1,315 $ 13,734 $ --
======== ======== =======
Supplemental cash flows information:
Cash paid for interest.................................... $ 3,038 $ 739 $ --
======== ======== =======
Cash paid for income taxes................................ $ 43 $ -- $ --
======== ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1. BASIS OF PRESENTATION
WorldPages.com, Inc. was originally founded and operated as Advanced
Communications Group, Inc. In February 2000, the name of the company was changed
to WorldPages.com, Inc. Accordingly, all disclosures and discussions within the
financial statements have been changed to reflect the new name of the company.
The consolidated financial statements include the accounts of WorldPages.com
and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
WorldPages.com was founded to provide a portfolio of telecommunications
services to business customers in service areas of Southwestern Bell and U S
WEST and publishes yellow pages directories in selected markets. WorldPages.com
completed its initial public offering (IPO) on February 18, 1998. In connection
with the IPO, WorldPages.com simultaneously acquired one yellow pages publisher
and eight telecommunications companies and a 49% interest in another company
(collectively, the Acquired Companies or the Acquisitions). Prior to February
1998, WorldPages.com had not conducted any operations other than those relating
to the IPO and the Acquisitions. Consequently, the financial statements included
herein relate only to the parent Company prior to February 18, 1998, but include
the results of Great Western, the yellow pages publisher, for the period
February 18, 1998 to December 31, 1998 and for all later periods as continuing
operations. The telecommunications companies and the 49% interest in another
company are included in discontinued operations.
Great Western Directories is WorldPages.com's only remaining operating
subsidiary at December 31, 1999. In November 1999, all of WorldPages.com's
telecommunications subsidiaries were sold and are therefore presented as
discontinued operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS--WorldPages.com considers cash in banks and
highly-liquid investments purchased with an original maturity of three months or
less to be cash and cash equivalents.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost. Improvements are capitalized. Repair and maintenance costs are expensed as
incurred. The cost and related accumulated depreciation of assets retired or
disposed of and are removed from the accounts, and any gains or losses are
reflected in results of operations. Depreciation is computed using the
straight-line method over the respective useful lives of the assets. The
estimated useful lives of the assets are: buildings and improvements--40 years;
equipment--5 to 10 years; furniture and office equipment--3 to 5 years; and
leasehold improvements--shorter of life of lease or useful life of related
asset.
INTANGIBLE ASSETS FROM BUSINESS ACQUISITIONS--Intangible assets resulting
from the cost of businesses acquired exceeding the fair value of net assets
acquired consist principally of customer lists and goodwill. Customer lists and
goodwill are amortized on a straight-line basis over their estimated useful
lives of 10 years and 40 years, respectively. For the years ended December 31,
1999 and 1998,
F-6
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amortization expense relating to intangible assets was $4,532,000 and
$4,402,000, respectively and accumulated amortization totaled $8,408,000 and
$3,876,000 at December 31, 1999 and 1998, respectively.
OTHER ASSETS, NET--Other assets consist of deferred debt issuance costs and
deferred acquisition costs. The costs incurred in connection with obtaining debt
facilities are deferred and amortized on a straight-line basis over the life of
the related debt instrument. Deferred acquisition costs consists of legal,
accounting and other costs related to acquisitions which are included in the
purchase price and allocated to assets acquired.
INCOME TAXES--Income taxes are recognized during the year based on all
events that have been recognized in the consolidated financial statements, with
deferred taxes being provided for differences between the book basis and tax
basis of assets and liabilities as measured by the enacted tax laws.
REVENUE RECOGNITION--Directory revenues are derived from the sale of
advertising space in telephone directories and are recognized on the date that
the directory is published and substantially delivered. If the estimate of total
directory costs exceeds advertising revenues for a specific region's telephone
directory, a provision is made for the entire amount of such estimated loss.
Directory costs are deferred until the date that the directory is published and
substantially delivered. Directory costs include all direct costs related to the
publishing of a telephone directory, such as publishing and distribution
expenses, commissions on sales, other selling expenses and estimated bad debt
expense. General and administrative costs are charged to expense as incurred.
Costs incurred with the expansion into new markets include all direct costs
related to the publishing of a first-year telephone directory (prototype
directory). Advertising space in prototype directories is generally provided to
advertisers at no cost; therefore, generally no advertising revenues are derived
from prototype directories. Because the future economic benefit of the direct
costs related to prototype directories cannot be determined, such direct costs
are charged to expense as incurred. WorldPages.com recognized net expense of
approximately $3.1 million and $0.4 million in the years ended December 31, 1999
and 1998, respectively, relating to prototype directories.
STOCK-BASED COMPENSATION--WorldPages.com has elected to follow the intrinsic
value method and has included in these financial statements pro forma
disclosures of net loss and net loss per share as if the fair value method of
accounting had been applied. No employee stock options or similar equity
instruments were issued by WorldPages.com prior to January 1, 1997.
NET EARNINGS (LOSS) PER SHARE--Basic earnings per share (Basic EPS) is
determined by dividing income available to common stockholders by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share (Diluted EPS) reflects the potential dilution that could occur if
securities and other contracts to issue common stock were exercised or converted
into common stock. In periods in which the inclusion of such securities or
contracts are anti-dilutive, the effect of such securities is not given
consideration. In calculating Diluted EPS for the year ended December 31, 1999,
1998, and 1997, options and warrants to purchase 3,806,523, 3,960,312, and
2,288,640, respectively, shares of common stock were outstanding during part of
the year but were not included in the computation of Diluted EPS due to their
anti-dilutive effect.
F-7
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS--WorldPages.com's only financial
instruments are cash, short-term trade receivables and payables and notes
payable. Management believes the carrying amounts of the financial instruments
classified as current assets and liabilities approximate their fair values
because of their short-term nature. Management believes the carrying value of
its notes payable obligations approximate fair value.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED
OF--Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flow expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets.
COMPREHENSIVE INCOME--For the years ended December 31, 1999, 1998, and 1997,
WorldPages.com did not incur items to be reported in comprehensive income that
were not already included in the reported net earnings; therefore, comprehensive
income (loss) and net income (loss) were the same for these periods.
RECLASSIFICATIONS--Certain amounts presented in the 1998 consolidated
financials statements have been reclassified to conform with the 1999
presentation.
3. DISCONTINUED OPERATIONS
In April 1999, WorldPages.com announced that it intended to divest its
telecommunications segment in connection with several strategic acquisitions. In
July 1999, WorldPages.com and four of its wholly-owned subsidiaries, Feist Long
Distance Services, Inc., FirsTel, Inc., Telecom Resources, Inc. and Valu-Line of
Longview, Inc., entered into a stock purchase agreement with Ionex
Telecommunications, Inc. under which WorldPages.com agreed to sell all of the
capital stock of those wholly-owned subsidiaries to Ionex Telecommunications for
$49.8 million, subject to a dollar-for-dollar reduction to the extent current
assets are less than current liabilities at the time of closing and to the
extent of any decrease in property, plant and equipment from May 1, 1999 to the
closing date. The sale was completed on November 19, 1999 and WorldPages.com
received $42.6 million, representing the purchase price less a preliminary
working capital adjustment. The estimated remaining costs of the transaction are
included in other liabilities in the financial statements.
As a result of the divestiture, the results of all the telecommunications
segment from the date of the announcement are classified as discontinued
operations in the accompanying consolidated financial statements. Revenues from
the discontinued telecommunications segment were $86.2 million and
$59.6 million in 1999 and 1998, respectively. Net losses from the discontinued
telecommunications operations were $7.4 million, net of an income tax benefit of
$4.0 million in 1999, and $7.5 million, net of an income tax benefit of
$6.4 million in 1998.
WorldPages.com has recorded a loss on the sale of the discontinued
telecommunications operations of $51.8 million. The loss on the sale of the
discontinued operations includes operating losses incurred through the
completion of the sale, transaction costs, exit costs of leased facilities,
F-8
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
3. DISCONTINUED OPERATIONS (CONTINUED)
employee severance and termination costs, and proceeds from the sale. The loss
is recorded net of an income tax benefit of $8.1 million.
In connection with the IPO, WorldPages.com purchased a 49% interest in
KINNET, an owner and operator of a fiber optic network in Kansas, for
$18.0 million. WorldPages.com accounted for its investment in KINNET using the
equity method. In December 1998, WorldPages.com sold its entire interest in
KINNET back to the original owner of KINNET for $10.0 million in cash,
225,000 shares of WorldPages.com's common stock, valued at $0.9 million, and the
indefeasible right to use (IRU) certain network facilities of KINNET valued at
$7.0 million. The sale of the KINNET stock resulted in a $2.4 million loss due
to the tax effect associated with this transaction. The loss on the sale of
KINNET is also included in the loss on the discontinued telecommunications
operations. The net assets and liabilities of the discontinued
telecommunications operations are classified on the accompanying consolidated
balance sheet as net assets held for sale at December 31, 1998.
4. ACQUISITIONS
In April 1999, WorldPages.com's Board of Directors approved a letter of
intent to acquire all the outstanding stock of YPtel Corporation, Web YP, Inc.
and Big Stuff, Inc. for approximately 19.5 million newly issued shares of common
stock. YPtel Corporation is the parent of Pacific Coast Publishing, Ltd. a
leading yellow pages publisher located in Tacoma, Washington. Web YP maintains a
website and operates an Internet yellow pages network that is integrated with
Big Stuff's yellow pages services. In connection with the acquisitions,
WorldPages.com's Chairman and CEO, Richard O'Neal and the other 5% Note holders
have agreed to convert the $15.0 million 5% Notes and accrued interest owed by
WorldPages.com into approximately 2,864,000 shares of common stock in support of
WorldPages.com's strategy. See discussion of subsequent events in note 15 to the
consolidated financial statements.
In February 1998, WorldPages.com completed its IPO. Concurrent with and as a
condition to the closing of the IPO, WorldPages.com acquired all of the
outstanding capital stock of Great Western Directories, Inc., Valu-Line of
Longview, Inc., Feist Long Distance Service, Inc., FirsTel, Inc. and Tele-
Systems, Inc., substantially all of the assets of Long Distance Management
II, Inc., Long Distance Management of Kansas, Inc., The Switchboard of Oklahoma
City, Inc., and National Telecom, a proprietorship, and 49% of the outstanding
capital stock of KINNET (collectively the Acquisitions or the Acquired
Companies). The Acquisitions are accounted for using the purchase method of
accounting.
F-9
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
4. ACQUISITIONS (CONTINUED)
The following table sets forth for accounting purposes the fair value of
consideration paid with respect to the acquisition of Great Western and the
assets acquired:
<TABLE>
<CAPTION>
(IN THOUSANDS)
- --------------
<S> <C>
Consideration Paid for Acquired Companies:
Cash...................................................... $55,634
Common stock.............................................. 8,000
Notes payable............................................. 15,000
Options and warrants...................................... 3,125
-------
Total purchase price.................................... $81,759
=======
Assets Acquired:
Net working capital....................................... $ 6,160
Property and equipment.................................... 1,237
Customer lists............................................ 32,900
Goodwill.................................................. 50,921
Net deferred tax liability................................ (9,459)
-------
Total assets acquired................................... $81,759
=======
</TABLE>
In addition to the acquisition of Great Western, WorldPages.com purchased
the other acquired companies for $62.6 million in cash, stock options and notes
payable. These acquisitions resulted in $47.0 million of goodwill,
$14.9 million of customer lists and $.7 million of net other assets which have
been classified as net assets held for sale at December 31, 1998.
The following pro forma information presents results of operations as if the
acquisition of Great Western had occurred at the beginning of the periods
presented. This pro forma information is based on historical information and
does not necessarily reflect the actual results that would have occurred nor is
it necessarily indicative of the future results of the combined companies.
<TABLE>
<CAPTION>
PRO FORMA INFORMATION (UNAUDITED, IN THOUSANDS) 1998 1997
- ----------------------------------------------- -------- --------
<S> <C> <C>
Total revenues from continuing operations................... $ 47,336 $ 43,247
Net loss from continuing operations......................... (2,972) (2,563)
Loss per share from continuing operations................... (.15) (.13)
</TABLE>
In November 1998, WorldPages.com acquired all of the outstanding stock of
Telecom Resources, Inc. and affiliates (TRI) for 477,538 newly issued shares of
common stock valued at $1.6 million. TRI, based in Dallas, Texas, offers its
customers a web-based virtual office package that combines voice, fax and data
into a single interface. This acquisition is accounted for under the purchase
method of accounting. The excess of cost over the estimated fair value of assets
acquired and liabilities assumed was allocated to goodwill. Approximately
$3.3 million was allocated to goodwill and will be amortized over 15 years. The
results of operations and the pro forma results would not have been
significantly different if TRI had been acquired at the beginning of 1998. As
described in Note 3, TRI was sold with WorldPages.com's telecom subsidiaries in
November 1999.
F-10
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31,
1999 and 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
- -------------- -------- --------
<S> <C> <C>
Land and buildings.......................................... $ 544 $ 544
Leasehold improvements...................................... 387 388
Furniture and office equipment.............................. 1,883 1,443
-------- --------
2,814 2,375
Less accumulated depreciation............................... (1,437) (1,241)
-------- --------
$ 1,377 $ 1,134
======== ========
</TABLE>
6. LONG-TERM DEBT
The carrying amount of long-term debt, which approximates fair value,
consisted of the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1999 1998
- -------------- -------- --------
<S> <C> <C>
Borrowings under revolving line of credit, variable
interest, 9.25% and 8.25% at December 31, 1999 and 1998,
respectively.............................................. $ 7,000 $ 17,000
5% Notes payable due February 18, 2000, interest due
annually (related parties)................................ 15,000 15,000
10% Convertible Notes due February 18, 2000, interest due
annually (related parties)................................ 2,000 2,000
7% Note due annually through February 18, 2001, interest due
annually (related parties)................................ -- 350
-------- --------
24,000 34,350
Less short-term borrowings and current maturities........... (24,000) (17,117)
-------- --------
$ -- $ 17,233
======== ========
</TABLE>
The weighted average interest rates at December 31, 1999 and 1998 for
short-term borrowings were 6.7% and 8.2%, respectively.
On May 14, 1999, WorldPages.com, through its wholly-owned yellow
pages publishing subsidiary, Great Western, entered into a $40.0 million
revolving loan agreement with Bank of America National Trust and Savings
Association. WorldPages.com used a portion of the credit facility to refinance
an existing $25.0 million credit facility and to finance its discontinued
telecommunications operations. In connection with the closing of the sale of the
telecommunications operations, the revolving credit facility was amended to
reduce the total available borrowings to $15.0 million. The balance of the new
credit facility is, subject to various restrictions, for the general working
capital needs and other corporate purposes of WorldPages.com and Great Western.
Interest on the facility varies at LIBOR (adjusted by the Eurodollar reserve
percentage) plus 2.75% or at the Bank of America's prime or base rate plus .75%.
The facility requires a commitment fee of .5% on the unused balance and is
subject to various restrictions and the maintenance of certain financial ratios.
The facility expires on May 13, 2000
F-11
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
6. LONG-TERM DEBT (CONTINUED)
and WorldPages.com guaranteed the loan by pledging to Bank of America
substantially all of its assets. See discussion of subsequent events in note 15
to the consolidated financial statements.
In connection with the acquisitions of YPtel Corporation, Web YP, Inc. and
Big Stuff, Inc., (Note 4), WorldPages.com intends to issue approximately
2,863,637 shares of WorldPages.com's common stock in redemption of the
$15.0 million 5% Notes and accrued interest owed thereon. The 5% Notes are owed
to the former stockholders of Great Western, including Mr. Richard O'Neal,
WorldPages.com's Chairman of the Board and Chief Executive Officer and three
other managers of Great Western. The indebtedness was originally incurred in
connection with WorldPages.com's acquisition of Great Western in February 1998.
See discussion of subsequent events in note 15 to the consolidated financial
statements.
The 5% Notes and 10% Convertible Notes may be prepaid at any time and are
subordinated to WorldPages.com's senior debt as defined therein. The 10%
Convertible Notes are convertible into shares of WorldPages.com's common stock
at $14.00 per share.
Until the IPO, WorldPages.com's activities had been financed through a
Subordinated Promissory Note as amended (the Note), with Consolidated Partners
Founding Fund (CPFF), a related party, in the principal amount of $3,230,000 and
bearing an annual interest rate of 8%. The Note was due on the earlier of
December 31, 1998, or the consummation of the IPO. In connection with the IPO in
February 1998, the entire balance of the Note was repaid. During 1998 and 1997,
WorldPages.com incurred interest expense of $149,000 and $256,000, respectively,
related to the Note.
Included in short-term and long-term debt at December 31, 1999 and 1998,
respectively, are notes relating to the Acquisitions totaling $14,803,000 and
$15,393,000, respectively, which are due to current directors and members of
management. For the years ended December 31, 1999 and 1998, WorldPages.com
recognized interest expense of $768,000 and $709,000, respectively, relating to
these notes.
7. INCOME TAXES
The provision for income tax expense (benefit) related to continuing
operations consisted of the following:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Current:.................................................... $ -- $ --
Federal................................................... -- --
------- -------
State..................................................... -- --
------- -------
Deferred:
Federal................................................... (1,230) (5,945)
State..................................................... (235) (514)
------- -------
(1,465) (6,459)
======= =======
Income tax expense (benefit)................................ $(1,465) $(6,459)
======= =======
</TABLE>
F-12
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
7. INCOME TAXES (CONTINUED)
Significant components of deferred tax assets and liabilities at December 31,
1999 and 1998 were:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Deferred tax assets:
Property and equipment depreciation....................... $ 108 $ --
Reserves and accruals..................................... 172 1,273
Net operating loss carryforwards.......................... 16,555 1,222
-------- --------
16,835 2,495
-------- --------
Deferred tax liabilities:
Intangible assets......................................... (10,158) (16,144)
Deferred costs............................................ (1,701) --
Property and equipment depreciation....................... -- (319)
-------- --------
(11,859) (16,463)
-------- --------
Total net deferred tax asset (liability).................. 4,976 (13,968)
Net deferred tax liabilities included in net assets held
for sale................................................ -- 3,490
-------- --------
Net deferred tax asset (liability)........................ $ 4,976 $(10,478)
======== ========
</TABLE>
The benefit for income taxes reconciles to the amount computed by applying
the statutory federal tax rate of 34% as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Computed expected tax benefit............................... $(1,643) $(6,031)
Non-deductible goodwill and intangibles..................... 317 332
State income tax benefit.................................... (155) (339)
Loss on sale of KINNET...................................... -- 816
Other....................................................... 16 (44)
Change in valuation allowance............................... -- (1,193)
------- -------
$(1,465) $(6,459)
======= =======
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion, or all of the deferred tax
assets will be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the period in
which those temporary differences become deductible. Net operating loss
carryforwards of $3,139,000, $518,000 and $39,909,000 expire in 2012, 2018, and
2019, respectively. Management believes that WorldPages.com will generate
sufficient taxable income to absorb all net operating loss carryforwards and
deductible temporary differences prior to their expiration.
F-13
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
8. STOCK OPTIONS AND WARRANTS
In connection with the Acquisitions and IPO, WorldPages.com issued various
common stock warrants that allow the holder to purchase shares of common stock
at defined exercise prices. As of December 31, 1999 and 1998, 1,674,427 and
1,584,427 of such warrants were issued and outstanding, respectively.
WorldPages.com has an employee incentive stock option plan which allows
WorldPages.com to grant key employees incentive and non-qualified stock options
to purchase up to 3,500,000 shares of WorldPages.com's common stock at not less
than the market price on the date of the grant. Options not exercised accumulate
and are exercisable, in whole or in part, in any subsequent period but not later
than ten years from the date of the grant.
WorldPages.com also has a Non-Employee Director stock option plan, approved
by the stockholders, under which WorldPages.com grants an option to purchase
15,000 shares of common stock to each director who is neither an officer of
WorldPages.com nor compensated under any employment or consulting arrangements
(Non-Employee Director) upon their initial appointment as director and an
additional option to purchase 5,000 shares upon each subsequent re-election to
director. Under the plan, the option exercise price is the fair market value of
WorldPages.com's common stock on the date of the grant, and the options are
exercisable, on a cumulative basis, at 33 1/3% per year commencing on the first
anniversary date of the grant.
A summary of the stock option and warrant transactions under the plans for
the years ended December 31, 1999 and 1998, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- --------------------- --------------------
AVERAGE NUMBER OF AVERAGE NUMBER OF AVERAGE NUMBER OF
PRICE SHARES PRICE SHARES PRICE SHARES
-------- --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options and warrants outstanding at
beginning of year................. $6.96 3,960,312 $ 8.76 2,288,640 $ -- 0
Options and warrants granted........ $7.50 393,961 $ 9.89 4,116,172 $7.59 2,813,640
Options and warrants exercised...... $4.28 (366,634) $ -- -- $2.50 525,000
Options and warrants canceled....... $5.56 (181,116) $13.57 (2,444,500) $ -- 0
--------- ---------- ---------
Options and warrants outstanding at
end of year....................... $7.34 3,806,523 $ 6.96 3,960,312 $8.76 2,288,640
========= ========== =========
Exercisable at end of year.......... 3,110,826 1,580,377 107,561
========= ========== =========
</TABLE>
F-14
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
8. STOCK OPTIONS AND WARRANTS (CONTINUED)
Other information regarding stock options and warrants outstanding as of
December 31, 1999, is as follows:
<TABLE>
<CAPTION>
OPTIONS AND
OPTIONS AND WARRANTS OUTSTANDING WARRANTS EXERCISABLE
----------------------------------------------- ----------------------------
REMAINING
RANGE OF EXERCISE NUMBER OF CONTRACTUAL LIFE WEIGHTED AVERAGE NUMBER OF WEIGHTED AVERAGE
PRICE OPTIONS (YEARS) EXERCISE PRICE OPTIONS EXERCISE PRICE
- --------------------------- --------- ---------------- ---------------- --------- ----------------
<S> <C> <C> <C> <C> <C>
$2.50-$4.19................ 630,593 7.6 $ 2.54 537,260 $ 2.52
$4.50-$4.50................ 1,037,000 1.9 $ 4.50 932,793 $ 4.50
$4.67-$6.61................ 879,714 6.8 $ 6.46 601,933 $ 6.40
$6.96-$10.50............... 279,461 6.6 $ 8.32 189,667 $ 7.86
$14.00-$14.00.............. 979,755 5.2 $14.00 849,173 $14.00
--------- --- ------ --------- ------
$2.50-$14.00............... 3,806,523 5.2 $ 7.34 3,110,826 $ 7.32
========= === ====== ========= ======
</TABLE>
WorldPages.com accounts for the option plans using the intrinsic value
method. Under such method, no compensation expense has been recognized relating
to the stock options. Pro forma net earnings and net earnings per common share
in the following table were prepared as if WorldPages.com had accounted for its
stock options and warrants under the fair market value method.
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net loss--pro forma (in thousands).......................... $9,024 $6,059 $5,972
Net loss per share--pro forma............................... .45 .33 .73
</TABLE>
For the pro forma disclosures, the fair value of each option and warrant
grant is estimated at the date of the grant using an option pricing model with
the following assumptions: no expected dividends, risk-free interest rates of
6.0%, price volatility of 50% and expected lives of four years.
On December 13, 1998, WorldPages.com's Board of Directors approved the
re-pricing of approximately 2,125,000 options granted to key employees with a
weighted-average exercise price of $13.53. Under the terms of the re-pricing,
holders of the affected options received one new option for each two existing
options. The new options have an exercise price of $4.50 per share, which
represents the fair market value of WorldPages.com's stock on December 14, 1998.
In connection with the Acquisitions, WorldPages.com issued warrants to
purchase 756,078 shares of common stock at $6.61 per share and options to
purchase 598,500 shares of common stock at $14.00 per share (the IPO price). The
fair value of these options and warrants was determined to be $4,101,000 on the
date of grant, and was recorded as a component of the purchase price of the
Acquisitions.
During December 1997, WorldPages.com awarded two of its officers ten-year
options to purchase 300,000 shares of common stock at an exercise price of $2.50
per share which vested in full at the end of three months. Additionally, in
May 1997, WorldPages.com granted to one of its consultants a warrant for the
purchase of 7,561 shares of common stock at an exercise price of $2.65 per
share.
F-15
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
8. STOCK OPTIONS AND WARRANTS (CONTINUED)
During the year ended December 31, 1998 and 1997, WorldPages.com recognized
$1,760,000 and $870,000, respectively, of compensation expense related to these
options and warrants.
9. BENEFIT PLANS
WorldPages.com has a stock purchase plan whereby eligible employees may
elect to invest up to 10% of their salary and WorldPages.com contributes an
amount equal to 15% of each participant's contribution. WorldPages.com also has
a 401(k) plan whereby eligible employees may elect to contribute a portion of
their salary and WorldPages.com contributes an amount equal to 50% of employee
contributions up to 6% of the employee's base salary. WorldPages.com recognized
expense of $482,000 in 1999; $281,000 in 1998; and no expense in 1997 relating
to these plans.
10. LEASES
Certain sales and administrative offices and equipment are leased. The
leases expire at various dates through 2003. Leases that expire are generally
renewed or replaced by similar leases depending on business needs. Rent expense
for operating leases in 1999, 1998, and 1997 was $2,153,000, $1,370,000 and
$48,000, respectively. At December 31, 1999, WorldPages.com's future minimum
rental payments due under noncancelable operating leases were as follows:
$473,000 in 2000; $359,000 in 2001; $206,000 in 2002; $88,000 in 2003; $25,000
in 2004; and $0 thereafter.
11. PREFERRED STOCK
In connection with a strategic alliance with a utility company, which was
consummated with the IPO, WorldPages.com issued 142,857 shares of Series A
Redeemable Convertible Preferred Stock (Preferred Stock) with an aggregate
liquidation preference of $2.0 million. The Preferred Stock was convertible into
a like number of shares of common stock eighteen months after the consummation
of the IPO. In August 1999, the preferred stock was converted by the holder into
142,857 shares of WorldPages.com's common stock. The Preferred Stock did not pay
dividends and its holders were not entitled to vote in the election of
directors.
12. COMMITMENTS AND CONTINGENCIES
In August 1996, one of WorldPages.com's subsidiaries, Valu-Line of
Longview, Inc., entered into a written agreement with MCI Communications
Corporation under which, for a fee, MCI would provide access to Valu-Line so
that Valu-Line could provide services as a long distance carrier. After
execution of the written agreement, service failures by MCI occurred. To address
the service failures and MCI relocation of circuits serving Valu-Line,
representatives of Valu-Line and MCI agreed upon a reduced fee structure and
revised network architecture in order to provide restitution to Valu-Line and to
address the service quality issues. The resulting agreement reflecting the
reduced fee structure was never set forth in writing. Both before and after
WorldPages.com acquired Valu-Line, the payments made under the Valu-Line
contract with MCI were in accordance with the modified agreement. In
April-May 1999, after the acquisition of MCI by WorldCom, Inc., MCI
WorldCom, Inc., as the owner of the successor-in-interest to MCI, took the
position that ACG owed $2.9 million in delinquent amounts under the original
written contract, ignoring the modification to the contract between the parties.
MCI WorldCom and WorldPages.com have agreed to settle this matter in
arbitration.
F-16
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Management intends to actively pursue WorldPages.com's rights and defenses in
arbitration. See discussion of subsequent event in Note 15 to the consolidated
financial statements.
In July 1999, Loretta R. Cross, Chapter 7 Trustee for Total National
Telecommunications, Inc., filed an Adversary Proceeding against Lou Zant and
TRI, in the United States Bankruptcy Court for the Southern District of Texas.
The trustee's complaint seeks recovery of $2.6 million from TRI as a fraudulent
conveyance under the Bankruptcy Code. The complaint is based on an October 1,
1996 stock purchase agreement in which Total World Telecommunications, Inc., the
parent of Total National Telecommunications, agreed to purchase all the stock of
NETTouch Communications, Inc., from TRI and Mr. Zant. The trustee's complaint
alleges that Total National Telecommunications provided the funds to Total World
Telecommunications to complete and close the stock purchase and that Total
National Communications never received any consideration for its funds. TRI
intends to vigorously defend the action.
WorldPages.com is party to various legal actions, proceedings and claims
arising in the normal course of business. Some of the foregoing involve, or may
involve, claims for compensatory, punitive or other damages in material amounts.
Litigation is subject to many uncertainties, and it is possible that some of the
legal actions, proceedings and claims referred to above could be decided against
WorldPages.com. WorldPages.com's management believes that any resulting
liability will not materially affect WorldPages.com's financial position,
liquidity or results of operations
13. REPORTABLE SEGMENTS
WorldPages.com considers its directory operations as its only reportable
segment. The directory operations publish and distribute yellow
pages directories in various markets in Oklahoma, Texas and California. Prior to
November 1999, WorldPages.com had reported its telecommunications operations as
another segment. The telecommunications operations provided local, long distance
and other telecommunications services to customers in service areas of
Southwestern Bell and U S West. The different telecommunications services were
aggregated and classified as one reportable segment because they were considered
one segment in assessing performance and allocation of resources. The
telecommunications segment was sold in November 1999 and has been presented as
discontinued operations in the accompanying consolidated financial statements.
The costs associated with WorldPages.com's corporate overhead including, but
not limited to, executive salaries, salaries of shared administrative personnel
and the direct costs of company-wide programs, have been allocated to the
directory operations segment based on management's estimate of those costs
expected to be continuing after the sale of the telecommunications operations.
The administrative costs that will not continue after the sale of the
telecommunications segment have been allocated to the discontinued
telecommunications operations.
F-17
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL
----------- ----------- ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
1999
- ---------------------------------------
Revenues............................... $ 18,743 $ 14,481 $ 9,113 $ 7,650 $ 49,987
Operating income (loss)................ 3,391 (1,126) (537) (1,869) (141)
Net income (loss) from continuing
operations........................... 1,031 (1,250) (2,181) (967) (3,367)
Net loss from discontinued
operations........................... (7,378) -- -- -- (7,378)
Net loss on sale of discontinued
operations........................... (51,800) -- -- -- (51,800)
Total net loss......................... (58,147) (1,250) (2,181) (967) (62,545)
Net income (loss) per common share from
continuing operations................ 0.05 (0.06) (0.11) (0.05) (0.17)
Net loss per common share from
discontinued operations.............. (0.37) -- -- -- (0.37)
Net loss per common share from sale of
discontinued operations.............. (2.60) -- -- -- (2.60)
Total net loss per share............... (2.93) (0.06) (0.11) (0.05) (3.14)
Common shares used in per share
calculation.......................... 19,859 19,859 19,968 20,134 19,956
</TABLE>
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER TOTAL
----------- ----------- ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
1998
- ---------------------------------------
Revenues............................... $ 9,183 12$,809.... $ 8,255 $ 7,843 $ 38,090
Operating income (loss)................ (761) 1,596 (891) (2,139) (2,195)
Net income (loss)...................... (816) 501 (1,295) (2,162) (3,772)
Net loss from discontinued
operations........................... (308) (1,532) (2,396) (3,271) (7,507)
Total net loss......................... (1,124) (1,031) (3,691) (5,433) (11,279)
Net income (loss) per common share from
continuing operations................ (0.05) 0.03 (0.07) (0.11) (0.20)
Net loss per common share from
discontinued operations.............. (0.03) (0.09) (0.12) (0.17) (0.41)
Total net loss per share............... (0.08) (0.06) (0.19) (0.28) (0.61)
Common shares used in per share
calculation.......................... 15,269 19,616 19,616 19,822 18,594
</TABLE>
F-18
<PAGE>
WORLDPAGES.COM AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
15. SUBSEQUENT EVENTS (UNAUDITED)
On February 23, 2000, WorldPages.com completed the acquisitions of YPtel
Corporation, Web YP, Inc. and Big Stuff, Inc. by issuing 19,500,000 shares of
common stock. Also in connection with the transactions, WorldPages.com redeemed
its $15.0 million 5% notes in exchange for 2,864,000 shares of common stock and
refinanced its indebtedness. The new financing consists of $60 million of senior
revolving loan with Bank of America, N.A. and $20 million of 5% convertible
debentures issued to institutional investors led by funds managed by Palladin
Group, L.P. Approximately $53 million of the financing package has been used to
refinance existing indebtedness. The additional $27 million will be used for
working capital needs and other general corporate purposes. The senior revolving
credit facility bears interest at LIBOR plus a spread of 1.5% to 3.5% or the
prime rate plus a spread of up to 1.25% and expires in February 2005. The
convertible debentures, which are due in February 2006, are convertible into
shares of WorldPages.com's common stock at a conversion price of $15.63 per
share, subject to adjustment at the end of every six-month period during the
first two years of the term of the convertible debentures. The holders of the
convertible debentures also received warrants to purchase 572,350 shares of
WorldPages.com's common stock at an exercise price of $18.47 per share. The
convertible debentures also provide for options to issue up to an additional
$10 million of convertible debentures under similar terms and conditions.
Additionally in March 2000, WorldPages.com settled its dispute with MCI
WorldCom, Inc. The settlement did not have a material impact on WorldPages.com's
results of operations or its financial condition.
F-19
<PAGE>
WORLDPAGES.COM, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND FROM END OF
OF YEAR EXPENSES RESERVES YEAR
(In thousands) ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1999..................... $4,014 $4,246 $ 4,014(A) $4,246
Year ended December 31, 1998..................... $ -- $4,872 $ 858(A) $4,014
Year ended December 31, 1997..................... $ -- $ -- $ --(A) $ --
</TABLE>
- ------------------------
(A) Accounts charged off less recoveries.
F-20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report on Form 10-K
for the fiscal year ended December 31, 1999, to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLDPAGES.COM, INC.
By: /s/ RICHARD O'NEAL
-----------------------------------------
Richard O'Neal
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
/s/ MICHAEL A. PRUSS
-----------------------------------------
Michael A. Pruss
VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
(PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL
ACCOUNTING OFFICER)
Dated: March 28, 2000
II-1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard O'Neal and Michael A. Pruss, and each of
them (with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Annual Report on Form 10-K for the year ended
December 31, 1999 and any and all amendments to this report, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GEORGE ANDERSON
- ------------------------------ Director March 28, 2000
George Anderson
/s/ ROD K. CUTSINGER
- ------------------------------ Director March 28, 2000
Rod K. Cutsinger
/s/ ROBERT FLYNN
- ------------------------------ Director March 28, 2000
Robert Flynn
/s/ WILMOT MATTHEWS
- ------------------------------ Director March 28, 2000
Wilmot Matthews
/s/ DAVID MITCHELL
- ------------------------------ Director March 28, 2000
David Mitchell
/s/ RICHARD O'NEAL
- ------------------------------ Director March 28, 2000
Richard O'Neal
</TABLE>
II-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
2.1 Amended and Restated YPtel Agreement dated as of
October 26, 1999, by and among Advanced Communications
Group, Inc., YPtel Corporation, the shareholders of YPtel
Corporation listed on Exhibit "A" to the Amended and
Restated YPtel Agreement, The J.L.R. Family Trust, The
Paisley Family Trust, Edward Truant, Douglas G. McIntyre,
Stephen D. Lister, Jeffrey L. Rosenthal, Cold Trust, Global
Investment Trust, Freezer Trust, Storage Trust, Directory
Trust, Publisher Trust, and Imperial Capital Limited,
incorporated hereby by reference to Exhibit 2(b) of Advanced
Communications Group, Inc.'s Current Report on Form 8-K,
dated November 19, 1999, and filed with the Securities and
Exchange Commission on December 6, 1999.
2.2 Amended and Restated Acquisition Agreement dated as of
October 26, 1999, by and among Advanced Communications
Group, Inc., ACG Acquisition VI Corp., Web YP, Inc., Richard
O'Neal and Richard L. Reid, incorporated herein by reference
to Exhibit 2(c) of Advanced Communications Group, Inc.'s
Current Report on Form 8-K, dated November 19, 1999, and
filed with the Securities and Exchange Commission on
December 6, 1999.
2.3 Amended and Restated Acquisition Agreement dated as of
October 26, 1999, by and among Advanced Communications
Group, Inc., ACG Acquisition VII Corp., Big Stuff, Inc.,
Richard O'Neal and Richard L. Reid, incorporated herein by
reference to Exhibit 2(d) of Advanced Communications Group,
Inc.'s Current Report on Form 8-K, dated November 19, 1999,
and filed with the Securities and Exchange Commission on
December 6, 1999.
2.4 Stock Purchase Agreement by and among Advanced
Communications Group, Inc., Ionex Telecommunications Group,
Inc. (formerly known as Compass Telecommunications, Inc.),
Feist Long Distance Services, Inc., FirsTel, Inc., Telecom
Resources, Inc., and Valu-Line of Longview, Inc., dated
July 14, 1999, incorporated herein by reference to
Exhibit 2 to Advanced Communications Group, Inc.'s Current
Report on Form 8-K dated July 14, 1999 and filed with the
Securities and Exchange Commission on July 29, 1999.
2.5 First Amendment dated November 19, 1999 to the Stock
Purchase Agreement by and among Advanced Communications
Group, Inc., Ionex Telecommunications, Inc. (formerly known
as Compass Telecommunications, Inc.), Feist Long Distance
Services, Inc., FirsTel, Inc., Telecom Resources, Inc., and
Valu-Line of Longview, Inc., dated July 14, 1998,
incorporated herein by reference to Exhibit 2(a) to Advanced
Communications Group, Inc.'s Current Report on Form 8-K
dated November 19, 1999, and filed with the Securities and
Exchange Commission on December 6, 1999.
3(i) Restated Certificate of Incorporation, as amended, including
Certificate of Designation of Class B Voting Preferred
Stock, filed herewith.
3(ii) Bylaws as amended, filed herewith.
4(i)(a) Form of certificate representing WorldPages.com, Inc. common
stock, filed herewith.
4(i)(b) Reference is made to Articles IV and V, Sections 6 and 8 of
Article VI, Section 2 of Article VII and Section 3 of
Article VIII, of the Restated Certificate of Incorporation,
as amended, and the Certificate of Designation of the
Class B Voting Preferred Stock, all of which are filed as
Exhibit 3(i) of this Form 10-K.
4(i)(c) Reference is made to Articles II, VI and IX of the Bylaws as
amended, filed as Exhibit 3(ii) of this Form 10-K.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
4(i)(d) Exchange and Voting Trust Agreement dated as of
February 21, 2000 among Advanced Communications Group, Inc.,
ACG Holding Company, ACG Exchange Company, 1 + USA
V Acquisition Corp. and certain holders of YPtel Limited
shares as listed on Schedule A thereto and YPtel/ACG Pledge
Corporation and Montreal Trust Company of Canada, as
Trustee, filed herewith.
4(i)(e) Support Agreement dated as of February 21, 2000 among
Advanced Communications Group, Inc., ACG Holding Company,
ACG Exchange Company, 1 + USA V Acquisition Corp., certain
holders of shares of YPtel Limited as set out in Schedule A
thereto, and YPtel/ACG Pledge Corporation, filed herewith.
4(ii)(a) Loan Agreement among Great Western Directories, Inc., and
Bank of America National Trust and Savings Association, as
Administrative Agent for the Lenders, dated May 14, 1999,
incorporated herein by reference to Exhibit 10.49 of
Advanced Communications Group, Inc.'s Quarterly Report on
Form 10-Q for the period ended June 30, 1999, and filed with
the Securities and Exchange Commission on August 16, 1999.
4(ii)(b) First Amendment to Loan Agreement among Great Western
Directories, Inc., and Bank of America, N.A. (f/k/a Bank of
America National Trust and Savings Association), as
Administrative Agent for the Lenders, dated October 21,
1999, incorporated by reference to Exhibit 4(i)(b) to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
4(ii)(c) Second Amendment to Loan Agreement among Great Western
Directories, Inc., and Bank of America, N.A., as a Lender
and Administrative Agent, dated November 19, 1999,
incorporated by reference to Exhibit 4(i)(c) to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
4(ii)(d) Security Agreement among Great Western Directories, Inc.,
and Bank of America National Trust and Savings Association,
as Administrative Agent for the Lenders, dated May 14,
1999, incorporated herein by reference to Exhibit 10.50 of
Advanced Communications Group, Inc.'s Quarterly Report on
Form 10-Q for the period ended June 30, 1999, and filed with
the Securities and Exchange Commission on August 16, 1999.
4(ii)(e) Guarantee Agreement among Great Western Directories, Inc.,
and Bank of America National Trust and Savings Association,
as Administrative Agent for the Lenders, dated May 14, 1999,
incorporated herein by reference to Exhibit 10.51 of
Advanced Communications Group, Inc.'s Quarterly Report on
Form 10-Q for the period ended June 30, 1999, and filed with
the Securities and Exchange Commission on August 16, 1999.
4(ii)(f) First Amendment to Parent Guaranty among Advanced and Bank
of America, N.A., as a Lender and as Administrative Agent,
dated November 19, 1999, incorporated by reference to
Exhibit 4(i)(f) to WorldPages.com's Registration Statement
on Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
4(ii)(g) Pledge Agreement among Great Western Directories, Inc., and
Bank of America National Trust and Savings Association, as
Administrative Agent for the Lenders, dated May 14, 1999,
incorporated herein by reference to Exhibit 10.52 of
Advanced's Quarterly Report on Form 10-Q for the period
ended June 30, 1999 and filed with the Securities and
Exchange Commission on August 16, 1999.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
4(ii)(h) First Amendment to Parent Pledge Agreement among Great
Western Directories, Inc., and Bank of America National
Trust and Savings Association, as Administrative Agent for
the Lenders, dated June 30, 1999, incorporated by reference
to Exhibit 4(i)(h) to WorldPages.com's Registration
Statement on Form S-1 (333-30102) and filed with the
Securities and Exchange Commission on February 11, 2000.
10.1* Advanced Communications Group, Inc.'s 1997 Stock Awards
Plan, incorporated herein by reference to Exhibit 10.1 to
Advanced Communications Group, Inc.'s Registration Statement
on Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on October 10, 1997.
10.2* Form of Non-Qualified Stock Option Agreement, incorporated
herein by reference to Exhibit 10.1A to Advanced
Communications Group, Inc.'s Registration Statement on
Amendment No. 2 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on January 16, 1998.
10.3* Non-Qualified Stock Option Plan for Non-Employee Directors,
incorporated herein by reference to Exhibit 10.2 to Advanced
Communications Group, Inc.'s Registration Statement on
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on October 10, 1997.
10.4* Form of Employment Agreement between Great Western
Directories, Inc. and Richard O'Neal incorporated herein by
reference to Annex V to Exhibit 2.1 of Advanced
Communications Group, Inc.'s Registration Statement on
Amendment No. 1 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on December 29, 1997.
10.5* Employment Agreement between Advanced Communications Group,
Inc. and William H. Zimmer III, incorporated herein by
reference to Exhibit 10.17 to Advanced Communications Group,
Inc.'s Registration Statement on Amendment No. 1 to
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on December 29, 1997.
10.6* Termination Agreement between Advanced Communications Group,
Inc. and William H. Zimmer III, dated April 27, 1999,
incorporated by reference to Exhibit 10.7 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.7* Employment Agreement between Advanced Communications Group,
Inc. and James F. Cragg, incorporated herein by reference to
Exhibit 10.18 to Advanced Communications Group, Inc.'s
Registration Statement on Amendment No. 1 to Form S-1
(333-37671) as filed with the Securities and Exchange
Commission on December 29, 1997.
10.8* Termination Agreement between Advanced Communications Group,
Inc. and James F. Cragg, dated April 27, 1999, incorporated
by reference to Exhibit 10.9 to WorldPages.com's
Registration Statement on Form S-1 (333-30102) and filed
with the Securities and Exchange Commission on February 11,
2000.
10.9* Employment Agreement between Advanced Communications Group,
Inc. and Anthony Capers, dated March 31, 1998, incorporated
by reference to Exhibit 10.10 to WorldPages.com's
Registration Statement on Form S-1 (333-30102) and filed
with the Securities and Exchange Commission on February 11,
2000.
10.10* Modification of Employment Agreement between Advanced
Communications Group, Inc. and Anthony Capers, dated
December 6, 1998, incorporated by reference to
Exhibit 10.11 to WorldPages.com's Registration Statement on
Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
10.11* Second Modification of Employment Agreement between Advanced
Communications Group, Inc. and Anthony G. Capers, dated
May 5, 1999, incorporated by reference to Exhibit 10.12 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.12* Employment Agreement between Advanced Communications Group,
Inc. and Michael A. Pruss, dated November 19, 1999,
incorporated by reference to Exhibit 10.13 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.13* Form of Indemnification Agreement entered into between
Advanced Communications Group, Inc. and certain of its
executive officers and directors, incorporated herein by
reference to Exhibit 10.7 to Advanced Communications Group,
Inc.'s Registration Statement on Amendment No. 1 to
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on December 29, 1997.
10.14 Form of Series A Warrant issued to shareholders of Great
Western Directories, Inc., incorporated herein by reference
to Exhibit 10.9 to Advanced Communications Group, Inc.'s
Registration Statement on Form S-1 (333-37671) as filed with
the Securities and Exchange Commission on October 10, 1997.
10.15 Form of Series B Warrant issued to shareholders of Great
Western Directories, Inc., incorporated herein by reference
to Exhibit 10.10 to Advanced Communications Group, Inc.'s
Registration Statement on Form S-1 (333-37671) as filed with
the Securities and Exchange Commission on October 10, 1997.
10.16 Form of Series C Warrant issued to shareholders of Great
Western Directories, Inc., incorporated herein by reference
to Exhibit 10.11 to Advanced Communications Group, Inc.'s
Registration Statement on Form S-1 (333-37671) as filed with
the Securities and Exchange Commission on October 10, 1997.
10.17 Form of Series D Warrant issued to shareholders of Great
Western Directories, Inc. incorporated herein by reference
to Annex IV to Exhibit 2.1 to Advanced Communications Group,
Inc.'s Registration Statement on Form S-1 (333-37671) as
filed with the Securities and Exchange Commission on
October 10, 1997.
10.18 Form of Series E Warrant issued to certain shareholders of
Tele-Systems, Inc., incorporated herein by reference to
Exhibit 10.19 to Advanced Communications Group, Inc.'s
Registration Statement on Amendment No. 1 to Form S-1
(333-37671) as filed with the Securities and Exchange
Commission on December 29, 1997.
10.19 Form of Series F Warrant issued to certain shareholders of
Tele-Systems, Inc., incorporated herein by reference to
Exhibit 10.20 to Advanced Communications Group, Inc.'s
Registration Statement on Amendment No. 1 to Form S-1
(333-37671) as filed with the Securities and Exchange
Commission on December 29, 1997.
10.20 Form of Series G Warrant issued to certain shareholders of
Tele-Systems, Inc. incorporated herein by reference to
Annex IV to Exhibit 2.4 to Advanced Communications Group,
Inc.'s Registration Statement on Amendment No. 1 to
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on December 29, 1997.
10.21 Form of Series H Warrant issued to Daniel W. and Cheryl A.
Peters, incorporated herein by reference to Annex IV to
Exhibit 2.9 to Advanced Communications Group, Inc.'s
Registration Statement on Amendment No. 1 to Form S-1
(333-37671) as filed with the Securities and Exchange
Commission on December 29, 1997.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
10.22 Form of Series I Warrant issued to Daniel W. and Cheryl A.
Peters, incorporated herein by reference to Annex V to
Exhibit 2.9 to Advanced Communications Group, Inc.'s
Registration Statement on Amendment No. 1 to Form S-1
(333-37671) as filed with the Securities and Exchange
Commission on December 29, 1997.
10.23 Form of Series K Warrant issued to certain consultants,
incorporated herein by reference to Exhibit 10.25 to
Advanced Communications Group, Inc.'s Registration Statement
on Amendment No. 1 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on December 29, 1997.
10.24 Form of Series L Warrant issued to G. Edward Powell and Brad
K. Cutsinger, incorporated herein by reference to Exhibit
10.26 to Advanced Communications Group, Inc.'s Registration
Statement on Amendment No. 1 to Form S-1 (333-37671) as
filed with the Securities and Exchange Commission on
December 29, 1997.
10.25 Form of Series M Warrant issued to William McCaughey,
incorporated herein by reference to Exhibit 10.47 to
Advanced Communications Group, Inc.'s Registration Statement
on Amendment No. 3 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on February 12, 1998.
10.26 Series N Warrant issued to Robert F. Benton, filed herewith.
10.27* Series N Warrant issued to Rod K. Cutsinger, filed herewith.
10.28* Series N Warrant issued to Marvin C. Moses, filed herewith.
10.29 Form of Series P Warrant issued to Wilmot Matthews, filed
herewith.
10.30 Form of Series P Warrant issued to Nicholas J. Ross, filed
herewith.
10.31 Form of Series P Warrant issued to George Anderson, filed
herewith.
10.32 Form of Series P Warrant issued to Maxwell Gotlieb, filed
herewith.
10.33 Form of Series P Warrant issued to Robert Flynn, filed
herewith.
10.34 Warrant issued to Joseph C. Cook, incorporated herein by
reference to Exhibit 10.24 to Advanced Communications Group,
Inc.'s Registration Statement on Amendment No. 1 to
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on December 29, 1997.
10.35 Form of 5% Subordinated Note issued to shareholders of Great
Western Directories, Inc., incorporated herein by reference
to Annex III to Exhibit 2.1 to Advanced Communications
Group, Inc.'s Registration Statement on Form S-1 (333-37671)
as filed with the Securities and Exchange Commission on
October 10, 1997.
10.36 Note Redemption Agreement dated June 3, 1999, by and between
Advanced Communications Group, Inc. and Larry Baldwin,
incorporated by reference to Exhibit 10.39 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.37 Note Redemption Agreement dated June 3, 1999, by and between
Advanced Communications Group, Inc. and Ron Baldwin,
incorporated by reference to Exhibit 10.40 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.38 Note Redemption Agreement dated June 3, 1999, by and between
Advanced Communications Group, Inc. and Ronnie Emmanuel,
incorporated by reference to Exhibit 10.41 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
10.39 Note Redemption Agreement dated June 3, 1999, by and between
Advanced Communications Group, Inc. and Richard O'Neal,
incorporated by reference to Exhibit 10.42 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.40 Note Redemption Agreement dated June 3, 1999, by and between
Advanced Communications Group, Inc. and Steve Sparks,
incorporated by reference to Exhibit 10.43 to
WorldPages.com's Registration Statement on Form S-1
(333-30102) and filed with the Securities and Exchange
Commission on February 11, 2000.
10.41 Form of 10% Convertible Subordinated Note issued to
shareholders of FirsTel, Inc., incorporated herein by
reference to Annex III to Exhibit 2.4 to Advanced
Communications Group, Inc.'s Registration Statement on
Form S-1 (333-37671) as filed with the Securities and
Exchange Commission on October 10, 1997.
10.42 Sales Agreement Terms and Conditions dated July 16, 1997,
between Big Stuff, Inc. and Great Western Directories, Inc.,
incorporated herein by reference to Exhibit 10.16 to
Advanced Communications Group, Inc.'s Registration Statement
on Amendment No. 1 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on December 29, 1997.
10.43 Supplemental Letter dated December 22, 1997, from Big Stuff,
Inc. to Great Western Directories, Inc. regarding exclusive
marketing rights to WorldPages in certain areas,
incorporated herein by reference to Exhibit 10.16A to
Advanced Communications Group, Inc.'s Registration Statement
on Amendment No. 1 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on December 29, 1997.
10.44 Form of Stock Option and Put Agreement issued to Mark Beall,
incorporated herein by reference to Exhibit 10.48 to
Advanced Communications Group, Inc.'s Registration Statement
on Amendment No. 3 to Form S-1 (333-37671) as filed with the
Securities and Exchange Commission on February 12, 1998.
10.45 Consulting Agreement made and entered into as of July 14,
1999, by and between Advanced Communications Group, Inc. and
IONEX Telecommunications, Inc., f/k/a Compass
Telecommunications, Inc., incorporated by reference to
Exhibit 10.53 to WorldPages.com's Registration Statement on
Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
10.46 Directory Sales Agreement made and entered into as of
November 19, 1999, by and between Advanced Communications
Group, Inc. and IONEX Telecommunications, Inc., f/k/a
Compass Telecommunications, Inc., incorporated by reference
to Exhibit 10.54 to WorldPages.com's Registration Statement
on Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
10.47 Transitional Services Agreement made and entered into as of
November 19, 1999, by and between Advanced Communications
Group, Inc. and IONEX Telecommunications, Inc., f/k/a
Compass Telecommunications, Inc., incorporated by reference
to Exhibit 10.55 to WorldPages.com's Registration Statement
on Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
10.48 Advertising Agreement made and entered into as of
November 19, 1999, by and between Advanced Communications
Group, Inc. and IONEX Telecommunications, Inc., f/k/a
Compass Telecommunications, Inc., incorporated by reference
to Exhibit 10.56 to WorldPages.com's Registration Statement
on Form S-1 (333-30102) and filed with the Securities and
Exchange Commission on February 11, 2000.
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTIONS
- --------------------- ------------
<S> <C>
11. Computation of Earnings Per Share, filed herewith.
21. List of subsidiaries of WorldPages.com, Inc., filed
herewith.
23.1 Consent of KPMG LLP, filed herewith.
24. Powers of Attorney contained on the signature page.
27. Financial Data Schedule filed with the Securities and
Exchange Commission in EDGAR version only.
</TABLE>
- ------------------------
* Compensatory plan or management arrangement.
II-9
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "ADVANCED COMMUNICATIONS GROUP, INC.", CHANGING ITS NAME FROM
"ADVANCED COMMUNICATIONS GROUP, INC." TO "WORLDPAGES.COM, INC.", FILED IN
THIS OFFICE ON THE TWENTY-FOURTH DAY OF FEBRUARY, A.D. 2000, AT 10:01 O'CLOCK
A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2802188 8100 AUTHENTICATION: 0277764
001092804 DATE: 02-24-00
<PAGE>
CERTIFICATE OF AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION OF
ADVANCED COMMUNICATIONS GROUP, INC.
Advanced Communications Group, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"),
DOES HEREBY CERTIFY THAT:
I. The proposed amendment to the Corporation's Restated Certificate of
Incorporation set forth below was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
II. ARTICLE I is amended to read in its entirety as follows:
ARTICLE I
The name of the Corporation is: WorldPages.com, Inc.
IN WITNESS WHEREOF, we have hereunto set out our hands and seals as
President and Secretary, respectively, of the Corporation this 24th day of
February, 2000, and we hereby affirm that the foregoing Certificate of Amendment
of the Restated Certificate of Incorporation is our act and deed and the act and
deed of the Corporation and that the facts stated therein are true.
/s/ Richard A. O'Neal
---------------------------------
Richard A. O'Neal, President
ATTEST:
/s/ Michael A. Pruss
- -------------------------------
Michael A. Pruss, Secretary
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "ADVANCED COMMUNICATIONS GROUP, INC.", FILED IN THIS OFFICE ON
THE TWENTY-THIRD DAY OF FEBRUARY, A.D. 2000, AT 9:15 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2802188 8100 AUTHENTICATION: 0273041
001088681 DATE: 02-23-00
<PAGE>
CERTIFICATE OF DESIGNATIONS OF
CLASS B VOTING PREFERRED STOCK OF
ADVANCED COMMUNICATIONS GROUP, INC.
PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Advanced Communications Group, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, as amended, does HEREBY
CERTIFY that the following resolution has been duly adopted by the Board of
Directors of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation by the
provisions of the Restated Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation"), there
hereby is created, out of the 20,000,000 shares of Preferred Stock,
par value $0.0001 per share, of the Corporation authorized in
Article IV of the Certificate of Incorporation (the "Preferred
Stock"), a series of Preferred Stock of the Corporation, to be
designated "Class B Voting Preferred Stock," consisting of one (1)
share, which series shall have the following voting powers,
designations, preferences and relative, participating, optional and
other rights, and the following qualifications, limitations and
restrictions (in addition to the powers, designations, preferences
and relative, participant, optional and other rights, and the
qualifications, limitations and restrictions set forth in the
Certificate of Incorporation which are applicable to the Preferred
Stock):
SECTION 1. DESIGNATION AND SIZE OF ISSUE, RANKING.
(A) The designation of the series of Preferred Stock shall be
"Class B Voting Preferred Stock" (the "Class B Stock"), and the number
of shares constituting the Class B Stock shall be one (1) share.
(B) The share of Class B Stock which at any time has been
redeemed or otherwise reacquired by the Corporation shall, after such
redemption or other acquisition, resume the status of authorized and
unissued shares of Preferred Stock, without designation as to series
until such share is once more designated as part of a particular
series by the Board of Directors.
(C) The share of Class B Stock shall rank senior, as to
distribution of assets upon liquidation, to the shares of Common
Stock, par value $0.0001 per share, of the Corporation, (the "Common
Stock"), and junior to any future series of Preferred Stock or shares
of preference stock of the Corporation (the "Preference Stock") issued
by the Corporation after the effectiveness of this Certificate of
Designations that by its terms ranks senior to the Class B Stock.
SECTION 2. VOTING RIGHTS OF CLASS B STOCK.
(A) GENERAL. Except as otherwise required by law or the
Certificate of Incorporation, the holder of record of the share of
Class B Stock shall have a number of votes with respect to any matter,
proposition or question on which holders of Common Stock are entitled
to vote, consent or otherwise act, equal to the product of (i) the
number of shares of Common Stock for which the Exchangeable Shares
then issued and outstanding from time to time and held by Holders are
exchangeable, multiplied by (ii) the number of votes to which a holder
of one share of Common Stock is entitled with respect to such matter,
proposition or question. For the purposes hereof, (x) "Exchangeable
Shares" means the Class A Special Shares of ACG Exchange Company, a
Nova Scotia unlimited liability company ("ACG Exchange Company"), (y)
"Holders" means the registered holders from time to time of
Exchangeable Shares, other than
<PAGE>
Exchangeable Shares beneficially owned by the Corporation or its
Subsidiaries, and (z) "Subsidiary" in relation to any person, means
any body corporate, partnership, joint venture, association or other
entity of which more than 50% of the total voting power of shares of
stock or units of ownership or beneficial interest entitled to vote
in the election of directors (or members of a comparable governing
body) is owned or controlled, directly or indirectly, by such person.
(B) COMMON STOCK AND CLASS B STOCK IDENTICAL IN VOTING.
Except as otherwise required by law or the Certificate of
Incorporation, in respect of all matters concerning the voting of
shares of capital stock of the Corporation, the Common Stock (and any
other class or series of capital stock of the Corporation entitled to
vote generally with the Common Stock) and the Class B Stock shall vote
as a single class and, apart from the differing number of votes
attaching to the Class B Stock as set forth in Section 2(A) above,
such voting rights shall be identical in all respects.
SECTION 3. LIQUIDATION. In the event of any liquidation,
dissolution or winding-up of the Corporation, and subject to any prior
rights of holders of shares of any other series of Preferred Stock or
of any series of Preference Stock, if the Class B Stock is then
outstanding the holder thereof shall be entitled to receive, out of
the assets of the Corporation available for distribution to its
stockholders, an amount equal to $1.00 before any distribution is made
on the Common Stock or on any other stock of the Corporation ranking
junior to the Class B Stock as to distribution of assets on
liquidation, dissolution or winding-up. After payment of the full
amount of the above liquidation preference of the outstanding share of
Class B Stock, the holder of the share of Class B Stock shall not be
entitled to any further participation in any distribution of assets of
the Corporation. For the purposes of this Section 3, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration ) of all or substantially all of the
property or assets of the Corporation, nor the consolidation or merger
of the Corporation with or into one or more other entities, shall be
deemed to be a liquidation, dissolution or winding-up of the
Corporation.
SECTION 4. DIVIDENDS. The holder of the Class B Stock shall
not be entitled to receive any dividends, whether payable in cash, in
property or in shares of capital stock of the Corporation.
SECTION 5. CLASS B STOCK.
(A) Pursuant to the terms of that certain Amended and
Restated YPtel Agreement dated as of October 26, 1999 (the "YPtel
Agreement"), between the Corporation, YPtel Corporation ("YPtel"),
the shareholders of YPtel listed on Exhibit "A" to the YPtel
Agreement, Edward Truant, Douglas G. McIntyre, Jeffrey L. Rosenthal,
Stephen D. Lister, The J.L.R. Family Trust and The Paisley Family
Trust (collectively the "ICL Principals"), Cold Trust, Global
Investment Trust, Freezer Trust, Storage Trust, Directory Trust and
Publisher Trust (collectively the "Barbadian Trusts") (the
shareholders listed on Exhibit "A" to the YPtel Agreement, the ICL
Principals and the Barbadian Trusts are collectively referred to as
the "Shareholders"), and Imperial Capital Limited ("ICL"), one share
of Class B Stock is being issued to the Trustee (as hereinafter
defined) under the Exchange and Voting Trust Agreement made as of
February 18, 2000 among the Corporation, ACG Holding Company, a Nova
Scotia unlimited liability company, ACG Exchange Company, a Nova
Scotia unlimited liability company, 1 + USA V Acquisition Corp., a
corporation organized and existing under the laws of the State of
Delaware, certain holders of YPtel shares as set out on Schedule A
thereto, YPtel/ACG Pledge Corporation, an Ontario corporation, and
Montreal Trust Company of Canada, a trust company incorporated under
the laws of Canada (the "Trustee"), as may be amended from time to
time.
(B) The holder of the share of Class B Stock is entitled to
exercise the voting rights attendant thereto in such manner as
specified in the Exchange and Voting Trust Agreement.
<PAGE>
(C) At such time as the term of the Exchange and Voting Trust
Agreement shall end, being the earlier of the date when (i) no
outstanding Exchangeable Shares are held by a Holder, (ii) such
Agreement is terminated by mutual agreement as provided therein or
(iii) February 18, 2005, the Class B Stock shall be redeemed in
accordance with Section 7 hereof.
SECTION 6. CONVERSION OR EXCHANGE. The holder of the share of
Class B Stock shall not have any rights hereunder to convert such
share into, or exchange such share for, shares of any other series or
class of capital stock of the Corporation.
SECTION 7. REDEMPTION. The share of Class B Stock shall not
be subject to redemption, except that at such time as the term of the
Exchange and Voting Trust Agreement shall end, the Class B Stock shall
automatically be redeemed by the Corporation for an amount equal to
$1.00 due and payable upon such redemption.
SECTION 8. OTHER RIGHTS. The share of Class B Stock shall not
have any powers, preferences or relative, participating, optional or
other special rights, or qualifications, limitations or restrictions
other than as set forth herein.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested this 23rd day of February, 2000.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Richard A. O'Neal
-------------------------------
Richard A. O'Neal, Chairman
of the Board and Chief Executive Officer
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "ADVANCED COMMUNICATIONS GROUP, INC." FILED IN THIS OFFICE ON
THE EIGHTEENTH DAY OF FEBRUARY, A.D. 2000, AT 4:30 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2802188 8100 AUTHENTICATION: 0268860
001085509 DATE: 02-22-00
<PAGE>
CERTIFICATE ELIMINATING REFERENCE TO
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
FROM THE
RESTATED CERTIFICATE OF INCORPORATION
OF
ADVANCED COMMUNICATIONS GROUP, INC.
Pursuant to the provisions of Section 151 (g) of the General
Corporation Law of the State of Delaware, it is hereby certified that:
1. The name of the corporation is ADVANCED COMMUNICATIONS
GROUP, INC., (hereinafter referred to as the "Corporation").
2. The designation of the shares referred to as Series A
Redeemable Convertible Preferred Stock of the Corporation (hereinafter referred
to as the "Series A") to which this Certificate relates is hereby eliminated.
3. All of the voting powers, designations, preferences, and
the relative, participating, optional, or other rights, and the
qualifications, limitations, and restrictions of the said Series A stock were
provided for in a resolution adopted by the Board of Directors of the
Corporation pursuant to authority expressly vested in it by the provisions of
the Restated Certificate of Incorporation of the Corporation. A Certificate
of Designations setting forth the said resolution was filed with the
Secretary of State of the State of Delaware on February 17, 1998, pursuant to
the provisions of Section 151 (g) of the General Corporation Law of the State
of Delaware.
4. The Board of Directors of the Corporation has adopted
the following resolution:
WHEREAS, Section 2 of the Certificate of Designations of the
Series A Redeemable Convertible Preferred Stock (hereinafter referred
to as the "Series A") provides in relevant part that, "Shares of
Series A that are...converted into Common Stock shall be cancelled and
shall revert to authorized but unissued shares of Preferred Stock
undesignated as to series"; and
WHEREAS, all of the issued and outstanding Series A were
converted by the holder thereof into a like number of shares of Common
Stock on August 18, 1999;
WHEREAS, Section 151 (g) of the General Corporation Law of
the State of Delaware provides for the filing of a Certificate with
the Secretary of State of Delaware for the purpose of eliminating from
the Restated Certificate of Incorporation all reference to the
Series A Stock.
<PAGE>
NOW, THEREFORE, BE IT RESOLVED, that the proper officers of
the Corporation be and hereby are authorized and directed to file a
Certificate pursuant to the provisions of Section 151 (g) of the
General Corporation Law of the State of Delaware to effect the
elimination from the Restated Certificate of Incorporation all
references to the Series A Stock.
5. The effective time of this certificate shall be on the
filing date.
Signed on February 18, 2000.
/s/ Michael A. Pruss
--------------------------------------
Michael A. Pruss, Vice President,
Secretary and Chief Financial Officer
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS
FILED FROM AND INCLUDING THE RESTATED CERTIFICATE OF "ADVANCED COMMUNICATIONS
GROUP, INC." AS RECEIVED AND FILED IN THIS OFFICE.
THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:
RESTATED CERTIFICATE, FILED THE NINTH DAY OF OCTOBER, A.D. 1997, AT 3:10
O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE SEVENTEENTH DAY OF FEBRUARY, A.D.
1998, AT 12:30 O'CLOCK P.M.
CERTIFICATE OF DESIGNATION, FILED THE SEVENTEENTH DAY OF FEBRUARY, A.D.
1998, AT 12:31 O'CLOCK P.M.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2802188 8100X AUTHENTICATION: 0260238
001077366 DATE: 02-16-00
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
ADVANCED COMMUNICATIONS GROUP, INC.
The name of the corporation is Advanced Communications Group, Inc. (the
"Corporation"). The name of the Corporation as originally incorporated was
New ACG, Inc. The original certificate of incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware (the
"Secretary of State") on September 29, 1997 and amended by an instrument
filed with the Secretary of State on October 9, 1997 to change the
Corporation's name to Advanced Communications Group, Inc. This Restated
Certificate of Incorporation amends and restates the Corporation's original
certificate of incorporation, and amended, and was duly adopted in accordance
with Section 241 and Section 245 of the General Corporation Law of the State
of Delaware. The Corporation certifies that it has not authorized the
issuance of any of its stock or received any payment therefor.
ARTICLE I
The name of the Corporation is Advanced Communications Group, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, County of New
Castle, Wilmington, Delaware 19801. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
Section 1. AUTHORIZED CAPITAL. The Corporation shall be authorized to
issue two hundred million (200,000,000) shares of capital stock, of which one
hundred eighty million (180,000,000) shares shall be shares of Common Stock,
$.0001 par value per share ("Common Stock"), and twenty million (20,000,000)
shares shall be shares of Preferred Stock, $.0001 par value per share
("Preferred Stock").
Section 2. PREFERRED STOCK. The Board of Directors is hereby expressly
authorized, subject to any limitations prescribed by applicable law, to
provide from time to time for the issuance of shares of Preferred Stock in one
or more series, and to determine the number of shares of each series and to
fix for each series of Preferred Stock such voting powers, full or limited or
no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and such qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
<PAGE>
resolution or resolutions adopted by the Board of Directors or a duly
authorized committee thereof providing for the issue of such series.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(a) the designated number of shares of such series, which may
subsequently be increased or decreased (but not below the number of
shares of that series then outstanding) by resolution of the Board of
Directors, without the consent of the holders of any outstanding shares
of Common Stock or Preferred Stock, and the distinctive designation
thereof;
(b) the voting powers, full or limited, if any, of the shares of
such series;
(c) the rights in respect of dividends on the shares of such
series, whether dividends shall be cumulative and, if so, from which
date or dates and the relative rights of priority, if any, of payment of
dividends on shares of such series and any limitations, restrictions or
conditions on the payment of dividends;
(d) the terms and conditions (including the price or prices which
may vary under different conditions and at different redemption dates),
if any, upon which all or any part of the shares of such series may be
redeemed, and any limitations, restrictions or conditions on such
redemption;
(e) the terms, if any, upon which the shares of such series shall
be convertible into or exchangeable for shares of any other class,
classes, or series, or other securities, whether or not issued by the
Corporation;
(f) the relative amounts, and the relative rights or priority, if
any, or payment in respect to shares of such series, which the holders
of the shares of such series shall be entitled to receive upon
liquidation, dissolution or winding up of the Corporation;
(g) the terms, if any, of any purchase, retirement or sinking fund
to be provided for the shares of such series;
(h) the restrictions, limitations and conditions, if any, upon
issuance of indebtedness and shares of the same series or of any other
class or series of the Corporation during the period any shares of such
series are outstanding; and
-2-
<PAGE>
(i) any other preferences and relative, participating, optional or
other rights or limitations not inconsistent with applicable law, the
provisions of this ARTICLE IV or any resolution of the Board of
Directors, or a duly authorized committee thereof, pursuant thereto.
Section 3. REACQUIRED STOCK. Subject to the requirements of applicable
law, shares of any series of Preferred Stock which have been redeemed or
converted, or which have been issued and reacquired in any manner, and
retired shall have the status of authorized and unissued shares of Preferred
Stock and may be reissued by the Board of Directors as shares of the same or
any other series of Preferred Stock.
Section 4. NO PREEMPTIVE RIGHTS. No holder of any shares of Common Stock
or series of Preferred Stock, or any other security, option, warrant or right
issued by the Corporation, shall have any preemptive rights to subscribe to
any additional shares of Common Stock or any series of Preferred Stock, or
any other security, option, warrant or right issued by the Corporation, or
any security convertible into any series of Common Stock or Preferred Stock,
or any other security, option, warrant or right when now or hereinafter
authorized or issued by the Corporation, PROVIDED, HOWEVER, subject to the
rights of any holder of Common Stock or any series of Preferred Stock, that
pursuant to a resolution or resolutions adopted by the Board of Directors, or
any duly authorized committee thereof, the Corporation may issue and dispose
of any securities (including, without limitation, Common Stock and Preferred
Stock) convertible into or carrying options, warrants or other rights to
purchase or otherwise acquire any other security or securities of the
Corporation to such persons or other entities and upon such terms and for
such consideration as the Board of Directors may determine and as may be
permitted by applicable law, without offering any such securities, either in
whole or in part, to the existing holders of any security of the Corporation.
Section 5. EXCLUSIVE RIGHTS OF COMMON STOCK. Subject to the rights of
the holders of any series of Preferred Stock, and except as otherwise
provided by law, the Common Stock shall have the exclusive right to vote for
the election of directors of the Corporation (each a "Director") and for all
other purposes. The number of authorized shares of Common Stock and Preferred
Stock may be increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a
majority in voting power of the stock of the Corporation entitled to vote
thereon irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of the State of Delaware (or any successor provision
thereto), and no vote of the holders of either the Common Stock or the
Preferred Stock voting separately as a class shall be required therefor.
Section 6. VOTING RIGHTS OF COMMON STOCK. Each outstanding share of
Common Stock shall entitle the holder thereof to one vote on each matter
properly submitted to the stockholders of the Corporation for their vote,
consent, waiver, release or other action.
-3-
<PAGE>
Section 7. RECORD HOLDERS. The Corporation shall be entitled to treat
the person in whose name any share of its stock is registered in the records
of the Corporation, or with any agent of the Corporation employed as the
stock transfer agent of the Corporation, as the owner thereof for all
purposes, and the Corporation shall not be bound to recognize any equitable
or other claim to, or interest in, such share on the part of any other person
or entity, whether or not the Corporation shall have notice of such claim,
except as expressly provided by applicable law.
ARTICLE V
Section 1. ANNUAL MEETINGS OF STOCKHOLDERS. The annual meetings of
stockholders of the Corporation (each a "Stockholder" and collectively,
"Stockholders") shall be held on such date and at such place and time as may
be fixed by resolution of the Board of Directors.
Section 2. CALLING OF SPECIAL MEETINGS OF STOCKHOLDERS. Subject to the
rights of the holders of any series of Preferred Stock, and to the
requirements of applicable law, special meetings of Stockholders may be
called only by either (a) the Chairman of the Board of Directors, or (b) by
the Board of Directors pursuant to be resolution adopted by a majority of the
total number of Directors which the Corporation would have if there were no
vacancies or unfilled newly-created directorships (the "Whole Board").
Notwithstanding any other provisions of this Restated Certificate of
Incorporation, and notwithstanding that a lesser percentage may be permitted
from time to time by applicable law, no provision of this Section 2 of
ARTICLE V may be altered, amended or repealed in any respect, nor may any
provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal or adoption is approved by the affirmative vote of the
holders of at least 80 percent of the combined voting power of the then
outstanding shares of the Corporation's stock entitled to vote generally in
the election of Directors ("Voting Stock"), voting together as a single class.
Section 3. CHAIRMAN OF STOCKHOLDER MEETINGS. Each annual and special
meeting of Stockholders shall be presided over by a Chairman, who shall have
the exclusive authority to, among other things, determine (a) whether
business and nominations have been properly brought before such meetings, and
(b) the order in which business and nominations properly brought before such
meeting shall be considered. The Chairman of each annual and special meeting
shall be the Chairman of the Board of Directors, or such person as shall be
appointed by the resolution approved by the majority of the Board of
Directors.
Notwithstanding any other provisions of this Restated Certificate of
Incorporation, and notwithstanding that a lesser percentage may be permitted
from time to time by applicable law, no provision of this Section 3 of
ARTICLE V may be altered, amended or repealed in any respect, nor may any
provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal
-4-
<PAGE>
or adoption is approved by the affirmative vote of the holders of at least 80
percent of the combined voting power of the outstanding shares of Voting
Stock, voting together as a single class.
Section 4. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS.
(i) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the
Stockholders may be made at an annual meeting of Stockholders (A)
pursuant to the Corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any Stockholder who
was a Stockholder of record at the time of giving of notice provided
for in this Section, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section.
(ii) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
Section 4(a)(i)(C) of this ARTICLE V, the Stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation and such other business must otherwise be a proper matter
for Stockholder action. To be timely, a Stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; PROVIDED,
HOWEVER, that in the event that the date of the annual meeting is
more than 30 days before or more than 60 days after such anniversary
date, notice by the Stockholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later
of the 60th day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time
period for the giving of a Stockholder's notice as described above.
Such Stockholder's notice shall set forth:
(A) as to each person whom the Stockholder
proposes to nominate for election or reelection as a
Director all information relating to such person that is
required to be disclosed in solicitations of proxies for
election of Directors in an election contest, or is
otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Rule 14a-11 thereunder (including
-5-
<PAGE>
such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if
elected);
(B) as to any other business that the Stockholder
proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting
and any material interest in such business of such
Stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and
(C) as to the Stockholder giving the notice and
the beneficial owner, if any, on whose behalf the
nomination or proposal is made (1) the name and address of
such Stockholder, as they appear on the Corporation's
books, and of such beneficial owner, (2) the class and
number of shares of the Corporation which are owned
beneficially and of record by such Shareholder and such
beneficial owner, and (3) whether the proponent intends
(or is part of a group which intends) to solicit proxies
from other stockholders in support of such nomination or
proposal.
(iii) Notwithstanding anything in the second sentence
of Section 4(a)(ii) of this ARTICLE V to the contrary, in the event
that the number of Directors to be elected to the Board of Directors
is increased and there is no public announcement by the Corporation
naming all of the nominees for Director or specifying the size of
the increased Board of Directors at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a Stockholder's
notice required by this Section shall also be considered timely, but
only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public
announcement is first made by the Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of Stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of
meeting. Nominations of persons for election to the Board of Directors
may be made at a special meeting of Stockholders at which Directors are
to be elected pursuant to the Corporation's notice of meeting (a) by or
at the direction of the Board of Directors or (b) provided that the
Board of Directors has determined that Directors shall be elected at
such meeting, by any Stockholder who is a Stockholder of record at the
time of giving of notice provided for in this Section 4, who shall be
entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 4. In the event the Corporation
calls a special meeting of Stockholders for the purpose of electing one
or
-6-
<PAGE>
more Directors to the Board of Directors, any such Stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
Stockholder's notice required by Section 4(a)(ii) of this ARTICLE V
shall be delivered to the Secretary at the principal executive offices
of the Corporation not earlier than the close of business on the 90th
day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or
the tenth day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall
the public announcement of an adjournment of a special meeting commence
a new time period for the giving of a Stockholder's notice as described
above.
(c) GENERAL.
(i) Only such persons who are nominated in accordance
with the procedures set forth in this Section 4 shall be eligible to
serve as Directors and only such business shall be conducted at a
meeting of Stockholders as shall have been brought before the meeting
in accordance with the procedures set forth in this Section 4. Except
as otherwise provided by applicable law, the Chairman of the meeting
shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set
forth in this Section 4 and, if any proposed nomination or business
is not in compliance with this Section 4, to declare that such
defective proposal or nomination shall be disregarded.
(ii) For purposes of this Section 4, "public
announcement" shall mean disclosure in a press release reported by the
Dow Jones News Service, Associated Press or comparable national news
service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d)
of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Section 4, a Stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this
Section 4. Nothing in this Section 4 shall be deemed to affect any
rights.
(A) of Stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 under the Exchange Act; or
-7-
<PAGE>
(B) of the holders of any series of Preferred Stock
to elect Directors under specified circumstances.
Notwithstanding any other provisions of this Restated Certificate of
Incorporation, and notwithstanding that a lesser percentage may be permitted
from time to time by applicable law, no provision of this Section 4 of
ARTICLE V may be altered, amended or repealed in any respect, nor may any
provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal or adoption is approved by the affirmative vote of the
holders of at least 80 percent of the combined voting power of the then
outstanding shares of Voting Stock, voting together as a single class.
Section 5. ELECTION OF DIRECTORS.
(a) METHOD OF ELECTION. Election of Directors at all
meetings of the Stockholders at which Directors are to be elected
need not be by written ballot and instead may be made by voice vote.
(b) REQUIRED VOTE. At all meetings of Stockholders at which
Directors are to be elected, a plurality of the combined voting
power of the then outstanding shares of Voting Stock cast thereat
shall elect Directors. Each share of Common Stock shall be entitled
to one vote, in person or by proxy. Each share of any series of
Preferred Stock shall be entitled to that number of votes as
designated by the Board of Directors in the resolution establishing
such issuance or series. Cumulative voting for the election of
Directors is expressly not permitted.
Section 6. ELECTIONS OTHER THAN FOR DIRECTORS.
(a) METHOD OF VOTING. Unless and except to the extent that
the By-Laws of the Corporation shall so require, all voting by
Stockholders, except the election of Directors of the Corporation,
need not be by written ballot and instead may be made by voice vote.
(b) REQUIRED VOTE. Subject to the rights of holders of any
series of Preferred Stock, and except as otherwise provided by law,
applicable stock exchange rules or this Restated Certificate of
Incorporation, in all matters other than the election of Directors,
the affirmative vote of a majority of the shares present in person
or represented by proxy at the meeting and entitled to vote on the
matter shall be the act of the Stockholders.
Section 7. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS. To
the extent required by applicable law, the Board of Directors by resolution
shall appoint one or more inspectors, which inspector or inspectors may
include individuals who serve the Corporation in other capacities,
-8-
<PAGE>
including, without limitation, as officers, employees, agents or
representatives, to act at the meetings of Stockholders and make a written
report thereof. One or more persons may be designated as alternate inspectors
to replace any inspector who fails to act. If not inspector or alternate has
been appointed to act or is able to act at a meeting of Stockholders, the
Chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter
upon which the Stockholders will vote at a meeting.
Section 8. STOCKHOLDER INSPECTION OF CORPORATE RECORDS. Except as
otherwise provided by applicable law, the Board of Directors shall have the
power to determine from time to time whether and, if allowed, under what
conditions, circumstances and regulations the books and records of the
Corporation shall be open to inspection by the Stockholders, and the
Stockholders' ability to inspect any of the books and records or any other
document of the Corporation are and shall be restricted or limited according
to the determination of the Board of Directors.
Section 9. NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Subject to the
rights of the holders of any series of Preferred Stock, any action required
or permitted to be taken by the Stockholders must be effected at a duly
called annual or special meeting of Stockholders and may not be effected
without such a meeting by any consent in writing by such holders.
Notwithstanding any other provisions of this Restated Certificate of
Incorporation, and notwithstanding that a lesser percentage may be permitted
from time to time by applicable law, no provision of this Section 9 of
ARTICLE V may be altered, amended or repealed in any respect, nor may any
provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal or adoption is approved by the affirmative vote of the
holders of at least 80 percent of the combined voting power of the then
outstanding shares of Voting Stock, voting together as a single class.
Notwithstanding any other provision of this Restated Certificate of
Incorporation, Section 9 of ARTICLE V shall only become effective upon the
consummation of the Corporation's initial underwritten public offering of its
Voting Stock.
-9-
<PAGE>
ARTICLE VI
Section 1. CORPORATE GOVERNANCE. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors.
Section 2. NUMBER. Subject to the rights of the holders of any series of
Preferred Stock, the number of Directors constituting the Whole Board of
Directors shall not be less than three nor more than twelve. Subject to the
rights of the holders of any series of Preferred Stock, the number of
Directors shall be fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the Whole Board.
Section 3. QUALIFICATIONS.
(a) No person shall be nominated for election, nor elected,
as a Director of the Corporation if such person (i) has attained the
age of 80 as of such nomination or election, or (ii) will attain the
age of 80 prior to the expiration of the term of office he is being
nominated or elected for.
(b) No person may be a Director of the Corporation after
conviction of any offense under applicable law punishable by a term
of imprisonment exceeding one year or by death during the period
after such conviction that such person in connection with such
conviction is incarcerated, on parole, subject to court order or
supervision, or subject to supervision of any agency of a state or
the federal government.
Section 4. TENURE. Commencing with the first annual meeting of
Stockholders, the Directors, other than those who may be elected by the
holders of any series of Preferred Stock, shall be divided, with respect to
the time for which they severally hold office, into three classes, as nearly
equal in number as is reasonably possible, with the term of office of the
first class to expire at the second annual meeting of Stockholders, the term
of office of the second class to expire at the third annual meeting of
Stockholders and the term of office of the third class to expire at the
fourth annual meeting of Stockholders, with each Director to hold office
until his or her successor shall have been duly elected and qualified. At
each annual meeting of Stockholders, commencing with the second annual
meeting, (i) Directors elected to succeed those Directors whose terms then
expire shall be elected for a term of office to expire at the third
succeeding annual meeting of Stockholders after their election, with each
Director to hold office until his or her successor shall have been duly
elected and qualified, and (ii) if authorized by a resolution of the Board
of Directors, Directors may be elected to fill any vacancy on the Board of
Directors, regardless of how such vacancy shall have been created.
Section 5. VACANCIES. Subject to applicable law and the rights of the
holders of any series of Preferred Stock, vacancies resulting from death,
resignation, retirement, disqualification,
-10-
<PAGE>
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of Directors, may be filled by the
affirmative vote of a majority of the remaining Directors, though less than a
quorum of the Board of Directors, and Directors so chosen shall hold office
for a term expiring at the annual meeting of Stockholders at which the term
of office of the class to which they have been elected expires and until such
Director's successor shall have been duly elected and qualified. No decrease
in the number of authorized Directors constituting the Whole Board shall
shorten the term of any incumbent Director.
Section 6. REMOVAL. Subject to the rights of the holders of any series
of Preferred Stock, and Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 80 percent of the combined voting
power of the then outstanding shares of Voting Stock, voting together as a
single class.
Section 7. RIGHTS OF CLASSES SEPARATELY TO ELECT DIRECTORS.
Notwithstanding anything else contained in this Restated Certificate of
Incorporation, whenever holders of any one or more series of Preferred Stock
shall have the right, voting separately by class, classes or series, to elect
Directors at any annual or special meeting of Stockholders, the election,
term of office, filling of vacancies and other features of such directorships
shall be governed by the provisions of this Restated Certificate of
Incorporation, including any applicable resolutions of the Board of Directors
adopted pursuant to ARTICLE IV hereof. Directors so elected shall not be
divided into classes and shall be elected by such holders annually unless
expressly provided otherwise by those provisions or resolutions, and, during
the prescribed terms of office of those Directors, the Board of Directors
shall consist of a number of Directors equal to the number of those Directors
plus the number of Directors determined as provided in Section 2 of ARTICLE VI.
Section 8. AMENDMENT. Notwithstanding any other provisions of this
Restated Certificate of Incorporation, and notwithstanding that a lesser
percentage may be permitted from time to time by applicable law, no provision
of this ARTICLE VI may be altered, amended or repealed in any respect, nor
may any provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal or adoption is approved by affirmative vote of the holders
of at least 80 percent of the combined voting power of the then outstanding
shares of Voting Stock, voting together as a single class.
ARTICLE VII
Section 1. DIRECTOR AMENDMENT OF BY-LAWS. In furtherance and not in
limitation of the powers conferred by applicable law, the Board of Directors
is expressly authorized and empowered to make, alter amend and repeal any or
all of the provisions of the By-Laws of the Corporation by a majority vote at
any regular or special meeting of the Board of Directors or by written
consent.
-11-
<PAGE>
Section 2. STOCKHOLDER AMENDMENT OF BY-LAWS. Stockholders shall have
the power to make, alter, amend and repeal the By-Laws of the Corporation by
the affirmative vote of the holders of at least 80 percent of the combined
voting power of the then outstanding shares of Voting Stock, voting together
as a single class.
ARTICLE VIII
Section 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A Director of
the Corporation shall not be personally liable to the Corporation or its
Stockholders for monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of loyalty to
the Corporation or its Stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the Director derived an
improper personal benefit. No amendment, alteration or repeal of, nor the
adoption of any provision inconsistent with, any provision of this Section 1
of ARTICLE VIII, which shall in any manner increase the actual or potential
liability of any Director of the Corporation, shall apply to or have any
effect on the liability or alleged liability of any such Director for or with
respect to actions or omissions of such Director occurring prior to such
amendment, alteration, repeal or adoption.
Section 2. INDEMNIFICATION AND INSURANCE
(a) RIGHT TO INDEMNIFICATION. Each person who was or
is made a party or is threatened to be made to be made a party to or
is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a Director or
officer of the Corporation or, while a Director or officer of the
Corporation, is or was serving at the request of the Corporation as
a Director, officer, employee or agent of another corporation or of
a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a
Director, officer, employee or agent or in any other capacity while
serving as a Director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended, against
all expense, liability and loss (including attorneys' fees,
judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a Director or officer
and shall inure to the benefit of his or her heirs, executors and
administrators; PROVIDED, HOWEVER, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or
part
-12-
<PAGE>
thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the Board of Directors. The right to
indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its
final disposition; PROVIDED, HOWEVER, that, if the General
Corporation Law of the State of Delaware requires, the payment of
such expenses incurred by a Director or officer in his or her
capacity as a Director or officer (and not in any other capacity in
which service was or is rendered by such person while a Director or
officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of a proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such Director or officer, to repay all amounts so advanced
if it shall ultimately be determined that such Director or officer
is not entitled to be indemnified under this Section or otherwise.
The Corporation may, by action of the Board of Directors, provide
indemnification to employees and agents of the Corporation with the
same scope and effect as the foregoing indemnification of Directors
and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation
within 30 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim
and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it
permissible under the General Corporation Law of the State of
Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its Stockholders)
to have made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth
in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its Stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met
the applicable standard of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification
and the payment of expenses incurred in defending a proceeding in
advance of its final disposition conferred in this Section shall not
be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of this Restated Certificate of
Incorporation,
-13-
<PAGE>
By-Laws, agreement, vote of Stockholders or disinterested Directors
of the Corporation or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any Director, officer, employee or
agent of the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under
the General Corporation Law of the State of Delaware.
(e) AMENDMENT. No amendment, alteration or repeal of, nor
the adoption of any provision inconsistent with, any provision of
Section 2 of ARTICLE VIII, which shall in any manner increase the
actual or potential liability of any Director of the Corporation
shall apply to or have any effect on the liability or alleged
liability of any such Director for or with respect to actions or
omissions of such Director occurring prior to such amendment,
alteration, repeal or adoption.
Section 3. AMENDMENT. Notwithstanding any other provisions of this
Restated Certificate of Incorporation, and notwithstanding that a lesser
percentage may be permitted from time to time by applicable law, no provision
of this ARTICLE VIII may be altered, amended or repealed in any respect, nor
may any provision inconsistent therewith be adopted, unless such alteration,
amendment, repeal or adoption is approved by the affirmative vote of the
holders of at least 80 percent of the combined voting power of the then
outstanding shares of Voting Stock, voting together as a single class.
ARTICLE IX
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Restated
Certificate of Incorporation, and any other provisions authorized by the laws
of the State of Delaware at the time in force may be added or inserted, in
the manner now or hereafter prescribed by applicable law; and all rights,
preferences and privileges of whatsoever nature conferred upon Stockholders,
Directors or any other persons whomsoever by and pursuant to this Restated
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this ARTICLE IX.
-14-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by Rod K. Cutsinger, its Chairman
of the Board, President and Chief Executive Officer, this 9th day of October,
1997.
By: /s/ Rod K. Cutsinger
-------------------------
Rod K. Cutsinger
-15-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Advanced Communications Group, Inc., a corporation
organized and existing under and by virtue of the General Corporation
Law of the State of Delaware (the "Company"), DOES HEREBY CERTIFY:
FIRST: That pursuant to Section 242(b) of the General
Corporation Law of the State of Delaware ("GCL"), the directors of
the Company duly and unanimously adopted resolutions proposing the
amendment of the Restated Certificate of Incorporation of the Company
filed October 9, 1997 (the "Restated Certificate"), declaring such
amendments to be advisable and submitting such amendment to the sole
stockholder for consideration, and the sole shareholder of the
Company approved such resolutions by written consent pursuant to
Section 228 of the GCL. The resolutions setting forth the amendment
are as follows:
RESOLVED, that the Restated Certificate be amended by
changing Article VI, Section 3, by deleting the word
"twelve" and substituting the word "fourteen"; and further
RESOLVED, that Article VI, Section 4, of the Restated
Certificate be amended by deleting such section and replacing
it in its entirety by the following:
Section 4. TENURE. Effective upon the due consummation of the
Corporation's initial underwritten public offering of its
Voting Stock, the Directors, other than those who may be
elected by the holders of any series of Preferred Stock, shall
be divided, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as
is reasonably possible, with the term of office of the first
class to expire at the next annual meeting of Stockholders
thereafter, the term of office of the second class to expire
at the second annual meeting of Stockholders thereafter and
the term of office of the third class to expire at the third
annual meeting of Stockholders thereafter, with each Director
to hold office until his or her successor shall have been duly
elected and qualified. At each annual meeting of Stockholders,
commencing with such first annual meeting after such
<PAGE>
initial underwritten public offering, (i) Directors elected to
succeed those Directors whose terms then expire shall be elected
for a term of office to expire at the third succeeding annual
meeting of Stockholders after their election, with each Director
to hold office until his or her successor shall have been duly
elected and qualified, and (ii) if authorized by a resolution of
the Board of Directors, Directors may be elected to fill any
vacancy on the Board of Directors, regardless of how such
vacancy shall have been created.
SECOND: That said amendment was duly proposed and adopted in accordance
with the provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
by William H. Zimmer III, its Executive Vice President, as of the 17th day of
February, 1998.
Advanced Communications Group, Inc.
By: /s/ William H. Zimmer III
------------------------------
Name: William H. Zimmer III
Title: Executive Vice President
-2-
<PAGE>
CERTIFICATE OF DESIGNATIONS
OF
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
OF
ADVANCED COMMUNICATIONS GROUP, INC.
Advanced Communications Group, Inc., a Delaware corporation (the
"Corporation"), does hereby certify that the following resolution was duly
adopted on February 11, 1998 by the Board of Directors of the Corporation
(the "Board of Directors") at a meeting duly convened and held pursuant to
authority conferred upon the Board of Directors by the provisions of the
Certificate of Incorporation of the Corporation that authorize the issuance
of up to 20,000,000 shares of preferred stock, par value $.0001 per share
("Preferred Stock"):
BE IT RESOLVED, that the issuance of a series of Preferred Stock of
Advanced Communications Group, Inc. (the "Corporation") is hereby
authorized, and the designation, powers, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions thereof, of the shares of said series, in
addition to those set forth in the Certificate of Incorporation of the
Corporation, are hereby fixed as follows:
SECTION 1. DESIGNATION. The distinctive serial designation of said
series shall be "Series A Redeemable Convertible Preferred Stock"
(hereinafter called "Series A"). Each share of Series A shall be
identical in all respects with all other shares of Series A.
SECTION 2. NUMBER OF SHARES. The number of shares in Series A shall
be 142,857, which number may from time to time be increased (but not
in excess of the total number of authorized shares of Preferred
Stock) or decreased (but not below the number of shares of Series A
then outstanding) by the Board of Directors. Shares of Series A that
are redeemed, purchased or otherwise acquired by the Corporation or
converted into Common Stock shall be cancelled and shall revert to
authorized but unissued shares of Preferred Stock undesignated as to
series.
SECTION 3. DEFINITIONS. As used herein with respect to Series A, the
following terms shall have the following meanings:
(a) The term "junior stock" shall mean the Common Stock and any
other class or series of stock of the Corporation hereafter
authorized over which Series A has preference or priority in the
distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
(b) The term "parity stock" shall mean any other class or series of
stock of the Corporation hereafter authorized which ranks on a
parity with Series A in the distribution of assets on any
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.
(c) The term "senior stock" shall mean any other class or series of
stock of the Corporation hereafter authorized which ranks ahead
of the Series A in the distribution of assets on any voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation.
(d) The term "business day" shall mean each Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in
New York City are not authorized or obligated by law or
executive order to close.
SECTION 4. DIVIDENDS. The holders of shares of Series A shall not be
entitled to receive, nor shall the Board of Directors declare,
dividends on the shares of Series A.
SECTION 5. LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the Corporation, then, before any distribution or payment shall be
made to the holders of any junior stock, but after all distributions
and payments shall be made to the holders of senior stock, the
holders of shares of Series A shall be entitled to be paid in full an
amount equal to $14.00 per share (the "Liquidation Amount").
<PAGE>
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the assets
distributable to the holders of Series A and the holders of all
parity stock shall be insufficient to permit the payment in full to
such holders of all preferential amounts payable to them, then the
entire assets of the Corporation then distributable, after
distribution of amounts payable with respect to the senior stock,
shall be distributed ratably among the holders of Series A and the
holders of all parity stock in proportion to the respective amounts
that would be payable on a per share basis if such assets were
sufficient to permit payment in full of all preferential amounts.
If the Liquidation Amount shall have been paid in full to each holder
of shares of Series A, the remaining assets of the Corporation shall
be distributed among the holders of junior stock, according to their
respective rights and preferences and in each case according to their
respective numbers of shares.
For the purposes of this Section 5, the consolidation or merger of
the Corporation with any other corporation shall not be deemed to
constitute a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.
SECTION 6. REDEMPTION. If, by February 18, 1999, the Corporation and
Northwestern Public Service Company, a Delaware corporation, have not
entered into the written Strategic Alliance Agreement contemplated by
the letter agreement among the Corporation, Northwestern Public
Service Company and Northwestern Growth Corporation dated January 15,
1998, then the Corporation at the option of the Board of Directors,
may redeem in whole the shares of Series A upon notice given as
hereinafter specified, at a redemption price per share equal to 62.5%
of the Liquidation Amount. If, by March 18, 1999, the Corporation
shall not have mailed notice of the redemption of all shares of
Series A as provided below, then the Corporation's right to redeem
the Series A shall thereupon expire.
Notice of every redemption of shares of Series A shall be mailed by
first class mail, postage prepaid, addressed to the holders of record
of the shares to be redeemed at their respective last addresses as
they shall appear on the books of the Corporation. Such mailing shall
be at least five days and not more than 30 days prior to the date
fixed for redemption. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given,
whether or not the stockholder receives such notice, and failure duly
to give such notice by mail, or any defect in such notice, to any
holder of shares of Series A designated for redemption shall not
affect the validity of the proceedings for the redemption of any
other shares of Series A.
If notice of redemption shall have been duly given, and if on or
before the redemption date specified therein all funds necessary for
such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the PRO RATA
benefit of the holders of the shares called for redemption, so as to
be and continue to be available therefor, then, notwithstanding that
any certificate for shares so called for redemption shall not have
been surrendered for cancellation, on and after such redemption date,
all shares so called for redemption shall no longer be deemed
outstanding and all rights with respect to such shares shall
forthwith on such redemption date cease and terminate, except only
the right of the holders thereof to receive the amount payable on
redemption thereof, without interest. Any funds so deposited and
unclaimed at the end of three years from such redemption date shall,
to the extent permitted by law, be released or repaid to the
Corporation, after which time the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
SECTION 7. CONVERSION RIGHTS. Each holder of shares of Series A shall
have the right, at such holder's option, to convert such shares into
shares of Common Stock of the Corporation at any time following
August 18, 1999, on and subject to the following terms and conditions:
(a) Each share of Series A shall be convertible at the principal
office of the Corporation and at such other office or offices, if
any, as the Board of Directors may designate, into such number of
fully paid and non-assessable shares (calculated as to each
conversion to the
2
<PAGE>
nearest 1/100th of a share) of Common Stock of the Corporation,
as shall be determined by dividing the Liquidation Amount by the
"conversion price"; provided, however, that the conversion price
shall be adjusted in certain instances as provided in paragraph
(d) below. The conversion price is initially the Liquidation
Amount.
(b) In order to convert shares of Series A into Common Stock the
holder thereof shall surrender at the office or offices
hereinabove mentioned the certificate or certificates therefor,
duly endorsed or assigned to the Corporation or in blank, and
give written notice to the Corporation at said office or offices
that such holder elects to convert such shares. No payment or
adjustment shall be made upon any conversion on account of any
unpaid or accrued dividends on account of any dividends on the
Common Stock issued upon conversion.
Shares of Series A shall be deemed to have been converted
immediately prior to the close of business on the day of the
surrender of the certificates for such shares for conversion in
accordance with the foregoing provisions, and the person or
persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Corporation
shall issue and shall deliver at such office a certificate or
certificates for the number of full shares of Common Stock
issuable upon such conversion, together with payment in lieu of
any fraction of a share, as hereinafter provided, to the person
or persons entitled to receive the same.
(c) No fractional shares of Common Stock shall be issued upon
conversion of shares of Series A, but, instead of any fraction of
a share which would otherwise be issuable, the Corporation shall
pay cash in respect of such fraction in an amount equal to the
same fraction of the Closing Price (as defined below) on the date
on which the certificate or certificates for such shares were
duly surrendered for conversion, or, if such date is not a
Trading Day (as defined below), on the next Trading Day.
(d) The conversion price shall be deemed to be proportionately
adjusted from time to time as follows:
(i) In case the Corporation shall (A) pay a dividend
or make a distribution on its outstanding Common Stock in
shares of its capital stock, (B) subdivide its outstanding
Common Stock into a greater number of shares, (C) combine its
outstanding Common Stock into a smaller number of shares or (D)
issue by reclassification of its Common Stock (whether pursuant
to a merger or consolidation or otherwise) any other shares of
the Corporation, the holder of any shares of Series A
surrendered for conversion after the record date fixed by the
Board of Directors for such dividend, distribution,
subdivision, combination or reclassification shall be entitled
to receive the aggregate number and kind of shares of capital
stock of the Corporation which, if such shares of Series A had
been converted immediately prior to such record date at the
conversion price then in effect, such holder would have been
entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification; and the
conversion price shall be deemed to have been adjusted after
such record date to apply to such aggregate number and kind of
shares. Such adjustment shall be made whenever any of the
events listed above shall occur.
(ii) In case the Corporation shall fix a record date
for issuing to all holders of Common Stock rights or warrants
expiring within 45 days entitling them to subscribe for or
purchase Common Stock at a price per share less than the
current market price per share (as determined pursuant to
clause (iv) below) on such record date, the conversion price in
effect from and after such record date shall be reduced so that
it shall be equal to the price determined by multiplying the
conversion price in effect immediately prior to such record
date by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on such record date plus
the number
3
<PAGE>
of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current market
price and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock so offered for
subscription or purchase. For the purpose of this clause (ii),
the issuance of rights or warrants to subscribe for or purchase
securities convertible into Common Stock shall be deemed to be
the issuance of rights or warrants to purchase the Common Stock
into which such securities are convertible at an aggregate
offering price equal to the aggregate offering price of such
securities plus the minimum aggregate amount (if any) payable
upon conversion of such securities into Common Stock. Such
adjustment shall be made successively whenever such a record
date is fixed. In case such rights or warrants are not issued
after such a record date has been fixed, the conversion price
shall be readjusted to the conversion price which would have
been in effect if such record date had not been fixed.
(iii) In case the Corporation shall fix a record date
for the distribution to all holders of Common Stock (whether
pursuant to a merger or consolidation or otherwise) of assets
(excluding cash dividends out of retained earnings), or rights
to subscribe (excluding those referred to in clause (ii)
above), then in each such case the conversion price in effect
from and after such record date shall be adjusted so that the
same shall be equal to the price determined by multiplying the
conversion price in effect immediately prior to such record
date by a fraction, of which the numerator shall be the current
market price per share (determined as provided in clause (iv)
below) of the Common Stock on such record date less the fair
market value (as determined by the Board of Directors, whose
determination in good faith shall be conclusive) of the portion
of the evidences of indebtedness or assets so distributed or of
such rights to subscribe applicable to one share of Common
Stock and of which the denominator shall be such current market
price per share of Common Stock. Such adjustment shall be made
whenever any such a record date is fixed. In case such
distribution is not made after such a record date has been
fixed, the conversion price shall be readjusted to the
conversion price which would have been in effect if such record
date had not been fixed.
(iv) For the purpose of any computation under clauses
(ii) and (iii) above, the current market price per share of
Common Stock on any date shall be deemed to be the average of
the daily Closing Prices for 30 consecutive Trading Days
selected by the Corporation commencing not less than 10 nor
more than 45 Trading Days before the date in question.
(v) In case the Corporation shall be a party to any
transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the
Corporation's assets, liquidation or recapitalization of the
Common Stock, but excluding any transaction to which clauses
(i), (ii) or (iii) above applies) in which the previously
outstanding Common Stock shall be changed into or exchanged for
different securities of the Corporation or common stock or
other securities of another corporation or interests in a
noncorporate entity or other property (including cash) or any
combination of any of the foregoing, then, as a condition of
the consummation of such transaction, lawful and adequate
provision shall be made so that each holder of shares of Series
A shall be entitled, upon conversion, to an amount per share of
Series A equal to (A) the aggregate amount of stock,
securities, cash or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged, times (B) the number of shares
of Common Stock into which a share of Series A is convertible
immediately prior to the consummation of such transaction.
4
<PAGE>
(vi) In any case in which this subsection (d) shall
require that an adjustment as a result of any event become
effective from and after a record date, the Corporation may elect
to defer until after the occurrence of such event (A) assuming to
the holder of any shares of Series A converted after such record
date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion over and above the
shares issuable on the basis of the conversion price in effect
immediately prior to adjustment and (B) paying to such holder any
amount in cash in lieu of a fractional share of Common Stock
pursuant to subsection (c) above. In lieu of the shares of the
issuance of which is deferred pursuant to item (A) above, the
Corporation shall issue or cause one of its transfer agents to
issue due bills or other appropriate evidence of the right to
receive such shares.
(vii) Any adjustment in the conversion price otherwise
required by this Section 7 to be made may be postponed until the
date of the next adjustment otherwise required to be made if such
adjustment (together with any other adjustments postponed pursuant
to this paragraph (vii) and not theretofore made) would not
require an increase or decrease of more than 1% in such price. All
calculations under this subsection (d) shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may
be.
(viii) In case at any time, as a result of an adjustment
made pursuant to paragraph (i) above, the holder of any shares of
Series A thereafter surrendered for conversion shall become
entitled to receive any shares of capital stock of the Corporation
other than Common Stock, thereafter the number of such other
shares so receivable upon conversion of such shares of Series A
shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in paragraphs (i) to
(vii), inclusive, above, and the other provisions of this
subsection (d) with respect to the Common Stock shall apply on
like terms to any such other shares.
(ix) The Board of Directors may in its discretion make
such reductions in the conversion price, in addition to those
required by this subsection (d), as shall be determined by the
Board of Directors to be advisable in order to avoid taxation so
far as practicable of any dividend of stock or stock rights or any
event treated as such for Federal income tax purposes to the
recipients. The Board of Directors shall have the power to resolve
any ambiguity or correct any error in this subsection (d), and its
action in so doing shall be final and conclusive.
(e) Whenever the conversion price is adjusted as herein provided:
(i) The Corporation shall compute the adjusted
conversion price in accordance with this Section 7 and shall cause
to be prepared a certificate signed by the Corporation's treasurer
setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with each transfer
agent for the shares of Series A; and
(ii) A notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall, as
soon as practicable, be mailed to the holders of record of
outstanding shares of Series A.
(f) In case:
(i) The Corporation shall declare a dividend or other
distribution on its Common Stock payable otherwise than in cash
out of retained earnings or in obligations to pay cash out of
retained earnings; or
(ii) The Corporation shall authorize the issuance to the
holders of its Common Stock of rights or warrants entitling them
to subscribe for or purchase any shares of capital stock or any
class or any other subscription rights or warrants; or
5
<PAGE>
(iii) Of any reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or
merger to which the Corporation is a party and for which approval
of any stockholders of the Corporation is required, or of the
sale, transfer or other disposition of all or substantially all of
the assets of the Corporation; or
(iv) Of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with each transfer
agent for the shares of Series A and shall cause to be mailed to the
holders of record of the outstanding shares of Series A, at least 20
days (or 10 days in any case specified in clause (i) or (ii) above)
prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date as of which the holders of
record of Common Stock to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is
expected that holders of record of Common Stock shall be entitled to
exchange their shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution or winding up.
Failure to give notice as required by this subsection (f), or any
defect therein, shall not affect the legality or validity of any
such dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, disposition, liquidation,
dissolution or winding up, or the vote on any action margin
authorizing such.
(g) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common
Stock, for the purpose of issuance upon conversion of shares of
Series A, the full number of shares of Common Stock then deliverable
upon the conversion of all shares of Series A then outstanding.
(h) The Corporation will pay any and all taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock on
conversion of shares of Series A pursuant hereto. The Corporation
shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of
shares of Common Stock in a name other than that in which the shares
of Series A so converted were registered, and no such issuance or
delivery shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax or
has established to the satisfaction of the Corporation that such tax
has been paid.
(i) For the purpose of this Section 7, the term "Common Stock" shall
include any stock of any class or series of the Corporation which
has no preference or priority in the payment of dividends or in the
distribution of assets in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and which
is not subject to redemption by the Corporation. However, shares
issuable upon conversion of shares of Series A shall include only
shares of the class designated as Common Stock as of the original
date of issuance of shares of Series A or shares of the Corporation
of any classes or series resulting from any reclassification or
reclassifications thereof and which have no preference or priority
in the payment of dividends or in the distribution of assets in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and which are not subject to
redemption by the Corporation, PROVIDED that if at any time there
shall be more than one such resulting class or series, the shares of
each such class and series then so issuable shall be substantially
in the proportion which the total number of shares of such class and
series resulting from all such reclassifications bears to the total
number of shares of all such classes and series resulting from all
such reclassifications.
6
<PAGE>
(j) As used in this Section 7, the term "Closing Price" on any day shall
mean the reported last sale price per share of Common Stock regular
way on such day or, in case no such sale takes place on such day,
the average of the reported closing bid and asked prices regular
way, in each case on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the
American Stock Exchange, or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted
to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average of the
closing bid and asked prices in the over-the-counter market as
reported by the National Association of Securities Dealers'
Automated Quotation System, or, if not so reported, as reported by
the National Quotation Bureau, Incorporated, or any successor
thereof, or, if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association
of Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose; or, in all other cases, the value
established by the Board of Directors in good faith; and the term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted
to trading is open for the transaction of business or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange, a Monday, Tuesday, Wednesday, Thursday, or
Friday on which banking institutions in New York City are not
authorized or obligated by law or executive order to close.
(k) The certificate of any independent firm of public accountants of
recognized standing selected by the Board of Directors shall be
presumptive evidence of the correctness of any computation made
under this Section 7.
SECTION 8. NO VOTING RIGHTS. The holders of Series A shall be entitled
to no votes per share, except as otherwise required by law or by the
Corporation's certificate of incorporation.
SECTION 9. LIMITED TRANSFERABILITY OF SERIES A. Until the earlier to
occur of (i) March 18, 1999, or (ii) the execution and delivery of the
written Strategic Alliance Agreement referenced in Section 6 above, the
Series A and the rights represented thereby are not transferable --
regardless of whether such transfer occurs by foreclosure or grant of a
lien, pledge, or other security interest therein, other volitional act,
operation of law, or otherwise. Any attempt to transfer an interest in
any shares of Series A in violation of the foregoing is void.
SECTION 10. OTHER RIGHTS. The shares of Series A shall not have any
powers, preferences on relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof,
other than as set forth herein.
IN WITNESS WHEREOF, Advanced Communications Group, Inc. has caused this
certificate to be signed by its undersigned duly authorized officer this 17th
day of February, 1998.
ADVANCED COMMUNICATIONS GROUP, INC.
BY: /s/ William H. Zimmer III
-----------------------------------
WILLIAM H. ZIMMER III
EXECUTIVE VICE PRESIDENT
7
<PAGE>
OCTOBER 9, 1997
RESTATED BYLAWS
OF
WORLDPAGES.COM, INC.
(which include Amendments
adopted by the Board of Directors
on November 9, 1998 and February 9, 2000)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 OFFICES....................................................................................1
SECTION 1.1. REGISTERED OFFICE......................................................................1
SECTION 1.2. OTHER OFFICES..........................................................................1
ARTICLE 2 STOCKHOLDERS...............................................................................1
SECTION 2.1. REFERENCE TO CHARTER DOCUMENTS.........................................................1
SECTION 2.2. RECORD DATE............................................................................1
SECTION 2.3. STOCKHOLDER LIST.......................................................................2
SECTION 2.4. PROXIES................................................................................2
SECTION 2.5. TREASURY STOCK.........................................................................2
ARTICLE 3 BOARD OF DIRECTORS..........................................................................2
SECTION 3.1. REFERENCE TO CHARTER DOCUMENT..........................................................2
SECTION 3.2. QUORUM; VOTING; OTHER..................................................................3
SECTION 3.3. PLACE OF MEETINGS; ORDER OF BUSINESS...................................................3
SECTION 3.4. FIRST MEETING..........................................................................3
SECTION 3.5. REGULAR MEETINGS.......................................................................3
SECTION 3.6. SPECIAL MEETINGS.......................................................................3
SECTION 3.7. COMPENSATION...........................................................................3
SECTION 3.8. ACTION WITHOUT A MEETING; TELEPHONE CONFERENCE MEETING.................................4
SECTION 3.9. CHAIRMAN OF THE BOARD OF DIRECTORS.....................................................4
ARTICLE 4 COMMITTEES.................................................................................4
SECTION 4.1. DESIGNATION; POWERS....................................................................4
SECTION 4.2. PROCEDURE; MEETINGS; QUORUM............................................................5
SECTION 4.3. REMOVAL OF MEMBERS; VACANCIES..........................................................5
ARTICLE 5 OFFICERS...................................................................................5
SECTION 5.1. NUMBER, TITLES AND TERM OF OFFICE......................................................5
SECTION 5.2. POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER.......................................5
SECTION 5.3. POWERS AND DUTIES OF THE PRESIDENT.....................................................6
SECTION 5.4. VICE PRESIDENTS........................................................................6
SECTION 5.5. SECRETARY..............................................................................6
SECTION 5.6. ASSISTANT SECRETARIES..................................................................6
SECTION 5.7. TREASURER..............................................................................7
SECTION 5.8. ASSISTANT TREASURERS...................................................................7
SECTION 5.9. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS................................7
SECTION 5.10. DELEGATION............................................................................7
ARTICLE 6 CAPITAL STOCK..............................................................................7
SECTION 6.1. CERTIFICATES OF STOCK..................................................................7
SECTION 6.2. TRANSFER OF SHARES.....................................................................8
SECTION 6.3. OWNERSHIP OF SHARES....................................................................8
SECTION 6.4. REGULATIONS REGARDING CERTIFICATES.....................................................8
SECTION 6.5. LOST OR DESTROYED CERTIFICATES.........................................................8
ARTICLE 7 MISCELLANEOUS PROVISIONS...................................................................9
SECTION 7.1. FISCAL YEAR............................................................................9
SECTION 7.2. CORPORATE SEAL.........................................................................9
SECTION 7.3. NOTICE AND WAIVER OF NOTICE............................................................9
SECTION 7.4. FACSIMILE SIGNATURES...................................................................9
i
<PAGE>
SECTION 7.5. RELIANCE UPON BOOKS, REPORTS AND RECORDS...............................................9
SECTION 7.6. APPLICATION OF BYLAWS.................................................................10
ARTICLE 8 INDEMNIFICATION OF OFFICERS AND DIRECTORS.................................................10
ARTICLE 9 AMENDMENTS................................................................................10
</TABLE>
ii
<PAGE>
BYLAWS
OF
WORLDPAGES.COM, INC.
ARTICLE 1 OFFICES
SECTION 1.1. REGISTERED OFFICE. The registered office of the Corporation
required by the State of Delaware to be maintained in the State of Delaware
shall be the registered office named in the Corporation's Restated Certificate
of Incorporation dated October 7, 1997, as amended if amended ("Charter
Document"), or such other office as may be designated from time to time by the
Board of Directors in the manner provided by law.
SECTION 1.2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 2 STOCKHOLDERS
SECTION 2.1. REFERENCE TO CHARTER DOCUMENTS. Article V of the Charter
Document sets forth certain provisions relating to the calling and holding of
annual and special meetings of stockholders, the presiding officer at meetings
of stockholders, the votes required for the election of directors and the taking
of other action at meetings of stockholders, procedures for stockholder
initiatives, stockholder rights to inspect corporate records, the prohibition on
the use of stockholder consents following the consummation of the Corporation's
initial underwritten public offering and certain other matters, which provisions
are incorporated herein by reference.
SECTION 2.2. RECORD DATE. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors of the Corporation may fix a date as
the record date for any such determination of stockholders, which record date
shall not precede the date on which the resolutions fixing the record date are
adopted and which record date shall not be more than 60 days nor less than ten
days before the date of such meeting of stockholders, nor more than 60 days
prior to any other action to which such record date relates.
If the Board of Directors does not fix a record date for any meeting of the
stockholders, the record date for determining stockholders entitled to notice of
or to vote at such meeting shall be at the close of business on the day next
preceding the day on which notice is given, or, if in accordance with Article 7,
Section 7.3 of these Bylaws notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment
<PAGE>
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 2.3. STOCKHOLDER LIST. A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical
order for each class of stock and showing the address of each such
stockholder and the number of shares registered in the name of such
stockholder, shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The stockholder list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
SECTION 2.4. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for such stockholder
as proxy by written proxy or by transmitting or authorizing the transmission of
a telegram, cablegram, telephone call, telefax, electronic mail message or other
means of electronic transmission to the person or persons who will be the
holder(s) of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person or persons who will be
the holder(s) of the proxy to receive such transmission, provided that any such
telegram, cablegram, telephone call, telefax, electronic mail message or other
means of electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram, cablegram,
telephone call, telefax, electronic mail message or other means of electronic
transmission was authorized by the stockholder. Proxies for use at any meeting
of stockholders shall be filed with the Secretary, or such other officer as the
Board of Directors may from time to time determine by resolution, before or at
the time of the meeting. All proxies shall be received and taken charge of and
all ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching upon the qualification of voters, the
validity of the proxies, and the acceptance or rejection of votes, unless an
inspector or inspectors shall have been appointed, in which event such inspector
or inspectors shall decide all such questions.
SECTION 2.5. TREASURY STOCK. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes. Nothing in this Section 2.5 shall be construed as
limiting the right of the Corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
ARTICLE 3 BOARD OF DIRECTORS
SECTION 3.1. REFERENCE TO CHARTER DOCUMENT. Article VI of the Charter
Document sets forth certain provisions relating to the Board of Directors of the
Corporation, including the power, number, qualifications, tenure and removal of
directors, the filling of vacancies on the Board of Directors, the creation of
committees of directors and certain other matters, which provisions are
incorporated herein by reference.
SECTION 3.2. QUORUM; VOTING; OTHER. A majority of the number of directors
fixed in accordance with the Charter Document shall constitute a quorum for the
transaction of
2
<PAGE>
business of the Board of Directors, and the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors. Directors need not be stockholders nor residents
of the State of Delaware.
SECTION 3.3. PLACE OF MEETINGS; ORDER OF BUSINESS. The directors may hold
their meetings and may have an office and keep the books of the Corporation,
except as otherwise provided by law, in such place or places, within or without
the State of Delaware, as the Board of Directors may from time to time
determine. At all meetings of the Board of Directors business shall be
transacted in such order as shall from time to time be determined by the
Chairman of the Board, or in the Chairman of the Board's absence by the
President or by the Board of Directors.
SECTION 3.4. FIRST MEETING. Each newly elected Board of Directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which a
quorum shall be present, held after the annual meeting of stockholders, the
Board of Directors shall elect the officers of the Corporation.
SECTION 3.5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by the Chairman of the Board, or in the Chairman of the Board's absence, by the
President, or in the President's absence, by another officer of the Corporation.
Notice of such regular meetings shall not be required.
SECTION 3.6. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, or in the Chairman of the Board's
absence by the President, or, on the written request of any director, by the
Secretary, in each case on at least twenty-four (24) hours' personal, written,
telegraphic, cable or wireless notice to each director. Such notice, or any
waiver thereof pursuant to Article 7, Section 7.3 hereof, need not state the
purpose or purposes of such meeting, except as may otherwise be required by law
or provided for in the Charter Document or these Bylaws. Meetings may be held at
any time without notice if all the directors are present (except where a
director is present for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because such meeting is not lawfully
called or convened) or if those not present waive notice of the meeting in
writing.
SECTION 3.7. COMPENSATION. Directors and members of standing committees
may receive such compensation as the Board of Directors from time to time
shall determine to be appropriate, and shall be reimbursed for all reasonable
expenses incurred in attending and returning from meetings of the Board of
Directors.
SECTION 3.8. ACTION WITHOUT A MEETING; TELEPHONE CONFERENCE MEETING. Any
action required or permitted to be taken at any meeting of the Board of
Directors or any committee designated by the Board of Directors may be taken
without a meeting if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee. Such
consent shall have the same force and effect as a
3
<PAGE>
unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with the Secretary of State of the State of Delaware.
Subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors, may
participate in a meeting of such Board of Directors or committee, as the case
may be, by means of a conference telephone connection or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
SECTION 3.9. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be chosen from the members of the Board of Directors
and shall preside at all meetings of the stockholders and the Board of
Directors. The Chairman of the Board may sign only those instruments for and
on behalf of the Company which the Board of Directors has specifically
authorized the Chairman to sign, and in general, the Chairman shall have only
such other powers and duties as may be required of that position under the
laws of Delaware, or as may be specifically assigned to the Chairman by these
Bylaws or by the Board of Directors from time to time.
ARTICLE 4 COMMITTEES
SECTION 4.1. DESIGNATION; POWERS. The Board of Directors may designate one
or more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more Directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the General Corporation
Law of the State of Delaware to be submitted to stockholders for approval or
(ii) adopting, amending or repealing any provision of these Bylaws.
SECTION 4.2. PROCEDURE; MEETINGS; QUORUM. Any committee designated
pursuant to this Article 4 shall keep regular minutes of its actions and
proceedings in a book provided for that purpose and report the same to the
Board of Directors at its meeting next succeeding such action, shall fix its
own rules or procedures, and shall meet at such times and at such place or
places as may be provided by such rules, or by such committee or the Board of
Directors. Should a committee fail to fix its own rules, the provisions of
these Bylaws, pertaining to the calling of meetings and conduct of business
by the Board of Directors, shall apply as
4
<PAGE>
nearly as may be practicable. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a quorum,
and the affirmative vote of a majority of the members present shall be
necessary for the adoption by it of any resolution.
SECTION 4.3. REMOVAL OF MEMBERS; VACANCIES. The Board of Directors shall
have the power at any time to remove any member(s) of a committee and to appoint
other directors in lieu of the person(s) so removed and shall also have the
power to fill vacancies in a committee.
ARTICLE 5 OFFICERS
SECTION 5.1. NUMBER, TITLES AND TERM OF OFFICE. The officers of the
Corporation shall be a Chief Executive Officer, President, one or more Vice
Presidents (any one or more of whom may be designated Executive Vice President
or Senior Vice President), a Treasurer, a Secretary, and such officers as the
Board of Directors may from time to time elect or appoint (including, but not
limited to, one or more Assistant Secretaries, and one or more Assistant
Treasurers). Each officer shall hold office until such officer's successor shall
be duly elected and shall qualify or until such officer's death or until such
officer shall resign or shall have been removed. Any number of offices may be
held by the same person, unless the Charter Documents provide otherwise. No
officer need be a director.
SECTION 5.2. POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER. Subject to
the control of the Board of Directors, the Chief Executive Officer shall have
the general executive charge, management and control of the properties, business
and operations of the Corporation with all such powers as may be reasonably
incident to such responsibilities. Without in any manner limiting the foregoing,
the Chief Executive Officer shall see that all orders and resolutions of the
Board of Directors are carried into effect, shall report official acts to the
Board of Directors for approval and shall have such powers and perform all other
duties that may be required of him under the laws of Delaware, the Bylaws of the
Corporation or by the Board of Directors from time to time, and may agree upon
and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation. The Chief Executive Officer shall
designate who shall perform the duties of the Chief Executive Officer in his
absence.
SECTION 5.3. POWERS AND DUTIES OF THE PRESIDENT. Unless the Board of
Directors or the Chief Executive Officer otherwise determines, the President
shall be the Chief Operating Officer of the Company and may, upon (and to the
extent of) direction by the Chief Executive Officer, act as general manager of
the Corporation's business affairs, subject to the control of the Chief
Executive Officer. The President shall have primary responsibility for the
Corporation's operations and sales of the Corporation's services and products.
He shall have general supervision and active management of the business of the
Corporation, and see that all orders and resolutions of the Board of Directors
are carried into effect; subject, however to the right of the Board of Directors
to delegate any specific powers to any other officer or officers of the
Corporation, except such as may be by statute exclusively conferred upon the
President. He shall report his official acts to the Chief Executive Officer for
approval and shall have such powers, and perform all other duties that may be
required of him, under the laws of Delaware, the Bylaws of the Corporation, the
Board of Directors or the Chief Executive Officer. Unless
5
<PAGE>
circumscribed by the Board of Directors or the Chief Executive Officer, the
President may agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the Corporation and execute
all certificates for shares of capital stock of the Corporation.
SECTION 5.4. VICE PRESIDENTS. Each Vice President shall at all times
possess power to sign all certificates, contracts and other instruments of
the Corporation, except as otherwise limited in writing by the Chief
Executive Officer or the President of the Corporation. Each Vice President
shall have such other powers and duties as from time to time may be assigned
to such Vice President by the Board of Directors, the Chairman of the Board
or the President.
SECTION 5.5. SECRETARY. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of the Board of Directors and
the stockholders, in books provided for that purpose; shall attend to the
giving and serving of all notices; may in the name of the Corporation affix
the seal of the Corporation to all contracts and attest the affixation of the
seal of the Corporation thereto; may sign with the other appointed officers
all certificates for shares of capital stock of the Corporation; shall have
charge of the certificate books, transfer books and stock ledgers, and such
other books and papers as the Board of Directors may direct, all of which
shall at all reasonable times be open to inspection of any director upon
application at the office of the Corporation during business hours; shall
have such other powers and duties as designated in these Bylaws and as from
time to time may be assigned to the Secretary by the Board of Directors, the
Chairman of the Board or the President; and shall in general perform all acts
incident to the office of Secretary, subject to the control of the Board of
Directors, the Chairman of the Board or the President.
SECTION 5.6. ASSISTANT SECRETARIES. Each Assistant Secretary shall have
the usual powers and duties pertaining to such office, together with such
other powers and duties as designated in these Bylaws and as from time to
time may be assigned to an Assistant Secretary by the Board of Directors, the
Chairman of the Board, the President or the Secretary. The Assistant
Secretaries shall exercise the powers of the Secretary during that officer's
absence or inability or refusal to act.
SECTION 5.7. TREASURER. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and
shall have such other powers and duties as designated in these Bylaws and as
from time to time may be assigned to the Treasurer by the Board of Directors,
the Chief Executive Officer or the President. The Treasurer shall perform all
acts incident to the position of Treasurer, subject to the control of the Board
of Directors, the Chief Executive Officer or the President; and the Treasurer
shall, if required by the Board of Directors, give such bond for the faithful
discharge of the Treasurer's duties in such form as the Board of Directors may
require.
SECTION 5.8. ASSISTANT TREASURERS. Each Assistant Treasurer shall have
the usual powers and duties pertaining to such office, together with such
other powers and duties as designated in these Bylaws and as from time to
time may be assigned to each Assistant Treasurer by the Board of Directors,
the Chief Executive Officer, the President, or the Treasurer. The
6
<PAGE>
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
SECTION 5.9. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the Chief Executive
Officer or the President, together with the Secretary or any Assistant
Secretary shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders of or
with respect to any action of security holders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and
all rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
SECTION 5.10. DELEGATION. For any reason that the Board of Directors
may deem sufficient, the Board of Directors may, except where otherwise
provided by statute, delegate the powers or duties of any officer to any
other person, and may authorize any officer to delegate specified duties of
such office to any other person. Any such delegation or authorization by the
Board of Directors shall be effected from time to time by resolution of the
Board of Directors.
ARTICLE 6 CAPITAL STOCK
SECTION 6.1. CERTIFICATES OF STOCK. The certificates for shares of
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Charter Document, as shall be approved by the
Board of Directors. Every holder of stock represented by certificates shall
be entitled to have a certificate signed by or in the name of the Corporation
by the Chairman of the Board, President or a Vice President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation representing the number of shares (and, if the stock of the
Corporation shall be divided into classes or series, certifying the class and
series of such shares) owned by such stockholder which are registered in
certified form; provided, however, that any of or all the signatures on the
certificate may be facsimile. The stock record books and the blank stock
certificate books shall be kept by the Secretary or at the office of such
transfer agent or transfer agents as the Board of Directors may from time to
time determine. In case any officer, transfer agent or registrar who shall
have signed or whose facsimile signature or signatures shall have been placed
upon any such certificate or certificates shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued by the
Corporation, such certificate may nevertheless be issued by the Corporation
with the same effect as if such person were such officer, transfer agent or
registrar at the date of issue. The stock certificates shall be consecutively
numbered and shall be entered in the books of the Corporation as they are
issued and shall exhibit the holder's name and number of shares.
SECTION 6.2. TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal
representatives upon surrender and cancellation of certificates for a like
number of shares. Upon surrender to the Corporation or a transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
7
<PAGE>
SECTION 6.3. OWNERSHIP OF SHARES. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
the State of Delaware.
SECTION 6.4. REGULATIONS REGARDING CERTIFICATES. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
SECTION 6.5. LOST OR DESTROYED CERTIFICATES. The Board of Directors may
determine the conditions upon which the Corporation may issue a new certificate
of stock in place of a certificate theretofore issued by it which is alleged to
have been lost, stolen or destroyed and may require the owner of such
certificate or such owner's legal representative to give bond, with surety
sufficient to indemnify the Corporation and each transfer agent and registrar
against any and all losses or claims which may arise by reason of the alleged
loss, theft or destruction of any such certificate or the issuance of such new
certificate in the place of the one so lost, stolen or destroyed.
ARTICLE 7 MISCELLANEOUS PROVISIONS
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January of each year.
SECTION 7.2. CORPORATE SEAL. The corporate seal shall be circular in form
and shall have inscribed thereon the name of the Corporation and the state of
its incorporation, which seal shall be in the charge of the Secretary and shall
be affixed to certificates of stock, debentures, bonds, and other documents, in
accordance with the direction of the Board of Directors or a committee thereof,
and as may be required by law; however, the Secretary may, if the Secretary
deems it expedient, have a facsimile of the corporate seal inscribed on any such
certificates of stock, debentures, bonds, contract or other documents.
Duplicates of the seal may be kept for use by any Assistant Secretary.
SECTION 7.3. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required to be given by law, the Charter Document or under the provisions of
these Bylaws, said notice shall be deemed to be sufficient if given (i) by
telegraphic, cable or wireless transmission (including by telecopy or
facsimile transmission) or (ii) by deposit of the same in a post office box
or by delivery to an overnight courier service company in a sealed prepaid
wrapper addressed to the person entitled thereto at such person's post office
address, as it appears on the records of the Corporation, and such notice
shall be deemed to have been given on the day of such transmission or mailing
or delivery to courier, as the case may be.
Whenever notice is required to be given by law, the Charter Document or
under any of the provisions of these Bylaws, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance
8
<PAGE>
of a person, including without limitation a director, at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice unless so required by the Charter Document or these
Bylaws.
SECTION 7.4. FACSIMILE SIGNATURES. In addition to the provisions for
the use of facsimile signatures elsewhere specifically authorized in these
Bylaws, facsimile signatures of any officer or officers of the Corporation
may be used whenever and as authorized by the Board of Directors.
SECTION 7.5. RELIANCE UPON BOOKS, REPORTS AND RECORDS. A member of the
Board of Directors, or a member of any committee designated by the Board of
Directors, shall, in the performance of such person's duties, be protected to
the fullest extent permitted by law in relying upon the records of the
Corporation and upon information, opinion, reports or statements presented to
the Corporation.
SECTION 7.6. APPLICATION OF BYLAWS. In the event that any provisions of
these Bylaws is or may be in conflict with any law of the United States, of the
State of Delaware or of any other governmental body or power having jurisdiction
over this Corporation, or over the subject matter to which such provision of
these Bylaws applies, or may apply, such provision of these Bylaws shall be
inoperative to the extent only that the operation thereof unavoidably conflicts
with such law, and shall in all other respects be in full force and effect.
ARTICLE 8 INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Corporation shall provide indemnification and the advancement of
expenses to its officers and directors to the extent and upon the terms set
forth in Section 2 of Article VIII of the Charter Document.
ARTICLE 9 AMENDMENTS
The Board of Directors and the stockholders of the Corporation shall
have the power to make, alter, amend and repeal any or all of the provisions of
these Bylaws to the extent and upon the terms set forth in Article VII of the
Charter Document.
9
<PAGE>
COMMON STOCK INCORPORATED UNDER THE LAWS
PAR VALUE $0.0001 OF THE STATE OF DELAWARE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
[ACG LOGO] THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 981922 10 7
NEW YORK, NY AND JERSEY CITY, NJ CUSIP 007310 10 6
SEE REVERSE FOR CERTAIN DEFINITIONS [CORPORATE SEAL]
</TABLE>
ADVANCED COMMUNICATIONS GROUP, INC.
THIS CERTIFIES THAT
SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Advanced Communications Group, Inc. transferable on the books of the
Corporation in person or by duly authorized attorney upon receipt of this
Certificate properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar.
NAME CHANGED TO WORLDPAGES.COM, INC.
In Witness Whereof, said Corporation authorized this Certificate to be
signed in facsimile by its duly authorized officers and its Corporate Seal
to be affixed in facsimile.
Dated COUNTER SIGNED AND REGISTERED
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT
AND REGISTRAR
[SIGNATURE] [SIGNATURE] BY [SPECIMEN]
CHAIRMAN AND CHIEF EXECUTIVE OFFICER TREASURER AUTHORIZED SIGNATURE
<PAGE>
[ACG LOGO]
Pursuant to Section 151(F) of the Delaware General Corporation Law, the
Corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences, and relative participating, optional
or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or
rights. Such request may be made to the Corporation or the Transfer Agent.
The following abbreviations, when used in the description on the face of the
certificate, shall be continued as though they were written out and according
to applicable laws or regulations.
TEN COM -- as tenants in common UNIF GIFT MIN ACT --______ Custodian_____
(Cust) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors Act
JT TEN -- as joint tenants with right _____ _______ _______ ________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list
For value received, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE [SPECIMEN]
- ---------------------------------------
|
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Shares of the stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ---------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated
---------------------
X
-----------------------------------
NOTICE (SIGNATURE)
THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
X
-----------------------------------
(SIGNATURE)
-----------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR
INSTITUTION(BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP) IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO
S.E.C. RULE 17Ad-15.
-----------------------------------
SIGNATURE(S) GUARANTEED BY:
<PAGE>
EXECUTION FORM
EXCHANGE AND VOTING TRUST AGREEMENT
AMONG
ADVANCED COMMUNICATIONS GROUP, INC.
AND
ACG HOLDING COMPANY
AND
ACG EXCHANGE COMPANY
AND
1 + USA V ACQUISITION CORP.
AND
CERTAIN HOLDERS OF YPTEL LIMITED SHARES
AS LISTED ON SCHEDULE A
AND
YPTEL/ACG PLEDGE CORPORATION
AND
MONTREAL TRUST COMPANY OF CANADA, AS TRUSTEE
FEBRUARY 21, 2000
<PAGE>
INDEX
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1 DEFINITIONS AND INTERPRETATION...................................... 2
1.1 DEFINITIONS............................................................ 2
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC........................... 7
1.3 NUMBER, GENDER, ETC.................................................... 7
1.4 DATE FOR ANY ACTION.................................................... 7
ARTICLE 2 PURPOSE OF AGREEMENT................................................ 7
ARTICLE 3 VOTING SHARE........................................................ 7
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE............................. 7
3.2 LEGEND SHARE CERTIFICATES.............................................. 8
3.3 SAFE KEEPING OF CERTIFICATE............................................ 8
ARTICLE 4 EXERCISE OF VOTING RIGHTS........................................... 8
4.1 VOTING RIGHTS.......................................................... 8
4.2 VOTING RIGHTS (CONTINUED).............................................. 8
4.3 NUMBER OF VOTES........................................................ 9
4.4 MAILINGS TO SHAREHOLDERS............................................... 9
4.5 COPIES OF STOCKHOLDER INFORMATION..................................... 10
4.6 OTHER MATERIALS....................................................... 11
4.7 LIST OF PERSONS ENTITLED TO VOTE...................................... 11
4.8 ENTITLEMENT TO DIRECT VOTES........................................... 12
4.9 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT MEETING 12
4.10 DISTRIBUTION OF WRITTEN MATERIALS.................................... 13
4.11 TERMINATION OF VOTING RIGHTS......................................... 13
ARTICLE 5 EXCHANGE RIGHT, EXCHANGE PUT RIGHT AND AUTOMATIC EXCHANGE RIGHT.... 13
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT............................. 13
5.2 GRANT AND OWNERSHIP OF THE AUTOMATIC EXCHANGE RIGHT................... 14
5.3 LEGEND SHARE CERTIFICATES............................................. 14
5.4 GENERAL EXERCISE OF EXCHANGE PUT RIGHT AND EXCHANGE RIGHT............. 14
5.5 PURCHASE PRICE........................................................ 14
5.6 EXERCISE INSTRUCTIONS FOR EXCHANGE PUT RIGHT AND EXCHANGE RIGHT....... 15
5.7 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE...... 16
5.8 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION................... 18
5.9 STAMP OR OTHER TRANSFER TAXES......................................... 18
5.10 NOTICE OF INSOLVENCY EVENT........................................... 19
5.11 QUALIFICATION OF PARENT COMMON STOCK................................. 19
5.12 PARENT COMMON STOCK.................................................. 20
5.13 AUTOMATIC EXCHANGE ON LIQUIDATION OF PARENT.......................... 20
5.14 WITHHOLDING RIGHTS................................................... 21
5.15 MEANING OF DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION.............. 22
</TABLE>
<PAGE>
- 2 -
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 6 CERTAIN RIGHTS AND OBLIGATIONS OF NEWCO I TO ACQUIRE
EXCHANGEABLE SHARES................................................ 22
6.1 NEWCO I LIQUIDATION CALL RIGHT........................................ 22
6.2 NEWCO I REDEMPTION CALL RIGHT......................................... 24
6.3 NEWCO I RETRACTION CALL RIGHT......................................... 25
ARTICLE 7 MISCELLANEOUS...................................................... 26
7.1 RESTRICTIONS ON ISSUANCE OF PARENT SPECIAL VOTING STOCK............... 26
7.2 TRANSFER AGENT........................................................ 26
7.3 RESTRICTIONS ON TRANSFER OF CLASS A SPECIAL SHARES.................... 27
7.4 NON-REGISTRATION OF EXCHANGEABLE SHARES............................... 28
7.5 OVERRIDING RIGHT AND OBLIGATION....................................... 28
7.6 NO AUDIT.............................................................. 28
ARTICLE 8 CONCERNING THE TRUSTEE............................................. 29
8.1 POWERS AND DUTIES OF THE TRUSTEE...................................... 29
8.2 NO CONFLICT OF INTEREST............................................... 29
8.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC........................ 30
8.4 BOOKS AND RECORDS..................................................... 30
8.5 INCOME TAX RETURNS AND REPORTS........................................ 30
8.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE................... 31
8.7 ACTIONS BY HOLDERS.................................................... 31
8.8 RELIANCE UPON DECLARATIONS............................................ 31
8.9 EVIDENCE AND AUTHORITY TO TRUSTEE..................................... 31
8.10 EXPERTS, ADVISERS AND AGENTS......................................... 32
8.11 INVESTMENT OF MONEYS HELD BY TRUSTEE................................. 33
8.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY................................ 33
8.13 TRUSTEE NOT BOUND TO ACT ON REQUEST.................................. 33
8.14 AUTHORITY TO CARRY ON BUSINESS....................................... 33
8.15 CONFLICTING CLAIMS................................................... 34
8.16 MISCELLANEOUS TRUSTEE PROVISIONS..................................... 34
8.17 ACCEPTANCE OF TRUST.................................................. 35
ARTICLE 9 COMPENSATION....................................................... 35
ARTICLE 10 INDEMNIFICATION AND LIMITATION OF LIABILITY....................... 35
10.1 INDEMNIFICATION OF THE TRUSTEE....................................... 35
10.2 LIMITATION OF LIABILITY.............................................. 36
ARTICLE 11 CHANGE OF TRUSTEE................................................. 36
11.1 RESIGNATION.......................................................... 36
11.2 REMOVAL.............................................................. 37
11.3 SUCCESSOR TRUSTEE.................................................... 37
11.4 NOTICE OF SUCCESSOR TRUSTEE.......................................... 37
ARTICLE 12 PARENT SUCCESSORS................................................. 37
12.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.................. 37
12.2 VESTING OF POWERS IN PARENT SUCCESSOR................................ 38
</TABLE>
<PAGE>
- 3 -
<TABLE>
<CAPTION>
<S> <C>
12.3 SUBSIDIARIES......................................................... 38
ARTICLE 13 AMENDMENTS AND SUPPLEMENTAL AGREEMENTS............................ 39
13.1 AMENDMENTS, MODIFICATIONS, ETC....................................... 39
13.2 MINISTERIAL AMENDMENTS............................................... 39
13.3 MEETING TO CONSIDER AMENDMENTS....................................... 39
13.4 CHANGES IN CAPITAL OF PARENT OR NEWCO II............................. 40
13.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS................................. 40
ARTICLE 14 TERMINATION AND AUTOMATIC REDEMPTION.............................. 41
14.1 PROVISIONS FOR AUTOMATIC REDEMPTION.................................. 41
14.2 TERM................................................................. 41
14.3 SURVIVAL OF CERTAIN PROVISIONS....................................... 41
ARTICLE 15 GENERAL.......................................................... 41
15.1 SEVERABILITY......................................................... 41
15.2 ENUREMENT............................................................ 41
15.3 NOTICES TO PARTIES................................................... 42
15.4 NOTICE TO NEWCO II, NEWCO I, AND PARENT.............................. 45
15.5 NOTICE TO HOLDERS.................................................... 46
15.6 COUNTERPARTS......................................................... 46
15.7 CONSTRUCTION......................................................... 46
15.8 JURISDICTION......................................................... 46
15.9 ATTORNMENT........................................................... 46
15.10 EFFECTIVENESS OF AGREEMENT.......................................... 47
15.11 TIME OF THE ESSENCE................................................. 47
</TABLE>
<PAGE>
EXCHANGE AND VOTING TRUST AGREEMENT
THIS EXCHANGE AND VOTING TRUST AGREEMENT is entered into as of February
21, 2000, by and among Advanced Communications Group, Inc., a corporation
existing under laws of Delaware ("PARENT"), ACG Holding Company, a Nova
Scotia unlimited liability company and a wholly owned subsidiary of Parent
("NEWCO I"), ACG Exchange Company, a Nova Scotia unlimited liability company
and a subsidiary of Newco I ("NEWCO II"), I + USA V Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent and a
shareholder of Newco II ("USA V"), certain holders of shares of the Company
(defined below) as set out in Schedule A hereto, YPtel/ACG Pledge
Corporation, an Ontario corporation, and Montreal Trust Company of Canada, a
trust company incorporated under the laws of Canada ("TRUSTEE").
WHEREAS, pursuant to an Agreement dated as of the 3rd day of June, 1999,
as amended and restated October 26, 1999 (as the same may be further amended
from time to time, the "YPTEL AGREEMENT"), by and among Parent, YPtel
Corporation, a corporation then incorporated under the laws of Canada,
continued under the laws of Nova Scotia as YPtel Limited, to be amalgamated
with a Nova Scotia unlimited liability company prior to the Closing Date (as
defined in the YPtel Agreement) thus becoming a Nova Scotia unlimited
liability company which will become a subsidiary of Newco II on the Closing
Date (THE "COMPANY"), the shareholders of the Company listed on Exhibit A
attached thereto, Cold Trust, Global Investment Trust, Freezer Trust, Storage
Trust, Directory Trust and Publisher Trust (collectively the "BARBADIAN
TRUSTS"), The J.L.R. Family Trust, The Paisley Family Trust, Edward Truant,
and Douglas G. McIntyre (COLLECTIVELY, THE "ICL PRINCIPALS") and Imperial
Capital Limited, a corporation incorporated under the laws of Ontario
("ICL"), the parties agreed that on the Closing Date the parties hereto would
execute and deliver the within Exchange and Voting Trust Agreement;
WHEREAS, pursuant to the YPtel Agreement, the shareholders of the
Company who are parties hereto will exchange certain of the issued and
outstanding common shares of the Company owned by them for all the initially
issued and outstanding Class A Special Shares of Newco II;
WHEREAS, Appendix A to the Articles of Association of Newco II, as
amended, sets forth, INTER ALIA, the rights, privileges, restrictions and
conditions attaching to the Class A Special Shares of Newco II (as the same
may be amended from time to time, the "EXCHANGEABLE SHARE PROVISIONS");
WHEREAS, Parent is to provide voting rights in Parent to each holder
(other than Parent or any Subsidiary of Parent) from time to time of
Exchangeable Shares, such voting rights to be equivalent to the voting rights
per share of Parent Common Stock for which such Exchangeable Shares are
exchangeable;
<PAGE>
- 2 -
WHEREAS, Parent, Newco I and Newco II are to grant to and in favor of
the holders (other than Parent or any Subsidiary of Parent) from time to time
of Exchangeable Shares certain rights, in the circumstances set forth herein,
to require Parent and/or Newco I and/or Newco II to purchase from each such
holder all or any part of the Exchangeable Shares held by the holder;
WHEREAS, the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in Parent shall be exercisable by
holders (other than Parent or any Subsidiary of Parent) from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title
to one share of Class B Preferred Stock of Parent, par value US$0.0001 (the
"PARENT SPECIAL VOTING STOCK") to which voting rights attach for the benefit
of such holders; and
WHEREAS, shortly after this Agreement becomes effective, Newco II will
amalgamate (the "NEWCO II AMALGAMATION") with various subsidiaries of Newco
II (other than the Company), and all the holders of common stock or of Class
A Special Shares of Newco II immediately prior to the amalgamation will
become all the holders of similar common shares and Class A Special Shares of
the amalgamated entity, which entity will also be named ACG Exchange Company
and be a Nova Scotia unlimited liability company (the "AMALGAMATED NEWCO II"
or "NEWCO II"), so that all references to Newco II herein shall refer to the
Newco II then existing and all references to the Class A Special Shares shall
refer to the Class A Special Shares of the Newco II then existing; and
WHEREAS, these recitals and any statements of fact in this Agreement
are made by Parent, Newco I, Newco II, USA V and the Holders and not by the
Trustee.
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this Agreement, the following terms shall have the
following meanings:
"ACG CONTROL TRANSACTION" means the completion of a Proposed Sale as
provided in Section 2.8 of the Support Agreement.
"AGGREGATE EQUIVALENT VOTING AMOUNT" means, with respect to any matter,
proposition or question on which holders of Parent Common Stock are entitled
to vote, consent or otherwise act, the product of (a) the number of shares of
Parent Common Stock for which Exchangeable Shares then issued and outstanding
and held by Holders (as hereinafter defined) are exchangeable
<PAGE>
- 3 -
multiplied by (b) the number of votes to which a holder of one share of
Parent Common Stock is entitled with respect to such matter, proposition or
question.
"AGREEMENT" means the within agreement, as the same may be amended from
time to time.
"AMALGAMATED NEWCO II" has the meaning provided in the recitals above.
"APPLICABLE LAWS" has the meaning provided in Section 5.11 hereof.
"ARTICLES OF ASSOCIATION" means the Articles of Association of Newco II
as amended from time to time.
"AUTOMATIC EXCHANGE RIGHT" means the benefit of the obligation of Parent
and Newco I to effect the automatic exchange of shares of Parent Common Stock
for Exchangeable Shares pursuant to Section 5.13 hereof.
"AUTOMATIC REDEMPTION DATE" has the meaning provided in the Exchangeable
Share Provisions.
"BOARD OF DIRECTORS" means the board of directors of Newco II.
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions;
"CLASS A SPECIAL SHARES" means the Class A Special Shares of Newco II,
and effective upon the Newco II Amalgamation, means the Class A Special
Shares of the Amalgamated Newco II;
"CLEC OPERATIONS" has the meaning provided in the YPtel Agreement.
"CLOSING DATE" has the meaning provided in the YPtel Agreement.
"COMPANY" has the meaning provided in the recitals above.
"EXCHANGE AGENT LETTER" means initially the letter agreement between
Parent, Newco I, Newco II, USA V and Transfer Agent with respect to
appointment of Continental Stock Transfer and Trust Company as exchange agent
with respect to the Class A Special Shares and providing for the holding of
certificates for Class A Special Shares in safekeeping on behalf of the
Holders, and includes any subsequent agreement with a Transfer Agent
fulfilling similar functions.
"EXCHANGE AGENT LETTER CONDITIONS" has the meaning provided in Section
5.6.
"EXCHANGE PUT DATE" has the meaning set forth in Section 5.7 hereof.
<PAGE>
- 4 -
"EXCHANGE PUT RIGHT" has the meaning provided in Section 8.1(a) of the
Exchangeable Share Provisions.
"EXCHANGE RIGHT" has the meaning provided in Section 5.1 hereof.
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions.
"EXCHANGEABLE SHARE PROVISIONS" has the meaning provided in the recitals
hereto, as such Appendix A may be amended from time to time.
"EXCHANGEABLE SHARES" means the Class A Special Shares.
"HOLDER EQUIVALENT VOTE AMOUNT" means, with respect to any matter,
proposition or question on which holders of Parent Common Stock are entitled
to vote, consent or otherwise act, the product of (a) the number of shares of
Parent Common Stock for which Exchangeable Shares then issued and outstanding
and held by a Holder are exchangeable, multiplied by (b) the number of votes
to which a holder of one share of Parent Common Stock is entitled with
respect to such matter, proposition or question.
"HOLDER VOTES" has the meaning provided in Section 4.3 hereof.
"HOLDERS" means the registered holders from time to time of Exchangeable
Shares, other than Exchangeable Shares beneficially owned by Parent or its
Subsidiaries.
"INSOLVENCY EVENT" means the institution by Newco II of any proceeding
to be adjudicated a bankrupt or insolvent or to be dissolved or wound-up, or
the consent of Newco II to the institution of bankruptcy, insolvency,
dissolution or winding-up proceedings against it, or the filing of a
petition, answer or consent seeking dissolution or winding-up under any
bankruptcy, insolvency or analogous laws, including without limitation the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and
Insolvency Act (Canada), and the failure by Newco II to contest in good faith
any such proceedings commenced in respect of Newco II within 30 days of
becoming aware thereof, or the consent by Newco II to the filing of any such
petition or to the appointment of a receiver, or the making by Newco II of a
general assignment for the benefit of creditors, or the admission in writing
by Newco II of its inability to pay its debts generally as they become due,
or Newco II not being permitted, pursuant to liquidity or solvency
requirements of applicable law, to redeem any Retracted Shares pursuant to
Section 6.6 of the Exchangeable Share Provisions unless Newco I shall have
exercised its Retraction Call Right.
"LIQUIDATION CALL PURCHASE PRICE" has the meaning set forth in Section
6.1 hereof.
"LIQUIDATION CALL RIGHT" has the meaning provided in Section 6.1 hereof.
<PAGE>
- 5 -
"LIQUIDATION EVENT" has the meaning provided in Subsection 5.13(b)
hereof.
"LIQUIDATION EVENT EFFECTIVE TIME" has the meaning provided in
Subsection 5.13(c) hereof.
"LIST" has the meaning provided in Section 4.7 hereof.
"MINIMUM NUMBER" means the lesser of (a) the number of Exchangeable
Shares which are exchangeable for 1,000 shares of Parent Common Stock or more
(b) all Exchangeable Shares then registered in the name of the applicable
Holder if exchangeable for less than 1,000 shares of Parent Common Stock.
"NEWCO I RETRACTION CALL NOTICE" has the meaning provided in Section 6.3
hereof.
"NEWCO II AMALGAMATION" has the meaning provided in the recitals above.
"OFFICER'S CERTIFICATE" means, with respect to Parent, a certificate
signed by the Chief Executive Officer or Chief Financial Officer of Parent
and with respect to Newco I, Newco II or USA V a certificate signed by the
President, Vice-President or Treasurer of Newco I or Newco II or USA V, as
applicable.
"PARENT COMMON STOCK" means a share of common stock of Parent, par value
US$0.0001.
"PARENT CONSENT" has the meaning provided in Section 4.3 hereof.
"PARENT MEETING" has the meaning provided in Section 4.3 hereof.
"PARENT SPECIAL VOTING STOCK" has the meaning provided in the recitals
hereto.
"PARENT SUCCESSOR" has the meaning provided in subsection 12.1(a) hereof.
"PERSON" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"PROPOSED SALE" has the meaning provided in Section 2.8 of the Support
Agreement.
"PURCHASE PRICE" has the meaning provided in Section 6.3 hereof.
<PAGE>
- 6 -
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in Section 6.2
hereof.
"REDEMPTION CALL RIGHT" has the meaning provided in Section 6.2 hereof.
"REDEMPTION DATE" shall have the meaning provided in the Exchangeable
Share Provisions.
"RETRACTED SHARES" has the meaning provided in Section 6.1 of the
Exchangeable Share Provisions and Section 5.8 hereof.
"RETRACTION CALL RIGHT" has the meaning provided in Section 6.1 of the
Exchangeable Share Provisions and Section 6.3 hereof.
"RETRACTION DATE" shall have the meaning provided in Section 6.1 of the
Exchangeable Share Provisions.
"RETRACTION REQUEST" has the meaning provided in Section 6.1 of the
Exchangeable Share Provisions.
"S-3 EFFECTIVE DATE" has the meaning provided in Section 5.15 hereof.
"SUBSIDIARY" has the meaning provided in the Exchangeable Share
Provisions.
"SUPPORT AGREEMENT" means that certain Support Agreement made as of even
date hereof by and between Parent, Newco I, Newco II, USA V and the Company
shareholders party thereto, as such Support Agreement may be amended from
time to time.
"TRANSFER AGENT" means the duly appointed exchange agent for the time
being of the Class A Special Shares, and as applicable a duly appointed
transfer agent for the time being of the Class A Special Shares; the initial
Transfer Agent shall be Continental Stock Transfer and Trust Company, which
is exchange agent, branch registrar and co-transfer agent with respect to the
Class A Special Shares.
"TRANSFER AGENT OFFICE" means the office of the Transfer Agent that may
be specified from time to time by the Transfer Agent in connection with
presentation or surrender of certificates of Exchangeable Shares by holders
thereof and for other purposes.
"TRUST" means the trust created by this Agreement with respect to the
Trust Estate.
"TRUST ESTATE" means the Voting Share.
<PAGE>
- 7 -
"TRUSTEE" means Montreal Trust Company of Canada and, subject to the
provisions of Article 11 hereof, includes any successor trustee or
permitted assigns.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Parent Special Voting Stock issued
by Parent to and deposited with the Trustee, which entitles the holder of
record to a number of votes at meetings of holders of Parent Common Stock
equal to the Aggregate Equivalent Voting Amount.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
Agreement into articles, sections and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. Unless otherwise indicated,
all references to an "Article" or "Section" followed by a number and/or a
letter refer to the specified Article or Section of this Agreement. The terms
"this Agreement", "hereof", "herein" and "hereunder" and similar expressions
refer to this Agreement and not to any particular Article, Section or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only
shall include the plural and vice versa. Words importing the use of any
gender shall include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required
to be taken under this Agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
2.1 PURPOSE. The purpose of this Agreement is (i) to create the Trust
for the benefit of the Holders with respect to the Voting Share; and (ii) to
provide certain rights to the Holders of Exchangeable Shares, Newco I and
Parent, as herein provided.
ARTICLE 3
VOTING SHARE
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE. Parent hereby issues
to and deposits with the Trustee, the Voting Share to be hereafter held of
record by the Trustee as trustee for and on behalf of, and for the use and
benefit of, the Holders and in accordance with the provisions of this
Agreement. Parent hereby acknowledges receipt from the Trustee as trustee for
and on behalf of the Holders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Voting Share by Parent to the
Trustee. During the term of the Trust and subject to the terms and conditions
of this Agreement, the Trustee
<PAGE>
- 8 -
shall possess and be vested with full legal ownership of the Voting Share and
shall be entitled to exercise the voting rights and all of the other rights
and powers of an owner with respect to the Voting Share, provided that the
Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Holders in accordance with
the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power
or authority to sell, transfer, vote or otherwise deal in or with
the Voting Share, and the Voting Share shall not be used or
disposed of by the Trustee for any purpose other than the purposes
for which this Trust is created pursuant to this Agreement.
3.2 LEGEND SHARE CERTIFICATES. Newco II will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of their right to instruct the Trustee with respect to the exercise
of the Voting Rights with respect to the Exchangeable Shares held by the
Holders.
3.3 SAFE KEEPING OF CERTIFICATE. The certificate representing the
Voting Share shall at all times be held in safekeeping by the Trustee.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may properly come before the
stockholders of Parent at a Parent Meeting or in connection with a Parent
Consent. The Voting Rights shall be and remain vested in and exercised by the
Trustee. Subject to Section 8.15 hereof:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Holders
entitled to instruct the Trustee as to the voting thereof at the
time at which a Parent Consent is sought or a Parent Meeting is
held; and
(b) to the extent that no instructions are received from a Holder with
respect to the Voting Rights to which such Holder is entitled, the
Trustee shall vote the Holder Votes of such Holder in the same
manner as the majority of other Holder Votes for which Trustee has
received instructions are voted by Trustee.
4.2 VOTING RIGHTS (CONTINUED). The holder of the Voting Share is
entitled to vote with the holders of Parent Common Stock as a single class in
accordance with the terms of the Parent Special Voting Stock. When the holder
<PAGE>
- 9 -
of the Voting Share is entitled to vote as a separate class in accordance
with the terms of the Parent Special Voting Stock, the Holders may instruct
the Trustee as to the exercise of the votes attached to the Voting Share in
such class or series vote. The Trustee acknowledges that, in accordance with
the terms of the Parent Special Voting Stock, the holder of the Voting Share
and the holders of shares of Parent Common Stock shall vote or consent (or
withhold consent) as a single class in respect of each matter, question or
proposition to be voted on at a Parent Meeting or with respect to which
consent is sought in connection with a Parent Consent, it being further
acknowledged that, in certain circumstances, the holder of the Voting Share
shall, in addition, have a further vote as a separate class or series in
respect of any particular matter, question or proposition.
4.3 NUMBER OF VOTES. With respect to all meetings of stockholders of
Parent at which holders of shares of Parent Common Stock are entitled to vote
(a "PARENT MEETING") and with respect to all written consents sought by
Parent from its stockholders including the holders of shares of Parent Common
Stock (a "PARENT CONSENT"), each Holder shall be entitled to instruct the
Trustee to cast and exercise, in the manner instructed, a number of votes
equal to the Holder Equivalent Vote Amount with respect to the Exchangeable
Shares owned of record by such Holder on the record date established by
Parent or by applicable law for such Parent Meeting or Parent Consent, as the
case may be, (the "HOLDER VOTES") in respect of each matter, question or
proposition to be voted on at such Parent Meeting or with respect to which
consent is sought in connection with such Parent Consent.
4.4 MAILINGS TO SHAREHOLDERS. With respect to each Parent Meeting and
Parent Consent, the Trustee will mail or cause to be mailed (or otherwise
communicate in the same manner as Parent utilizes in communications to
holders of Parent Common Stock) to each of the Holders named in the List on
the same day as the initial mailing or notice (or other communication) with
respect thereto is commenced or given by Parent to its stockholders:
(a) a copy of such notice, together with any related materials to be
provided to stockholders of Parent;
(b) a statement that such Holder is entitled to instruct the Trustee
as to the exercise of the Holder Votes with respect to such Parent
Meeting or Parent Consent, as the case may be, or pursuant to
Section 4.8 hereof, to attend such Parent Meeting and to exercise
personally the Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Holder or his designee to exercise
personally the Holder Votes; or
<PAGE>
- 10 -
(ii) a proxy to a designated agent or other representative of the
management of Parent to exercise such Holder Votes;
(d) a statement that if no such instructions are received from the
Holder, the Holder Votes to which such Holder is entitled are to
be voted in the same manner as the majority of the other Holder
Votes for which Trustee has received instruction are voted by
Trustee;
(e) a form of direction whereby the Holder may so direct and instruct
the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which
in the case of a Parent Meeting shall not be earlier than the
close of business on the second Business Day prior to such
meeting, and the method for revoking or amending such instructions.
The materials referred to above are to be provided by Parent to the
Trustee, but to the extent feasible, draft forms of items (b) through (f)
shall be submitted to Trustee in advance for review and comment by the
Trustee.
For the purpose of determining Holder Votes to which a Holder is
entitled in respect of any such Parent Meeting or Parent Consent, the number
of Exchangeable Shares owned of record by the Holder shall be determined at
the close of business on the record date established by Parent or by
applicable law for purposes of determining stockholders entitled to vote at
such Parent Meeting or to give written consent in connection with such Parent
Consent. Parent will notify the Trustee of any decision of the board of
directors of Parent with respect to the calling of any such Parent Meeting or
the seeking of any such Parent Consent and shall provide all necessary
information and materials to the Trustee in each case promptly and in any
event in sufficient time to enable the Trustee to perform its obligations
contemplated by this Section 4.4.
4.5 COPIES OF STOCKHOLDER INFORMATION. Parent will deliver to the
Trustee copies of all proxy materials, (including notices of Parent Meetings,
but excluding proxies to vote shares of Parent Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of Parent Common Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Holder at or about the same time as such materials are sent
to holders of Parent Common Stock. The Trustee will mail or otherwise send to
each Holder, at the expense of Parent, copies of all such materials (and all
materials specifically directed to the Holders or to the Trustee for the
benefit of the Holders by Parent) received by the Trustee from Parent at or
about the same time as such materials are first sent to holders of Parent
Common Stock. The Trustee will also make available for inspection by any
Holder at the Trustee's principal trust office in the
<PAGE>
- 11 -
City of Toronto all proxy materials, information statements, reports and
other written communications that are:
(a) received by the Trustee as the registered holder of the Parent
Special Voting Stock and made available by Parent generally to
holders of Parent Common Stock; or
(b) specifically directed to the Holders or to the Trustee for the
benefit of the Holders by Parent.
4.6 OTHER MATERIALS. As soon as practicable after receipt by Parent or
any stockholder of Parent (if such receipt is known by Parent) of any
material sent or given generally to the holders of Parent Common Stock by or
on behalf of a third party, including without limitation dissident proxy and
information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), Parent shall
obtain and deliver to the Trustee copies thereof in sufficient quantities so
as to enable the Trustee to forward such material (unless the same has been
provided directly to Holders by such third party) to each Holder as soon as
possible thereafter. As soon as practicable after receipt thereof, the
Trustee will mail or otherwise send to each Holder, at the expense of Parent,
copies of all such materials received by the Trustee from Parent. The Trustee
will also make copies of all such materials available for inspection by any
Holder at the Trustee's principal trust office in the City of Toronto.
4.7 LIST OF PERSONS ENTITLED TO VOTE. Newco II shall, (a) prior to
each annual and special Parent Meeting or the seeking of any Parent Consent
and (b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "LIST") of the names and
addresses of the Holders arranged in alphabetical order and showing the
number of Exchangeable Shares held of record by each such Holder, in each
case at the close of business on the date specified by the Trustee in such
request or, in the case of a List prepared in connection with a Parent
Meeting or a Parent Consent, at the close of business on the record date
established by Parent or pursuant to applicable law for determining the
holders of Parent Common Stock entitled to receive notice of and/or to vote
at such Parent Meeting or to give consent in connection with such Parent
Consent. Each such List shall be delivered to the Trustee promptly after
receipt by Newco II of such request or the record date for such meeting or
seeking of consent, as the case may be, and in any event within sufficient
time as to enable the Trustee to perform its obligations under this
Agreement. Parent agrees to give Newco II written notice (with a copy to the
Trustee) of the calling of any Parent Meeting or the seeking of any Parent
Consent, together with the record dates therefor, sufficiently prior to the
date of the calling of such meeting or seeking of such consent so as to
enable Newco II to perform its obligations under this Section 4.7. Newco II
shall cause the Transfer Agent to prepare and deliver the List as
contemplated hereunder and to deliver copies thereof to Newco I, Parent and
Trustee upon their request. Parent
<PAGE>
- 12 -
agrees to provide a copy of the most current List prepared upon request of a
Holder of Exchangeable Shares from time to time.
4.8 ENTITLEMENT TO DIRECT VOTES. Any Holder named in a List prepared
in connection with any Parent Meeting or any Parent Consent will be entitled
(a) to instruct the Trustee in the manner described in Section 4.4 hereof
with respect to the exercise of the Holder Votes to which such Holder is
entitled or (b) to attend such meeting and personally to exercise thereat (or
to exercise with respect to any written consent), as the proxy of the
Trustee, the Holder Votes to which such Holder is entitled.
4.9 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT
MEETING.
(a) In connection with each Parent Meeting and Parent Consent, the
Trustee shall exercise, either in person or by proxy, in accordance with the
instructions received from a Holder pursuant to Section 4.4 hereof, the
Holder Votes as to which such Holder is entitled to direct the vote (or any
lesser number thereof as may be set forth in the instructions); provided,
however, that such written instructions are received by the Trustee from the
Holder prior to the time and date fixed by the Trustee for receipt of such
instructions in the notice given by the Trustee to the Holder pursuant to
Section 4.4 hereof.
(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights to
attend each Parent Meeting. Upon submission by a Holder (or its designee) of
identification satisfactory to the Trustee's representative, and at the
Holder's request, such representative shall sign and deliver to such Holder
(or its designee) a proxy to exercise personally the Holder Votes as to which
such Holder is otherwise entitled hereunder to direct the vote, if such
Holder either:
(i) has not previously given the Trustee instructions pursuant
to Section 4.4 hereof in respect of such meeting, or
(ii) submits to the Trustee's representative written revocation
of any such previous instructions.
At such meeting, the Holder exercising such Holder Votes shall have the
same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect
of any matter, question or proposition, and to vote at such meeting by way of
a show of hands in respect of any matter, question or proposition. The
Trustee shall be reimbursed by Parent for any reasonable expenses incurred in
the course of attending or causing a representative to attend each Parent
Meeting.
4.10 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Trustee to the Holders pursuant to this Agreement shall be
sent by mail (or otherwise communicated in the same manner as Parent utilizes
in
<PAGE>
- 13 -
communications to holders of Parent Common Stock, subject to the Trustee
being advised in writing of such method of communication and its ability to
provide such method) to each Holder at its address as shown on the books of
Newco II. Newco II (and Parent) shall provide or cause to be provided to the
Trustee for this purpose, on a timely basis and without charge or other
expense:
(a) a current List; and
(b) at the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this Agreement.
4.11 TERMINATION OF VOTING RIGHTS. Except as otherwise provided herein
or in the Exchangeable Share Provisions, all of the rights of a Holder with
respect to the Holder Votes exercisable in respect of the Exchangeable Shares
held by such Holder, including the right to instruct the Trustee as to the
voting of or to vote personally such Holder Votes, shall be deemed to be
surrendered by the Holder and such Holder Votes and the Voting Rights
represented thereby shall cease immediately upon delivery of the Exchangeable
Share Consideration deliverable in exchange therefor by Parent, Newco I or
Newco II, upon the exercise by the Holder of the Exchange Put Right or the
Exchange Right or the occurrence of the automatic exchange of Exchangeable
Shares for shares of Parent Common Stock, as specified in Article 5 hereof,
or upon the retraction or redemption of Exchangeable Shares pursuant to
Article 6 or Article 7 of the Exchangeable Share Provisions, or upon the
effective date of the liquidation, dissolution or winding-up of Newco II or
any other distribution of the assets of Newco II among its shareholders for
the purpose of winding up its affairs pursuant to Article 5 of the
Exchangeable Share Provisions or upon the purchase of Exchangeable Shares
from the holder thereof by Newco I pursuant to the exercise by Newco I of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call
Right.
ARTICLE 5
EXCHANGE RIGHT, EXCHANGE PUT RIGHT AND AUTOMATIC EXCHANGE RIGHT
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE PUT RIGHT AND EXCHANGE RIGHT.
Parent and Newco I hereby jointly and severally grant to each Holder:
(a) the Exchange Put Right; and
(b) the right (the "EXCHANGE RIGHT") upon the occurrence and during
the continuance of an Insolvency Event, to require Newco I (and
upon default by Newco I, Parent) to purchase from such Holder all
or any part comprising at least the Minimum Number of the
Exchangeable Shares held by such Holder;
all in accordance with the provisions of this Agreement and the Exchangeable
Share Provisions, as the case may be. Each of Parent and Newco I hereby
<PAGE>
- 14 -
acknowledges receipt from the Holders of good and valuable consideration (and
the adequacy thereof) for the grant of the Exchange Put Right and the
Exchange Right to the Holders. Subject to the terms and conditions of this
Agreement, the Holders shall be entitled to exercise all of the rights and
powers of an owner with respect to the Exchange Put Right and the Exchange
Right.
5.2 GRANT AND OWNERSHIP OF THE AUTOMATIC EXCHANGE RIGHT. Parent and
Newco I hereby jointly and severally grant to the Holders the Automatic
Exchange Right in accordance with the provisions of this Agreement. Each of
Parent and Newco I hereby acknowledges receipt from the Holders of good and
valuable consideration (and the adequacy thereof) for the grant of the
Automatic Exchange Right by Parent and Newco I to the Holders. Subject to the
terms and conditions of this Agreement, the Holders shall be entitled to
exercise all of the rights and powers of an owner with respect to the
Automatic Exchange Right.
5.3 LEGEND SHARE CERTIFICATES. Newco II will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of:
(a) their right with respect to the exercise of the Exchange Put
Right and the Exchange Right in respect of the Exchangeable
Shares held by a Holder, and
(b) the Automatic Exchange Right.
5.4 GENERAL EXERCISE OF EXCHANGE PUT RIGHT, THE EXCHANGE RIGHT AND THE
AUTOMATIC EXCHANGE RIGHT. The Exchange Put Right, the Exchange Right and the
Automatic Exchange Right shall be and remain vested in the Holders.
5.5 PURCHASE PRICE. The purchase price payable by Parent or Newco I
for each Exchangeable Share to be purchased by Parent or Newco I (a) under
the Exchange Put Right, (b) under the Exchange Right or (c) under the
Automatic Exchange Right, shall be consideration equal to the Exchangeable
Share Consideration. The applicable Exchangeable Share Consideration for each
such Exchangeable Share so purchased may be satisfied by Parent issuing and
Parent or Newco I delivering or causing to be delivered to the relevant
Holder, the applicable Exchangeable Share Consideration (less any amounts
withheld pursuant to Section 5.14 hereof). A purchase pursuant to the
Exchange Put Right, the Exchange Right or the Automatic Exchange Right may be
made by either Parent or Newco I, as may be determined by Parent and Newco I
in their discretion, but unless a Holder is otherwise advised by Parent or
Newco I at any time, a Holder may assume the purchase will be made by Newco I
and Parent will cause the completion of such purchase by Newco I and delivery
of the Exchangeable Share Consideration. If Newco I fails to complete a
purchase as aforesaid or Parent is unable to cause Newco I to so complete,
Parent shall
<PAGE>
- 15 -
deliver such Exchangeable Share Consideration to complete such purchase
within the time period required pursuant to Section 5.7 hereof.
5.6 EXERCISE INSTRUCTIONS FOR EXCHANGE PUT RIGHT AND EXCHANGE RIGHT.
Subject to the terms and conditions provided in Article 8 of the Exchangeable
Share Provisions with respect to the Exchange Put Right and subject to the
terms and conditions set forth herein with respect to the Exchange Put Right
and the Exchange Right, a Holder shall be entitled (a) to exercise the
Exchange Put Right at any time and (b) upon the occurrence and during the
continuance of an Insolvency Event, to exercise the Exchange Right, in either
case with respect to all or any part comprising at least the Minimum Number
of the Exchangeable Shares registered in the name of such Holder on the books
of Newco II. To cause the exercise of the Exchange Right or the Exchange Put
Right, the Holder shall present and surrender to Transfer Agent at the
Transfer Agent Office the certificates representing the Exchangeable Shares
which such Holder desires Parent or Newco I to purchase, duly endorsed in
blank (or as may be otherwise specified by the Transfer Agent), and
accompanied by such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the Act and the Articles of
Association of Newco II and such other documents and instruments as are
required hereunder or as Transfer Agent may reasonably request together with:
(a) a duly completed form of notice of exercise of the Exchange Put
Right or Exchange Right, as applicable, stating:
(i) that the Holder thereby exercises the Exchange Right or
Exchange Put Right, as applicable, so as to require Parent
or Newco I to purchase from the Holder the number of
Exchangeable Shares specified therein, provided such number
shall be at least the Minimum Number,
(ii) for the Exchange Right, stating that an Insolvency Event has
occurred and is continuing and attaching appropriate
evidence that such has occurred,
(iii) that such Holder has good title to and owns all such
Exchangeable Shares to be acquired by Parent or Newco I, as
applicable, free and clear of all liens, claims,
encumbrances, security interests and adverse claims or
interests,
(iv) the names in which the certificates representing Parent
Common Stock issuable in connection with the exercise of the
Exchange Right are to be issued, and
(v) the names and addresses of the persons to whom the
Exchangeable Share Consideration should be delivered.
<PAGE>
- 16 -
(b) payment (or evidence reasonably satisfactory to Parent of payment)
of the taxes (if any) payable as contemplated by Section 5.9 of this
Agreement or a statement by such Holder that no such taxes are payable.
So long as the certificates representing the Exchangeable Shares are
held for safekeeping in the possession of the Transfer Agent on behalf of a
Holder pursuant to the Exchange Agent Letter, and the Transfer Agent has
received any necessary instructions or authorizations from such Holder to
transfer the Class A Special Shares (the "EXCHANGE AGENT LETTER CONDITIONS"),
then if a Holder delivers to Transfer Agent a duly completed form of notice
of exercise of the Exchange Put Right or Exchange Right, as applicable, in
the form of Form 1 or Form 2 attached hereto, respectively, and provided an
Insolvency Event shall have occurred and be continuing in the case of the
exercise of the Exchange Right, no additional documents or instruments shall
be required to be submitted for the proper exercise of the Exchange Put Right
or Exchange Right, unless the Holder is specifically notified by the Transfer
Agent in good faith of an additional document or instrument necessary to
comply with applicable legal requirements.
Such notice shall be irrevocable unless revoked (as to exercise of the
Exchange Put Right) by the Holder pursuant to Section 5.7(c) below or unless
the applicable purchase is not completed in accordance herewith and shall
constitute the Holder's authorization to Newco I and Parent, as the case may
be, to effect the exchange on behalf of the Holder. The surrender by the
Holder of Exchangeable Shares hereunder shall constitute the representation,
warranty and covenant of the Holder that the Exchangeable Shares so purchased
are sold free and clear of any lien, encumbrance, security interest or
adverse claim or interest. If only a part of the Exchangeable Shares
represented by any certificate or certificates delivered to Transfer Agent
are to be purchased by Parent or Newco I under the Exchange Right or Exchange
Put Right, a new certificate for the balance of such Exchangeable Shares
shall be issued and promptly delivered to the Holder at the expense of Newco
II.
5.7 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE.
(a) The receipt by the Transfer Agent at the Transfer Agent Office
(which shall be deemed receipt by Parent and Newco I) of the certificates
duly endorsed for transfer representing the Exchangeable Shares which the
Holder desires Parent or Newco I to purchase under the Exchange Put Right or
the Exchange Right or the holding of such certificates by Transfer Agent as
referenced in Section 5.6(b) above, together with such other documents and
instruments of transfer, if any, and a duly completed form of notice of
exercise of the Exchange Put Right or the Exchange Right (and payment of
taxes, if any, payable as contemplated by Section 5.9 hereof) (the date of
such receipt in the case of the Exchange Put Right sometimes being referred
to as the "EXCHANGE PUT DATE", and in the case of the Exchange Right
sometimes being referred to as the "EXCHANGE NOTICE DATE"), shall constitute
exercise of the Exchange Put
<PAGE>
- 17 -
Right or the Exchange Right, as applicable, by the Holder of such
Exchangeable Shares. Parent or Newco I, as applicable, shall within two (2)
Business Days after such receipt if the Exchange Agent Letter Conditions are
satisfied and otherwise within five (5) Business Days after such receipt,
make delivery of the Exchangeable Share Consideration to the Holder in
connection with the exercise of the Exchange Put Right or the Exchange Right
(less any amounts withheld pursuant to Section 5.14 hereof); provided,
however, that no such delivery shall be made unless and until the Holder
requesting the same shall have paid (or provided evidence satisfactory to the
Transfer Agent of the payment of) the taxes (if any) payable as contemplated
by Section 5.9 of this Agreement. Parent will cause Newco I to make delivery
of the Exchangeable Share Consideration in accordance with this Section
5.7(a) or will deliver it itself.
(b) Unless a Holder exercises its right to revoke pursuant to Section
5.7(c) with respect to the Exchange Put Right, immediately upon the notice of
the exercise of the Exchange Put Right or the Exchange Right as provided in
this Section 5.7(a), the closing of the transaction of purchase and sale
contemplated by the Exchange Put Right or the Exchange Right shall be deemed
to have occurred and Parent and/or Newco I, as applicable, shall be required
to take all action necessary to permit it to occur, including delivery of the
relevant Exchangeable Share Consideration, no later than the close of
business on the second Business Day or the fifth Business Day, as applicable,
following the Exchange Put Date or Exchange Notice Date. The Holder of such
Exchangeable Shares shall be deemed to have transferred to Parent or Newco I,
as applicable, all of its right, title and interest in and to such
Exchangeable Shares, shall cease to be a holder of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of a holder or Holder
in respect thereof when such Exchangeable Share Consideration is delivered by
Parent or Newco I to the Holder, and until such time the rights of the Holder
shall remain unaffected. Concurrently with such Holder ceasing to be a holder
of Exchangeable Shares, the Holder shall be considered and deemed for all
purposes to be the holder of the shares of Parent Common Stock delivered to
it pursuant to the Exchange Put Right or the Exchange Right. For greater
certainty, until the Exchangeable Share Consideration is delivered to the
Holder (or as the Holder may direct), the Holder shall be deemed to still be
a holder of the Exchangeable Shares tendered for sale for purposes of voting
rights with respect thereto under this Agreement.
(c) A Holder may, by notice in writing given by the Holder to the
Transfer Agent before the close of business on the first Business Day
following the Exchange Put Date, provided no such notice by Holder shall be
effective if given to the Transfer Agent after the Exchangeable Share
Consideration has been delivered to such Holder, withdraw such Holder's
notice of exercise of the Exchange Put Right in which event such exercise of
the Exchange Put Right shall be null and void, and for greater certainty, the
offer constituted by the notice exercising the Exchange Put Right to sell the
applicable Exchangeable Shares shall be deemed to be revoked. A Holder
revoking its notice of exercise of Exchange Put Right shall be obligated to
reimburse Parent or Newco I for any
<PAGE>
- 18 -
actual costs incurred (including any charges of the Transfer Agent) in
connection with such Holder's exercise of the Exchange Put Right prior to
Transfer Agent's receipt of notice of the applicable withdrawal.
5.8 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event
that a Holder has exercised its right under Article 6 of the Exchangeable
Share Provisions to require Newco II to redeem all or any part comprising at
least the Minimum Number of the Exchangeable Shares held by the Holder (the
"RETRACTED SHARES") and is notified by Newco II pursuant to Section 6.6 of
the Exchangeable Share Provisions that Newco II will not be permitted as a
result of liquidity or solvency requirements of applicable law to redeem all
such Retracted Shares, subject to receipt by the Holders of written notice to
that effect from Newco II and that the Holder has not revoked the Retraction
Request delivered by the Holder to Newco II pursuant to Section 6.7 of the
Exchangeable Share Provisions, the Retraction Request will constitute and
will be deemed to constitute notice from the Holder to Parent and Newco I
with respect to the exercise of the Exchange Right with respect to those
Retracted Shares which Newco II is unable to redeem. In any such event, Newco
II hereby agrees immediately to notify the Holder of such prohibition against
Newco II's redeeming all of the Retracted Shares and immediately to forward
or cause to be forwarded to the Holder all relevant materials delivered by
the Holder to Newco II (including without limitation a copy of the Retraction
Request delivered pursuant to Section 6.1 of the Exchangeable Share
Provisions) in connection with such proposed redemption of the Retracted
Shares, and Newco I and/or Parent will thereupon purchase the Retracted
Shares which Newco II is not permitted to redeem.
5.9 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable
Shares to Parent or Newco I pursuant to the Exchange Put Right or the
Exchange Right or any sale of Exchangeable Shares to Parent or Newco I
pursuant to the Automatic Exchange Right, the share certificate or
certificates representing Parent Common Stock to be delivered in connection
with the payment of the total purchase price therefor shall be issued in the
name of the Holder of the Exchangeable Shares so sold or in such names as
such Holder may otherwise direct the Transfer Agent in writing, without
charge to the holder of the Exchangeable Shares so sold, provided, however,
that such Holder:
(a) shall pay (and Parent and Newco I shall not be required to pay)
any documentary, stamp, transfer or other taxes that may be
payable in respect of any transfer involved in the issuance or
delivery of such shares to a person other than such Holder, or
(b) shall have established to the reasonable satisfaction of Parent or
Newco I, as applicable, that such taxes, if any, have been paid or
Holder shall have provided a statement that no such taxes are
payable.
<PAGE>
- 19 -
Such determination of taxes payable (or not) shall be made within the period
during which the Exchangeable Share Consideration is required to be delivered.
5.10 NOTICE OF INSOLVENCY EVENT. As soon as practicable following the
occurrence of an Insolvency Event or any event which with the giving of
notice or the passage of time or both would be an Insolvency Event, Newco II
shall give written notice thereof to the Holders. As soon as practicable
after receiving notice from Newco II of the occurrence of an Insolvency
Event, Newco II will mail to each Holder at the expense of Newco II (or
Parent if necessary) a notice of such Insolvency Event, which notice shall
contain a brief statement of the right of the Holders with respect to the
Exchange Right.
5.11 QUALIFICATION OF PARENT COMMON STOCK. Parent covenants that if any
shares of Parent Common Stock to be issued and delivered pursuant to the
Exchange Put Right, the Exchange Right, the Automatic Exchange Right or
otherwise pursuant to this Agreement or under the Exchangeable Share
Provisions require registration or qualification with or approval of or the
filing of any document including any prospectus or similar document, the
taking of any proceeding with or the obtaining of any order, ruling or
consent from any governmental or regulatory authority under any Canadian or
United States federal, provincial or state law or regulation or pursuant to
the rules and regulations of any regulatory authority, or the fulfillment of
any other legal requirement (collectively, the "APPLICABLE LAWS") before such
shares may be issued or transferred and delivered by Parent, Newco I or Newco
II to the initial holder thereof or in order that such shares of Parent
Common Stock may be freely traded thereafter, Parent will in good faith
expeditiously take all such actions and do all such things as are necessary
to register, qualify or obtain required approvals for the resale by such
holders of such shares of Parent Common Stock. Parent will in good faith take
all actions and do all things as are necessary under Applicable Laws at the
relevant time to cause the shares of Parent Common Stock to be issued and
delivered pursuant to the Exchange Put Right, the Exchange Right, the
Automatic Exchange Right or otherwise pursuant to this Agreement or under the
Exchangeable Share Provisions and to be freely tradeable thereafter, provided
that the first trade of Parent Common Stock is required to be executed
through the facilities of a stock exchange or market outside of Canada (such
as the New York Stock Exchange). Parent and Newco II, as the case may be,
will in good faith expeditiously take all such actions and do all such things
as are necessary to cause all shares of Parent Common Stock to be delivered
pursuant to the Exchange Put Right, the Exchange Right, the Automatic
Exchange Right or otherwise pursuant to this Agreement or under the
Exchangeable Share Provisions to be listed, quoted or posted for trading on
all stock exchanges and quotation systems on which outstanding shares of
Parent Common Stock are listed, quoted or posted for trading at such time.
Parent covenants that on or before the Closing Date in the YPTel Agreement,
Parent shall have registered, qualified or obtained required approvals for
the resale by the holders of Parent Common Stock with respect to the Parent
Common Stock hereafter required to be issued and delivered in connection with
exchanges
<PAGE>
- 20 -
pursuant to the Exchange Put Right, the Exchange Right, the Automatic
Exchange Right or the Exchangeable Share Provisions.
5.12 PARENT COMMON STOCK. Parent hereby represents, warrants and
covenants that the Parent Common Stock issuable and deliverable as described
herein will be duly authorized and validly issued as fully paid and
non-assessable.
5.13 AUTOMATIC EXCHANGE ON LIQUIDATION OF PARENT.
(a) Parent will give the Holders written notice of each of the
following events at the time set forth below:
(i) in the event of any determination by the board of directors
of Parent to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Parent or to effect
any other distribution of assets of Parent among its
stockholders for the purpose of winding up its affairs at
the same time as notice is sent by Parent to holders of its
shares, which shall in any event be at least 30 days prior
to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution; and
(ii) as soon as practicable following the earlier of: receipt by
Parent of notice of, or Parent's otherwise becoming aware
of, any threatened or instituted claim, suit, petition or
other proceedings with respect to the involuntary
liquidation, dissolution or winding-up of Parent or to
effect any other distribution of assets of Parent among its
stockholders for the purpose of winding up its affairs, in
each case where Parent has failed to contest in good faith
any such proceeding commenced in respect of Parent within 30
days of becoming aware thereof.
(b) Immediately following or together with the notice by Parent to
Holders of any event (a "LIQUIDATION EVENT") contemplated by Section
5.13(a)(i) or 5.13(a)(ii) above, Parent shall provide Holders with details
concerning the automatic exchange of Exchangeable Shares for shares of Parent
Common Stock provided for in Section 5.13(c) hereof (the "AUTOMATIC EXCHANGE
RIGHT").
(c) In order that the Holders will be able to participate on a pro
rata basis with the holders of Parent Common Stock in the distribution of
assets of Parent in connection with a Liquidation Event, immediately prior to
the effective time (the "LIQUIDATION EVENT EFFECTIVE TIME") of a Liquidation
Event, all of the then outstanding Exchangeable Shares shall be automatically
exchanged for shares of Parent Common Stock without any action of Holders
being required.
<PAGE>
- 21 -
To effect such automatic exchange, Parent shall then be deemed to have
purchased each Exchangeable Share outstanding immediately prior to the
Liquidation Event Effective Time and held by Holders, and each Holder shall
then be deemed to have sold the Exchangeable Shares held by it at such time,
for a purchase price per share equal to the Exchangeable Share Consideration.
(d) The closing of the transaction of purchase and sale contemplated
by Section 5.13(c) above shall be deemed to have occurred immediately prior
to the Liquidation Event Effective Time, and each Holder of Exchangeable
Shares shall be deemed to have transferred to Parent all of the Holder's
right, title and interest in and to such Exchangeable Shares and shall cease
to be a holder of such Exchangeable Shares, and Parent shall deliver to the
Holder the Exchangeable Share Consideration deliverable upon the automatic
exchange of Exchangeable Shares (less any amounts withheld pursuant to
Section 5.14 hereof). Concurrently with such Holder's ceasing to be a holder
of Exchangeable Shares, the Holder shall be considered and deemed for all
purposes to be the holder of the shares of Parent Common Stock delivered to
it pursuant to the automatic exchange of Exchangeable Shares for Parent
Common Stock, and the certificates held by the Holder previously representing
the Exchangeable Shares exchanged by the Holder with Parent pursuant to such
automatic exchange shall thereafter be deemed to represent the shares of
Parent Common Stock delivered to the Holder pursuant to such automatic
exchange. Upon the request of a Holder and the surrender by the Holder of
Exchangeable Share certificates deemed to represent shares of Parent Common
Stock, duly endorsed in blank and accompanied by such instruments of transfer
as Parent may reasonably require, Parent shall deliver or cause to be
delivered to the Holder, at the expense of Parent, certificates representing
the shares of Parent Common Stock of which the Holder is the holder.
Notwithstanding the foregoing, until each Holder is actually entered on the
register of holders of Parent Common Stock, such Holder shall be deemed to
still be a holder of the transferred Exchangeable Shares for purposes of all
voting rights with respect thereto under this Agreement.
5.14 WITHHOLDING RIGHTS. Parent or Newco I, as applicable, shall be
entitled to deduct and withhold from any consideration otherwise payable
under this Agreement to any holder of Exchangeable Shares or Parent Common
Stock such amounts as Parent or Newco I, as applicable, is required to deduct
and withhold with respect to such payment under the Income Tax Act (Canada),
the United States Internal Revenue Code of 1986 or any provision of
provincial, state, local or foreign tax law, in each case as amended or
succeeded. Such determination of the requirement to withhold shall be made
within the period during which the Exchangeable Share Consideration is
required to be delivered. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority and details are provided to such holder. To the
extent that the amount so required to be
<PAGE>
- 22 -
deducted or withheld from any payment to a Holder exceeds the cash portion of
the consideration otherwise payable to the Holder, Parent or Newco I, as
applicable, is hereby authorized to sell or otherwise dispose only of such
portion of the consideration as is necessary to provide sufficient funds to
Parent or Newco I, as applicable, to enable it to comply with such
withholding requirement, and Parent or Newco I, as applicable, shall notify
the Holder thereof and remit to such Holder any unapplied balance of the net
proceeds of such sale, if any.
5.15 MEANING OF DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION. Subject
to the following sentence, until a Form S-3 registration statement is filed
by Parent with the United States Securities and Exchange Commission and such
filing becomes effective with respect to the Parent Common Stock to be
provided as Exchangeable Share Consideration (such date, the "S-3 EFFECTIVE
DATE"), delivery of the Exchangeable Share Consideration shall mean when the
Exchangeable Share Consideration is sent by reputable overnight courier, such
as Federal Express, the costs of which shall be paid by Parent, Newco I or
Newco II as applicable, in each case sent in accordance with instructions
provided by the Holder to the Transfer Agent, and absent effective
instructions, to the address of the Holder as appearing on the records of the
Transfer Agent or in accordance with the usual procedure of the Transfer
Agent with respect to exchanges of such Class A Special Shares. If a delivery
is to be made to complete a sale trade of the Parent Common Stock through the
New York Stock Exchange and the person so designated is a broker with a DTC
number, the Parent Common Stock to be so sold shall be transmitted by
electronic means to the designated broker if so instructed by the Holder.
After the S-3 Effective Date occurs, delivery of the Exchangeable Share
Consideration to a Holder shall mean delivery by electronic means unless the
arrangements for electronic means have been revoked or shall otherwise fail,
in which event delivery shall mean when the Exchangeable Share Consideration
is sent in the manner described in the preceding sentence.
ARTICLE 6
CERTAIN RIGHTS AND OBLIGATIONS OF NEWCO I
TO ACQUIRE EXCHANGEABLE SHARES
6.1 NEWCO I LIQUIDATION CALL RIGHT.
(a) Newco I shall have the overriding right (the "LIQUIDATION CALL
RIGHT"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of Newco II as referred to in Article 5 of the
Exchangeable Share Provisions, to purchase from all but not less than all of
the Holders of Exchangeable Shares on the Liquidation Date (as defined in
Section 5.1 of the Exchangeable Share Provisions) all but not less than all
of the Exchangeable Shares held by such Holders on payment by Newco I to each
holder of the Exchangeable Share Consideration (the "LIQUIDATION CALL
PURCHASE PRICE"). In the event of the exercise of the Liquidation Call Right
by Newco I, each Holder shall be obligated to sell all the Exchangeable
Shares held by the Holder to
<PAGE>
- 23 -
Newco I on the Liquidation Date upon transfer and payment by Newco I to the
Holder of the Liquidation Call Purchase Price.
(b) To exercise the Liquidation Call Right, Newco I must notify the
Transfer Agent in writing, as agent for the holders of Exchangeable Shares,
of Newco I's intention to exercise such right at least ten (10) Business Days
before the Liquidation Date. Newco I shall also notify the Transfer Agent
accordingly if it does not intend to exercise the Liquidation Call Right.
Newco I or Newco II shall cause the Transfer Agent to notify the Holders of
Exchangeable Shares as to whether or not Newco I has exercised the
Liquidation Call Right forthwith after the expiry of the date by which the
same may be exercised by Newco I. If Newco I exercises the Liquidation Call
Right, on the Liquidation Date Newco I will purchase and the Holders will
sell all of the Exchangeable Shares then outstanding for the Exchangeable
Share Consideration.
(c) For purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, Newco I shall deposit with the
Transfer Agent, on or before the Liquidation Date, the Exchangeable Share
Consideration representing the total Liquidation Call Purchase Price.
Provided that such Exchangeable Share Consideration has been so deposited
with the Transfer Agent, on and after the Liquidation Date the right of each
Holder of Exchangeable Shares will be limited to receiving such Holder's
proportionate part of the total Liquidation Call Purchase Price payable by
Newco I without interest upon presentation and surrender by the Holder of
certificates representing the Exchangeable Shares held by such Holder and the
Holder shall on and after the Liquidation Date be considered and deemed for
all purposes to be the holder of Parent Common Stock. Upon surrender to the
Transfer Agent at the Transfer Agent Office of a certificate or certificates
representing Exchangeable Shares, together with such other documents and
instruments as may reasonably be required to effect a transfer of
Exchangeable Shares or as the Transfer Agent may reasonably require or
alternatively if the Exchange Agent Letter Conditions are satisfied in
connection therewith, the Holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and Newco I
(or the Transfer Agent on behalf of Newco I) shall deliver to such Holder,
the Exchangeable Share Consideration to which the Holder is entitled. If
Newco I does not exercise the Liquidation Call Right in the manner described
above, on the Liquidation Date the Holders of the Exchangeable Shares subject
to applicable law will be entitled to receive in exchange therefor the
Liquidation Consideration otherwise payable in connection with the
liquidation, dissolution or winding-up of Newco II pursuant to Article 5 of
the Exchangeable Share Provisions. Notwithstanding the foregoing, until such
Exchangeable Share Consideration is delivered to the Holder or the Transfer
Agent for such Holder, the Holder shall be deemed to still be a Holder of
Exchangeable Shares for purposes of all voting rights with respect thereto
under this Agreement.
(d) Notwithstanding anything to the contrary, Newco I and Parent
acknowledge and agree that prior to the Redemption Date or the Automatic
<PAGE>
- 24 -
Redemption Date, no voluntary liquidation, dissolution or winding up of Newco
II shall be effected without the approval of the Holders of the Exchangeable
Shares given in accordance with Article 10 of the Exchangeable Share
Provisions.
6.2 NEWCO I REDEMPTION CALL RIGHT
(a) Newco I shall have the overriding right (the "REDEMPTION CALL
RIGHT") in the case of and notwithstanding the proposed redemption or
automatic redemption of the Exchangeable Shares by Newco II pursuant to
Article 7 of the Exchangeable Share Provisions, to purchase from all but not
less than all of the Holders of Exchangeable Shares on the Automatic
Redemption Date or the Redemption Date, as applicable, all but not less than
all of the Exchangeable Shares held by each such Holder on payment by Newco I
to each Holder of the Exchangeable Share Consideration (the "REDEMPTION CALL
PURCHASE PRICE"). In the event of the exercise of the Redemption Call Right
by Newco I, each Holder shall be obligated to sell all the Exchangeable
Shares held by such Holder to Newco I on the Automatic Redemption Date or
Redemption Date, as applicable, upon transfer and payment by Newco I to the
Holder of the Redemption Call Purchase Price.
(b) To exercise the Redemption Call Right, Newco I must notify the
Transfer Agent in writing, as agent for the Holders of Exchangeable Shares,
of Newco I's intention to exercise such right not later than five Business
Days after the date by which Newco II is required to give notice of the
Automatic Redemption Date or Redemption Date, or possible redemption, as
applicable. If Newco I exercises the Redemption Call Right, then on the
Automatic Redemption Date or the Redemption Date, as applicable, Newco I will
purchase and the Holders will sell all of the Exchangeable Shares then
outstanding for the Exchangeable Share Consideration. In the case of any
notice given in connection with a possible Automatic Redemption Date, such
notice by Newco I will be given contingently and will be withdrawn if the
contingency does not occur. Notwithstanding the foregoing, the failure of
Newco II to give timely notice of a Redemption Date or the failure of Newco I
to give timely notice of its exercise of the Redemption Call Right shall not
prevent the exercise by Newco I of the Redemption Call Right, but the holders
of Exchangeable Shares shall nevertheless be entitled to notice of redemption
pursuant to Section 7.2 of the Exchangeable Share provisions at least 30 days
before the Redemption Date, and if such is delayed, the Redemption Date shall
be similarly delayed.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, Newco I shall deposit with the
Transfer Agent, on or before the Automatic Redemption Date or the Redemption
Date, as applicable, the Exchangeable Share Consideration representing the
total Redemption Call Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent, on and after the
Automatic Redemption Date or the Redemption Date, as applicable, the rights
of each Holder of Exchangeable Shares will be limited to receiving such
Holder's
<PAGE>
- 25 -
proportionate part of the total Redemption Call Purchase Price payable by
Newco I without interest upon presentation and surrender by the Holder of
certificates representing the Exchangeable Shares held by such Holder, and
the Holder shall on and after the Automatic Redemption Date or the Redemption
Date, as applicable, be considered and deemed for all purposes to be the
holder of the Parent Common Stock delivered to such Holder. Upon surrender to
the Transfer Agent at the Transfer Agent Office of a certificate or
certificates representing Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares or as the Transfer Agent may reasonably require, or
alternatively if the Exchange Agent Letter Conditions are satisfied in
connection therewith, the Holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and Newco I
(or the Transfer Agent on behalf of Newco I) shall deliver to such Holder, or
as such Holder shall direct, the Exchangeable Share Consideration to which
the Holder is entitled. If Newco I does not exercise the Redemption Call
Right in the manner described above on the Automatic Redemption Date or the
Redemption Date, as applicable, the Holders of the Exchangeable Shares will
be entitled to receive in exchange therefor the Exchangeable Share
Consideration otherwise payable by Newco II in connection with the redemption
of the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share
Provisions. Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the Holder or the Transfer Agent for such
Holder, the Holder shall be deemed to still be a Holder of Exchangeable
Shares for purposes of all voting rights with respect thereto under this
Agreement.
6.3 NEWCO I RETRACTION CALL RIGHT.
(a) Newco I shall have the overriding right (the "RETRACTION CALL
RIGHT"), in the event of a Retraction Request by a Holder under Article 6 of
the Exchangeable Share Provisions and in lieu of a redemption by Newco II of
the Retracted Shares under Article 6 of the Exchangeable Share Provisions, to
purchase all but not less than all of the Retracted Shares directly from the
Holder of Exchangeable Shares, and such Retraction Request shall be deemed to
be a revocable offer by the Holder to sell the Retracted Shares in accordance
with the terms and conditions of this Section 6.3
(b) To exercise the Retraction Call Right, Newco I shall notify Newco
II (directly or through the Transfer Agent) of its determination to do so
(the "NEWCO I RETRACTION CALL NOTICE") within one Business Day of the date
Newco II (directly or through the Transfer Agent) received the Retraction
Request and related documents in proper form. If Newco I does not so notify
Newco II within one Business Day, Newco II (directly or through the Transfer
Agent) will notify the Holder as soon as possible thereafter that Newco I
will not exercise the Retraction Call Right. If such notice is given to the
Holder by Newco II, Newco I shall be deemed not to have exercised its
Retraction Call Right. If Newco I delivers the Newco I Retraction Call Notice
within such one Business Day, and
<PAGE>
- 26 -
provided that the Retraction Request is not revoked by the Holder in the
manner specified in Section 6.7 of the Exchangeable Share Provisions, the
Retraction Request shall thereupon be considered only to be an offer by the
Holder to sell the Retracted Shares to Newco I in accordance with the
Retraction Call Right. In such event, Newco II shall not redeem the Retracted
Shares and Newco I shall purchase from such Holder and such Holder shall sell
to Newco I on the Retraction Date, the Retracted Shares for a purchase price
(the "PURCHASE PRICE") equal to the Exchangeable Share Consideration.
(c) For the purposes of completing a purchase pursuant to the
Retraction Call Right, Newco I shall deposit with the Transfer Agent, on or
before the Retraction Date the Exchangeable Share Consideration representing
the total Purchase Price. Provided that such Exchangeable Share Consideration
has been so deposited with the Transfer Agent, the closing of the purchase
and sale of the Retracted Shares pursuant to the Retraction Call Right shall
be deemed to have occurred as at the close of business on the Retraction Date
and, for greater certainty, no redemption by Newco II of such Retracted
Shares shall take place on the Retraction Date. Newco I shall deliver or
cause the Transfer Agent to deliver to such Holder, at the address of the
Holder recorded in the securities register of Newco II for the Exchangeable
Shares or to such Person and address as specified in the Holder's Retraction
Request or pursuant to other written instructions of Holder to the Transfer
Agent or by holding for pick up by the Holder at the Transfer Agent Office,
the Exchangeable Share Consideration representing the total Purchase Price
(less any tax permitted or required to be deducted or withheld therefrom by
Newco I), and such delivery of such Exchangeable Share Consideration to the
Transfer Agent shall be deemed to be payment of and shall satisfy and
discharge all liability for the total Purchase Price except as to any cheque
included therein which is not paid on due presentation.
(d) A Holder may withdraw its Retraction Request and revoke its offer
to sell pursuant to the provisions of Section 6.7 of the Exchangeable Share
Provisions. The rights of a Holder with respect to Retracted Shares from and
after the Retraction Date shall be limited as provided in Section 6.6 of the
Exchangeable Share Provisions.
ARTICLE 7
MISCELLANEOUS
7.1 RESTRICTIONS ON ISSUANCE OF PARENT SPECIAL VOTING STOCK. During
the term of this Agreement, Parent will not, without the consent of the
Holders at the relevant time of the Exchangeable Shares given in accordance
with Article 10 of the Exchangeable Share Provisions, issue any shares of
Parent Special Voting Stock in addition to the Voting Share.
7.2 TRANSFER AGENT. Parent, Newco I and Newco II covenant that there
shall at all times be a Transfer Agent with authority to carry out the
functions of the Transfer Agent as contemplated by the Exchangeable Share
<PAGE>
- 27 -
Provisions and this Agreement. The Transfer Agent shall either be (i) a
recognized transfer agent or trust company, or (ii) a law firm with an office
in Halifax, Nova Scotia. All costs of such Transfer Agent and all costs
incurred in connection with the Exchangeable Shares shall be borne by Newco
II, except as Newco I or Parent may otherwise agree or except as expressly
provided herein to the contrary, but if Newco II fails to pay or is unable to
pay such costs when due, Newco I shall pay such costs when due, and if Newco
I fails to pay or is unable to pay such costs when due, Parent shall pay such
costs when due.
7.3 RESTRICTIONS ON TRANSFER OF CLASS A SPECIAL SHARES.
(a) In addition to any other restrictions imposed by applicable laws
on a Holder's ability to transfer any Class A Special Shares, each Holder of
any Class A Special Shares agrees that such Holder will not sell, transfer or
otherwise dispose of any of the Class A Special Shares received by such
Holder pursuant to the YPtel Agreement or otherwise, except:
(i) pursuant to the laws of descent and distribution;
(ii) as a distribution from a trust to the beneficiaries of such
trust; or
(iii) as a transfer from a Holder to a Person not at arms length
from the transferor or to a trust for the benefit of Persons
not at arms length from the transferor,
provided that the distributee of such shares by descent and distribution or
from a trust shall remain subject to these transfer restrictions and that in
the case of a transfer to a Person not at arms length from the transferor,
such Person shall execute and deliver an agreement acknowledging that such
Person is bound by and subject to these transfer restrictions. For purposes
of this Section 7.3, a pledge of Exchangeable Shares by a Holder to a
financial institution as collateral security for loans arranged by such
Holder or for margining purposes shall not constitute a sale, transfer, or
other disposition of such shares so long as the financial institution agrees
to be bound to the restrictions imposed by this Section, nor shall any
release or transfer back to the Holder by such financial institution nor any
release or transfer by a Holder which is a pledgee back to the pledgor of the
Exchangeable Shares constitute a sale, transfer or other disposition of such
shares. Any distributee or transferee shall as condition precedent to having
the share transfer registered to such Person and becoming a Holder, execute
and deliver an agreement acknowledging that such Person joins in this
Agreement as a Holder and such Person is bound by and subject to all the
rights and obligations of a Holder under this Agreement, including without
limitation the transfer restrictions imposed by this Section.
(b) The restrictions in Section 7.3(a) shall not apply to any sale,
transfer or other disposition of Class A Special Shares to Newco I, Parent or
<PAGE>
- 28 -
Newco II, including, without limitation, shall not apply to any sale,
transfer or disposition of Class A Special Shares in connection with the
exercise by a Holder of Class A Special Shares of any retraction, exchange or
redemption right provided under this Agreement or under the Exchangeable
Share Provisions.
(c) Except as provided in this Section 7.3 or with respect to
restrictions imposed by applicable laws on a Holder's ability to transfer any
Class A Special Shares, the sales, transfers, pledges or other dispositions
of Class A Special Shares permitted by this Section 7.3 shall not be subject
to any requirement of consent on the part of Parent, Newco II, Newco I, USA
V, their boards of directors or anyone under their direct or indirect control
notwithstanding anything to the contrary in any Articles of Association.
(d) At the option of the ICL Principals who are directly or indirectly
Holders of Class A Special Shares, such Holders may satisfy their
indemnification obligations under Section 9.5(c) of the YPTel Agreement by
transferring to Parent or as Parent may direct (to Newco I) Class A Special
Shares valued pursuant to said Section 9.5(c).
7.4 NON-REGISTRATION OF EXCHANGEABLE SHARES. The Holders of Class A
Special Shares acknowledge and agree with Newco II and Parent that it is not
presently contemplated that the Class A Special Shares will be registered
with the U.S. Securities and Exchange Commission or with any governmental
authorities under state blue sky laws or the Canadian and provincial
securities laws and the rules and regulations thereunder, and neither Parent
nor Newco I or Newco II have any contractual obligation to cause any such
shares to be so registered, provided such registration is not required to
permit the exchanges contemplated by Article 5 above or to allow the
Exchangeable Shares to be transferred as contemplated by Section 7.3 hereof.
7.5 OVERRIDING RIGHT AND OBLIGATION. If Newco I exercises the
Liquidation Call Right, Redemption Call Right or Retraction Call Right and
for any reason does not complete the applicable purchase of Exchangeable
Shares and deliver the applicable Exchangeable Share Consideration, Parent
shall promptly complete the applicable purchase of Exchangeable Shares and
deliver the applicable Exchangeable Share Consideration. Nothing contained
herein shall limit the right of a Holder to exercise the Exchange Put Right
directly with Parent if Newco I or Newco II does not carry out its respective
obligations under the Exchangeable Share Provisions or this Agreement to
complete a redemption, retraction, liquidation or purchase of Exchangeable
Shares in accordance with the terms and provisions hereof or of the
Exchangeable Share Provisions.
7.6 NO AUDIT. Parent, Newco I, Newco II and the Holders of
Exchangeable Shares agree and consent that the financial statements of Newco
I and Newco II shall not be required to be audited.
<PAGE>
- 29 -
ARTICLE 8
CONCERNING THE TRUSTEE
8.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and
authorities of the Trustee under this Agreement, in its capacity as trustee
of the Trust, shall include:
(a) receipt and deposit of the Voting Share from Parent as trustee for
and on behalf of the Holders in accordance with the provisions of
this Agreement;
(b) granting proxies and distributing materials to Holders as provided
in this Agreement;
(c) voting the Holder Votes in accordance with the provisions of this
Agreement;
(d) holding title to the Trust Estate;
(e) taking action at the direction of a Holder or Holders to enforce
the obligations of Parent with respect to the Voting Share under this
Agreement; and
(f) taking such other actions and doing such other things as are
specifically provided with respect to the Trustee in this Agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this Agreement as the
Trustee, acting in good faith and in the reasonable exercise of its
discretion, may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary rights, powers and
authorities by the Trustee shall be final, conclusive and binding upon all
persons. The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best
interests of the Holders and shall exercise the care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances.
8.2 NO CONFLICT OF INTEREST. The Trustee represents to Parent and the
Holders that at the date of execution and delivery of this Agreement there
exists no material conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall within 60 days after it becomes aware that such a material
conflict of interest exists, either eliminate such material conflict of
interest or resign in the manner and with the effect specified in Article 11
hereof. If, notwithstanding the foregoing provisions of this Section 8.2, the
Trustee has such a material conflict of interest, the validity and
enforceability of this Agreement shall not be affected in any manner
whatsoever by reason only of the existence of such material conflict of
<PAGE>
- 30 -
interest. If the Trustee contravenes the foregoing provisions of this Section
8.2, any interested party may apply to the Superior Court of Justice
(Ontario) for an order that the Trustee be replaced as trustee hereunder. An
appointment of the Trustee as Transfer Agent for Newco II or transfer agent
for Newco I shall not be deemed to constitute a material conflict of interest
hereunder.
8.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. Parent, Newco II
and the Holders irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any subsequent registrar
or transfer agent, of the Exchangeable Shares and the Parent
Common Stock; and
(b) requisition, from time to time, from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under this Agreement.
Parent and Newco II irrevocably authorize their respective registrars and
transfer agents to comply with any such requests.
8.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection
by Parent and the Holders at the Trustee's principal trust office in Toronto,
Ontario, correct and complete books and records relating to the Trustee's
actions under this Agreement, including without limitation, all information
relating to mailings and instructions to and from Holders and all
transactions pursuant to the Voting Rights. On or before March 31, 2001, and
on or before March 31 in every year thereafter, so long as the Voting Share
is on deposit with the Trustee, the Trustee shall transmit to Parent and the
Holders a brief report, dated as of the preceding December 31, with respect
to:
(a) property comprising the Trust Estate as of that date; and
(b) all other actions taken by the Trustee in the performance of its
duties under this Agreement which it had not previously reported.
8.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall to the extent
necessary, and if so advised by Parent or Newco II in writing, prepare and
file on behalf of the Trust appropriate United States and Canadian income tax
returns and any other returns or reports relating to the Parent Special
Voting Stock or the Trust Estate as may be required by applicable law or
pursuant to the rules and regulations of any securities exchange or other
trading system through which the Parent Common Stock are traded. The Trustee
may retain such experts as it may consider necessary in preparing such
returns. If requested by the Trustee, Parent shall retain such expert for
purposes of providing such advice and assistance.
<PAGE>
- 31 -
8.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee
shall exercise any or all of the rights, duties, powers or authorities vested
in it by this Agreement at the request, order or direction of any Holder upon
such Holder's furnishing to the Trustee reasonable funding, security and
indemnity against the costs, expenses and liabilities which may be incurred
by the Trustee therein or thereby; provided that no Holder shall be obligated
to furnish to the Trustee any such funding, security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties,
powers and authorities with respect to the Voting Share pursuant to Article 4
hereof, subject to Section 8.15 hereof or its obligations under this
Agreement. None of the provisions contained in this Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur financial
liability in the exercise of any of its rights, powers, duties or authorities
unless funded, given security and indemnified as aforesaid.
8.7 ACTIONS BY HOLDERS. With respect to Articles 3, 4, 8, 9, 10, and
11 and Sections 2.1(i)and 7.1 hereof, no Holder shall have the right to
institute any action, suit or proceeding or to exercise any other remedy
authorized by this Agreement for the purpose of enforcing any of its rights
or for the execution of any trust or power hereunder unless the Holder has
requested the Trustee to take or institute such action, suit or proceeding
and furnished the Trustee with the funding, security and indemnity referred
to in Section 8.6 hereof and the Trustee shall have failed to act within a
reasonable time thereafter. In such case, but not otherwise, the Holder shall
be entitled to take proceedings in any court of competent jurisdiction such
as the Trustee might have taken; it being understood and intended that no one
or more Holders shall have any right in any manner whatsoever to affect,
disturb or prejudice the rights hereby created by any such action, or to
enforce any right hereunder or under the Voting Rights, except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted,
had and maintained by the Trustee, except only as herein provided, and in any
event for the equal benefit of all Holders. All costs so incurred by the
Holders in enforcing their rights hereunder shall be paid by the Parent if
the Holders are generally successful in such controversy.
8.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to
be in contravention of any of its rights, powers, duties and authorities
hereunder if, when required, it acts and relies in good faith upon lists,
mailing labels, notices, statutory declarations, certificates, opinions,
reports or other papers or documents furnished pursuant to the provisions
hereof or required by the Trustee to be furnished to it in the exercise of
its rights, powers, duties and authorities hereunder, and such lists, mailing
labels, notices, statutory declarations, certificates, opinions, reports or
other papers or documents comply with the provisions of Section 8.9 hereof,
if applicable, and with any other applicable provisions of this Agreement.
8.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Parent shall furnish to the
Trustee evidence of compliance with the conditions provided for in this
<PAGE>
- 32 -
Agreement relating to any action or step required or permitted to be taken by
it or the Trustee under this Agreement or as a result of any obligation
imposed under this Agreement, including, without limitation, in respect of
the Voting Right and the taking of any other action to be taken by the
Trustee at the request of or on the application of Parent or any Holder
forthwith if and when:
(a) such evidence is required by any other section of this Agreement
to be furnished to the Trustee in accordance with the terms of this
Section 8.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities as Trustee under this Agreement, gives Parent written
notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.
Such evidence may consist of a report or opinion of any solicitor or
other expert or any other person whose qualifications give authority to a
statement made by such person, provided that if such report or opinion is
furnished by a director, officer or employee of Parent, it shall be in the
form of an Officer's Certificate or a statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition provided
for in this Agreement shall include a statement by the person giving the
evidence:
(a) declaring that such person has read and understands the provisions
of this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or
investigation upon which such person based the statutory
declaration, Officer's Certificate, opinion or report; and
(c) declaring that such person has made such examination or
investigation as such person believes is necessary to enable such
person to make the statements or give the opinions contained or
expressed therein.
8.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any
solicitor or other expert, whether retained by the Trustee or by
Parent or otherwise, and may employ such assistants as may be
necessary to the proper determination and discharge of its powers
and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other
advice or assistance as aforesaid; and
<PAGE>
- 33 -
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its powers
and duties hereunder, and may pay reasonable remuneration for all
services performed for it (and shall be entitled to receive
reasonable remuneration for all services performed by it) in the
discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the
determination and discharge of its duties hereunder and in the
management of the Trust.
8.11 INVESTMENT OF MONEYS HELD BY TRUSTEE. Unless otherwise provided in
this Agreement, any moneys held by or on behalf of the Trustee which under
the terms of this Agreement may or ought to be invested or which may be on
deposit with the Trustee or which may be in the hands of the Trustee, may be
invested and reinvested in the name or under the control of the Trustee in
securities in which, under the laws of the Province of Ontario, trustees are
authorized to invest trust moneys; provided that such securities are stated
to mature within two years after their purchase by the Trustee, and the
Trustee shall so invest such moneys on the written direction of Parent.
Pending the investment of any moneys as hereinbefore provided, such moneys
may be deposited in the name of the Trustee in any chartered bank in Canada
or, with the consent of Parent, in the deposit department of the Trustee or
any other trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest then current on
similar deposits.
8.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of the
trusts, rights, duties, powers and authorities of this Agreement or otherwise
in respect of the premises.
8.13 TRUSTEE NOT BOUND TO ACT ON REQUEST. Except as otherwise
specifically provided in this Agreement, the Trustee shall not be bound to
act in accordance with any direction or request of Parent or of the directors
thereof until a duly authenticated copy of the instrument or resolution
containing such direction or request shall have been delivered to the
Trustee, and the Trustee shall be empowered to act and rely upon any such
copy purporting to be authenticated and believed by the Trustee to be genuine.
8.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to Parent
and the Holders that at the date of execution and delivery by it of this
Agreement it is authorized to carry on the business of a trust company in the
Province of Ontario but if, notwithstanding the provisions of this Section
8.14, it ceases to be so authorized to carry on business, the validity and
enforceability of this Agreement shall not be affected in any manner
whatsoever by reason only of such event; provided, however, the Trustee shall
within 60 days after ceasing to be authorized to carry on the business of a
trust company in the Province of
<PAGE>
- 34 -
Ontario, either become so authorized or resign in the manner and with the
effect specified in Article 11 hereof.
8.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to the Parent Special Voting Stock or the Voting
Rights, the Trustee shall be entitled, at its sole discretion, to refuse to
recognize or to comply with any such claim or demand. In so refusing, the
Trustee may elect not to exercise any Voting Rights subject to such
conflicting claims or demands and, in so doing, the Trustee shall not be or
become liable to any person on account of such election or its failure or
refusal to comply with any such conflicting claims or demands. The Trustee
shall be entitled to continue to refrain from acting and to refuse to act
until:
(a) the rights of all adverse claimants with respect to the Voting
Rights subject to such conflicting claims or demands or with
respect to the Parent Special Voting Stock have been adjudicated
by a final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights subject to such
conflicting claims or demands or with respect to the Parent
Special Voting Stock have been conclusively settled by a valid
written agreement binding on all such adverse claimants, and the
Trustee shall have been furnished with an executed copy of such
agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnity it as between all
conflicting claims or demands.
8.16 MISCELLANEOUS TRUSTEE PROVISIONS.
(a) The Trustee shall incur no liability with respect to the delivery
or non-delivery of any materials described in Article 4, whether delivered by
hand, mail or any other means;
(b) The Trustee in its personal or any other capacity, may buy, lend
upon and deal in securities of Parent and generally may contract and enter
into financial transactions with Parent without being liable to account for
any profit made thereby;
(c) The Trustee shall not be bound to give any notice or do or take
any act, action or proceeding by virtue of the powers conferred on it hereby
unless and until it shall be specifically required to do so under the terms
hereof; nor shall the Trustee be required to take any notice of, or to take
any act, action or proceeding as a result of, any default or breach of any
provisions hereunder unless and until notified in writing of such default or
breach, which notice shall
<PAGE>
- 35 -
distinctly specify the default or breach desired to be brought to the
attention of the Trustee and in the absence of such notice the Trustee may
for all purposes of this Agreement conclusively assume that no default or
breach has been made in the observance or performance of any of the
representations, warranties, covenants, agreements or conditions contained
herein; and
(d) The Trustee shall not be obligated to disburse any funds beyond
those which have been deposited with it and which remain in the Trust at the
time of any requirement that the Trustee disburse such funds.
(e) The Trustee shall not be responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness, transferability,
validity or sufficiency of title of any securities deposited with it.
8.17 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created
and provided for by and in this Agreement and agrees to perform the same upon
the terms and conditions herein set forth and to hold all rights, privileges
and benefits conferred hereby and by law in trust for the various persons who
shall from time to time be Holders, subject to all the terms and conditions
herein set forth.
ARTICLE 9
COMPENSATION
9.1 Parent and Newco II agree to pay to the Trustee reasonable
compensation for all of the services rendered by it under this Agreement and
will reimburse the Trustee for all reasonable expenses (including taxes other
than taxes based on the net income of the Trustee) and disbursements,
including the fees and expenses of experts, advisers and agents retained
pursuant to Section 8.10 and including the cost and expense of any suit or
litigation of any character and any proceedings before any governmental
agency, reasonably incurred by the Trustee in connection with its rights and
duties under this Agreement; provided that Parent and Newco II shall have no
obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted fraudulently or in bad faith or with
negligence, recklessness or willful misconduct.
ARTICLE 10
INDEMNIFICATION AND LIMITATION OF LIABILITY
10.1 INDEMNIFICATION OF THE TRUSTEE. Parent, Newco I and Newco II agree
to indemnify and hold harmless the Trustee and each of its directors,
officers and agents appointed and acting in accordance with this Agreement
(collectively, the "INDEMNIFIED PARTIES") against all claims, losses,
damages, costs, penalties, fines and reasonable expenses (including
reasonable expenses of the Trustee's legal counsel) which, without fraud,
negligence, recklessness, willful misconduct or bad faith on the part of such
Indemnified Party, may be paid,
<PAGE>
- 36 -
incurred or suffered by the Indemnified Party by reason of or as a result of
the Trustee's acceptance or administration of the Trust, its compliance with
its duties set forth in this Agreement, or any written or oral instructions
delivered to the Trustee by Parent pursuant hereto. In no case shall Parent,
Newco I or Newco II be liable under this indemnity for any claim against any
of the Indemnified Parties unless Parent, Newco I and Newco II shall be
notified by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the
Indemnified Parties shall have received any such written assertion of a claim
or shall have been served with a summons or other first legal process giving
information as to the nature and basis of the claim. Subject to clause (ii)
below, Parent, Newco I and Newco II shall be entitled to participate at their
own expense in the defense and, if Parent, Newco I or Newco II so elects at
any time after receipt of such notice, it may assume the defense of any suit
brought to enforce any such claim. The Trustee shall have the right to employ
separate counsel in any such suit and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Trustee
unless: (i) the employment of such counsel has been authorized by Parent,
Newco I or Newco II; or (ii) the named parties to any such suit include both
the Trustee and Parent, Newco I or Newco II and the Trustee shall have been
advised by counsel acceptable to Parent, Newco I or Newco II that there may
be one or more legal defenses available to the Trustee that are different
from or in addition to those available to Parent, Newco I or Newco II and
that, in the judgement of such counsel, would present a conflict of interest
were a joint representation to be undertaken (in which case Parent, Newco I
and Newco II shall not have the right to assume the defense of such suit on
behalf of the Trustee, but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee); or (iii) Parent, Newco I and/or Newco
II shall not have retained legal counsel on behalf of the Trustee within a
reasonable amount of time after the Trustee has given them notice of a
written assertion of a claim or action against any indemnified party. Such
indemnification shall survive the resignation and removal of the Trustee and
termination of the Agreement.
10.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for
any loss which may occur by reason of depreciation of the value of any part
of the Trust Estate or any loss incurred on any investment of funds pursuant
to this Agreement, except to the extent that such loss is attributable to the
fraud, negligence, recklessness, willful misconduct or bad faith on the part
of the Trustee.
ARTICLE 11
CHANGE OF TRUSTEE
11.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may
at any time resign by giving written notice of such resignation to Parent
specifying the date on which it desires to resign, provided that such notice
shall never be given less than 60 days before such desired resignation date
unless Parent otherwise agrees and provided further that such resignation
shall not take
<PAGE>
- 37 -
effect until the date of the appointment of a successor trustee and the
acceptance of such appointment by the successor trustee. Upon receiving such
notice of resignation, Parent shall promptly appoint a successor trustee by
written instrument in duplicate, one copy of which shall be delivered to the
resigning trustee and one copy to the successor trustee. Failing acceptance
by a successor trustee, a successor trustee may be appointed by an order of
the Superior Court of Justice (Ontario) upon application of one or more of
the parties hereto.
11.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be
removed with or without cause, at any time on not less than 30 days' prior
notice by written instrument executed by Parent, in duplicate, one copy of
which shall be delivered to the trustee so removed and one copy to the
successor trustee, provided that, in connection with such removal, provision
is made for a replacement trustee similar to that contemplated in Section
11.1.
11.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided
under this Agreement shall execute, acknowledge and deliver to Parent and to
its predecessor trustee an instrument accepting such appointment. Thereupon
the resignation or removal of the predecessor trustee shall become effective
and such successor trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named
as trustee in this Agreement. However, on the written request of Parent or of
the successor trustee, the trustee ceasing to act shall, upon payment of any
amounts then due it pursuant to the provisions of this Agreement, execute and
deliver an instrument transferring to such successor trustee all the rights
and powers of the trustee so ceasing to act. Upon the request of any such
successor trustee, Parent, and such predecessor trustee shall execute any and
all instruments in writing for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
11.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein, Parent shall cause to be mailed notice
of the succession of such trustee hereunder to each Holder specified in a
List. If Parent shall fail to cause such notice to be mailed within 10 days
after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of Parent.
ARTICLE 12
PARENT SUCCESSORS
12.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. Except as
otherwise permitted pursuant to Section 2.8 of the Support Agreement, Parent
shall not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets
would become the
<PAGE>
- 38 -
property of any other Person or, in the case of a merger, of the continuing
corporation resulting therefrom, but may do so if:
(a) such other Person or continuing corporation (the "PARENT
SUCCESSOR"), by operation of law, becomes, without more, bound by
the terms and provisions of this Agreement or, if not so bound,
executes, prior to or contemporaneously with the consummation of
such transaction an Agreement supplemental hereto and such other
instruments (if any) as are approved by the Holders in accordance
with Article 10 of the Exchangeable Share Provisions and in the
opinion of legal counsel to the Holders (at the cost of Parent)
are necessary or advisable to evidence the agreement of such
Parent Successor to observe and perform all the covenants and
obligations of Parent under this Agreement, the Support Agreement
and the Exchangeable Share Provisions and to be bound by the
covenants of Newco I and Newco II under this Agreement, the
Support Agreement and the Exchangeable Share Provisions; and
(b) such transaction shall, to the satisfaction of the Trustee, be
upon such terms which substantially preserve and do not impair in
any material respect any of the rights, duties, powers and
authorities of the Trustee hereunder; or
(c) the Parent Successor enters into amendments or other agreements
supplemental hereto as are approved by the Holders in accordance
with Article 10 of the Exchangeable Share Provisions.
12.2 VESTING OF POWERS IN PARENT SUCCESSOR. Whenever the conditions of
Section 12.1 hereof have been duly observed and performed, the Trustee, if
required by Section 12.1 hereof, and the Parent Successor shall execute and
deliver the supplemental agreement provided for in Article 13 hereof, and
thereupon the Parent Successor shall possess and from time to time may
exercise each and every right and power of Parent under this Agreement in the
name of Parent or otherwise and any act or proceeding by any provision of
this Agreement required to be done or performed by the board of directors of
Parent or any officers of Parent may be done and performed with like force
and effect by the directors or officers of such Parent Successor.
12.3 SUBSIDIARIES. Nothing herein shall be construed as preventing the
amalgamation or merger of any Subsidiary of Parent with or into Parent or the
voluntary winding-up, liquidation or dissolution of any Subsidiary of Parent
other than Newco I and Newco II provided that all of the assets of such
subsidiary are transferred to Parent or another subsidiary of Parent and that
such transactions do not adversely impact upon the Holders of Exchangeable
Shares; any such transactions are expressly permitted by this Article 12.
<PAGE>
- 39 -
ARTICLE 13
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
13.1 AMENDMENTS, MODIFICATIONS, ETC. Subject to Section 13.4 hereof and
Section 2.8 of the Support Agreement, this Agreement may not be amended or
modified except by an agreement in writing executed by Newco I, Newco II, USA
V, Parent and the Trustee and approved by the Holders in accordance with
Article 10 of the Exchangeable Share Provisions.
13.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section
13.1 hereof, Newco I, Newco II, USA V, Parent and Trustee may in writing, at
any time and from time to time, without the approval of the Holders but on
reasonable notice to them with sufficient details provided, amend or modify
this Agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for
the protection of the Holders or the Trustee hereunder;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters
or questions which, in the opinion of the board of directors of
each of Parent, Newco I or Newco II with respect to all matters
and in the opinion of the Trustee and its counsel relating to the
Trust Estate only, having in mind the best interests of the
Holders as a whole, it may be in good faith expedient to make,
provided that such boards of directors with respect to all matters
and the Trustee relating to the Trust Estate only, shall be of the
good faith opinion that such amendments and modifications will not
be prejudicial to the interests of the Holders as a whole; or
(c) making such changes or corrections which, on the written advice of
counsel to Newco I, Newco II, or Parent, and if relating to the
Trust Estate on the advice of Trustee and/or its counsel, are
required for the purpose of curing or correcting any ambiguity or
defect or inconsistent provision or clerical omission or mistake
or manifest error; provided that the Trustee and its counsel
relating to the Trust Estate only, and the board of directors of
each of the Newco I, Newco II and Parent and their counsel with
respect to all matters shall be of the good faith opinion that
such changes or corrections will not be prejudicial to the
interests of the Holders as a whole.
13.3 MEETING TO CONSIDER AMENDMENTS. Newco II at the request of Parent,
Newco I, any five Holders, or such number of Holders holding at least five
percent (5%) of the Exchangeable Shares then outstanding, shall call a
meeting or meetings of the Holders for the purpose of considering any
proposed amendment or modification requiring approval pursuant hereto. Any
such meeting or meetings shall be called and held in accordance with the
<PAGE>
- 40 -
Exchangeable Share Provisions and, to the extent applicable, the Articles of
Association of Newco II and all applicable laws. An approval of Holders may
be obtained by written consents in lieu of a meeting, as provided in Article
10 of the Exchangeable Share Provisions.
13.4 CHANGES IN CAPITAL OF PARENT OR NEWCO II. Subject to Section 14.1
hereof and Section 2.8 of the Support Agreement, at all times after the
occurrence of any event effected pursuant to Section 2.7 or Section 2.8 of
the Support Agreement, as a result of which either Parent Common Stock or the
Exchangeable Shares or both are in any way changed, to the extent reasonably
practicable in the circumstances, this Agreement shall forthwith be amended
and modified as necessary in order that it shall apply with full force and
effect, mutatis mutandis, to all new securities into which Parent Common
Stock or the Exchangeable Shares or both are so changed, and Newco I, Newco
II, Parent and Trustee shall execute and deliver a supplemental agreement
giving effect to and evidencing such necessary amendments and modifications.
13.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS. From time to time Parent
(when authorized by a resolution of its Board of Directors), Newco I (when
authorized by a resolution of its board of directors), Newco II (when
authorized by a resolution of its board of directors), and the Trustee may,
subject to the provisions of these presents, and they shall, when so directed
by these presents, execute and deliver by their proper officers, agreements
or other instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more of the following purposes:
(a) evidencing the succession of any Parent Successor to Parent and
the covenants of and obligations assumed by each such Parent
Successor in accordance with the provisions of Article 12 and the
successor of any successor trustee in accordance with the
provisions of Article 11;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange
Put Right, the Exchange Right, the Automatic Exchange Right, the
Liquidation Call Right, the Redemption Call Right or the
Retraction Call Right which the boards of directors of Parent,
Newco I and Newco II in good faith are of the opinion and based
upon written advice from counsel, will not be prejudicial to the
interests of the Holders as a whole or are necessary or advisable
in order to incorporate, reflect or comply with any legislation
the provisions of which apply to Parent, Newco I or Newco II, the
Holders, the Trustee or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of
this Agreement, including, without limitation, to make or evidence
any amendment or modification to this Agreement as contemplated
<PAGE>
- 41 -
hereby, provided that if the Holders have not approved the
applicable amendment or modification, the Trustee and its counsel
relating to the Trust Estate only and the boards of directors of
Parent, Newco I and Newco II in good faith and upon written advice
of counsel are of the opinion that the rights of the Trustee and
Holders will not be prejudiced thereby.
ARTICLE 14
TERMINATION AND AUTOMATIC REDEMPTION
14.1 PROVISIONS FOR AUTOMATIC REDEMPTION. Notwithstanding any
limitation contained in Article 12 or elsewhere in this Agreement, the
Support Agreement or the Exchangeable Share Provisions, if the terms for an
Automatic Redemption Date are applicable in connection with an ACG Control
Transaction, then in lieu of amending this Agreement or entering into a
supplemental agreement in connection with the ACG Control Transaction, Parent
may cause Newco II to redeem or Newco I to purchase all the Exchangeable
Shares of Holder pursuant to the provisions for automatic redemption in
Article 7 of the Exchangeable Share Provisions and Article 6 of this
Agreement.
14.2 TERM. This Agreement shall continue until the earliest to occur of
the following events:
(a) no outstanding Exchangeable Shares are held by a Holder,
(b) each of Newco I, Newco II and Parent elects in writing to
terminate this Agreement and such termination is approved by the
Holders in accordance with Article 10 of the Exchangeable Share
Provisions; and
(c) five (5) years and sixty (60) days after the date of this Agreement.
14.3 SURVIVAL OF CERTAIN PROVISIONS. The provisions of Articles 9 and
10 hereof shall survive any such termination of this Agreement.
ARTICLE 15
GENERAL
15.1 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability
of the remainder of this Agreement shall not in any way be affected or
impaired thereby, and the Agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
15.2 ENUREMENT. This Agreement shall be binding upon and enure to the
benefit of the parties hereto, the Holders and their respective successors
and permitted assigns. The Company shareholders party to this Agreement are
contemplated to become Holders hereunder when the Class A Special Shares
<PAGE>
- 42 -
are issued on the Closing Date. Upon any such party becoming a Holder
hereunder, such party will be party to this Agreement in its capacity as a
Holder, and upon any substitution of Class A Special Shares in connection
with the Newco II Amalgamation, shall remain a Holder hereunder. Any
transferee hereafter becoming a Holder shall be substituted for its
transferor under this Agreement upon the date of such transfer, and the
transferor shall be released from any obligations or liability thereafter
arising under this Agreement. From and after the Newco II Amalgamation, the
parties expressly confirm that the Amalgamated Newco II shall automatically
succeed to and become obligated to perform all the obligations of Newco II
hereunder and shall be entitled to all the rights of Newco II and for all
intents and purposes of this Agreement shall thereupon become the Newco II
party hereunder.
15.3 NOTICES TO PARTIES. All notices and other communications between
the parties hereunder which affect all Holders shall be in writing and shall
be deemed to have been given if delivered to the parties or by confirmed
telecopy to the parties at the following addresses (or at such other address
for such party as shall be specified in like notice):
TO PARENT, NEWCO I,
USA V OR NEWCO II: c/o 390 South Woods Mill Road
Suite 260
St. Louis, Missouri
U.S.A. 63017
Attention: the President
Facsimile No.: (314) 205-8141
WITH COPIES TO:
Blackwell Sanders Peper Martin LLP
720 Olive Street
Suite 2400
St. Louis, Missouri
U.S.A. 63101-4834
Attention: Craig Adoor
FACSIMILE NO: (314) 345-6060
AND
McInnes Cooper
1601 Lower Water Street
Halifax, Nova Scotia
Canada
B3J 2V1
Attention: Marcia Brennan
FACSIMILE NO: (902) 425-6350
AND
<PAGE>
- 43 -
Imperial Capital Limited
1 First Canadian Place
P.O. Box 438
Suite 5102
Toronto ON M5X 1E3
Attention: Managing Partner
FACSIMILE NO.: (416) 362-8660
AND
Cassels, Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Maxwell Gotlieb
FACSIMILE NO: (416) 360-8877
TO THE HOLDERS:
At their respective addresses
appearing on the records of
the Transfer Agent
WITH COPIES TO:
Imperial Capital Limited
1 First Canadian Place
P.O. Box 438
Suite 5102
Toronto ON M5X 1E3
Attention: Managing Partner
FACSIMILE NO.: (416) 362-8660
AND:
Cassels, Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Maxwell Gotlieb
FACSIMILE NO: (416) 360-8877
<PAGE>
- 44 -
TO THE TRUSTEE:
Montreal Trust Company of Canada
Corporate Services Division
151 Front St. West, Suite 605
Toronto, Ontario M5J 2N1
CANADA
Attention: Manager
FACSIMILE NO: (416) 981-9777
WITH COPIES TO:
Blackwell Sanders Peper Martin LLP
720 Olive Street
Suite 2400
St. Louis, Missouri
U.S.A. 63101-4834
Attention: Craig Adoor
FACSIMILE NO: (314) 345-6060
AND
McInnes Cooper
1601 Lower Water Street
Halifax, Nova Scotia
Canada
B3J 2V1
Attention: Marcia Brennan
FACSIMILE NO: (902) 425-6350
AND
Cassels, Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Maxwell Gotlieb
FACSIMILE NO: (416) 360-8877
TO TRANSFER AGENT:
Continental Stock Transfer & Trust Company
2 Broadway, 19th Floor
New York, NY 10004
Attention: Compliance Department
FACSIMILE NO.: (212) 616-7608
Any notice or other communication given personally or by overnight or expedited
delivery service shall be deemed to have been given and received upon delivery
<PAGE>
- 45 -
thereof, and if given by telecopy shall be deemed to have been given and
received on the date of receipt thereof unless such day is not a Business Day
in which case it shall be deemed to have been given and received upon the
immediately following Business Day. Save and except any notice actually
received earlier (in which case the notice shall be deemed given on the
Business Day received), any notice given by certified or registered mail
shall be deemed to have been given and received on the fifth Business Day
following the date of mailing, and any notice period providing for notice to
be given by twenty (20) or more days before a specified date or event may be
calculated as if the date of mailing were the date of giving notice. This
Section shall not affect the manner of Trustee providing communications to
Holders as set forth in Article 4 or the manner of Trustee and Parent
communicating with each other to carry out the provisions of Article 4.
Notices covered by Section 15.4 are not covered by this Section.
15.4 NOTICE TO NEWCO II, NEWCO I, AND PARENT.
(a) Except as otherwise herein provided, any notice and other
communications to be given to Newco II, Newco I, USA V or Parent by a Holder
of Exchangeable Shares shall be in writing and shall be valid and effective
if given by mail (postage prepaid) or by confirmed telecopy or by delivery:
(i) if in connection with a redemption, exchange, purchase or
retraction of Exchangeable Shares or exercise of any right
with respect thereto, addressed to Newco II, Newco I, USA V
or Parent, as the case may be, c/o the Transfer Agent at the
Transfer Agent Office;
(ii) otherwise to the applicable entity at the address from time
to time specified for such entity in Section 15.3 above,
provided copies of such notice need not be sent to the
parties above shown as to receive copies in Section 15.3
unless such notice affects all Holders.
(b) Notwithstanding any requirement for written notice in this
Agreement, any notices provided herein to be given as between or among Newco
I, Newco II, Parent, USA V and Transfer Agent may be given by telephone, by
fax or otherwise in an informal manner as such entities may agree among
themselves from time to time and such notices may be subject to standing
orders. For example, Newco I may advise the Transfer Agent and Newco II that
upon any Retraction Request, Newco I desires to exercise the Retraction Call
Right, in which event the Newco I Retraction Call Notice shall be deemed
properly given to Newco II upon any Retraction Request received by the
Transfer Agent until Newco I rescinds or otherwise modifies such standing
order.
(c) Section 13.6 of the Exchangeable Share Provisions shall be
applicable hereto in the same manner as if set forth herein (dealing with
notice of
<PAGE>
- 46 -
change in the identity of the Transfer Agent or change in the Transfer Agent
Office). Any requirement for written notice hereunder may also be waived by
the parties directly affected by a particular notice, including the
applicable Holder, and any period for giving a notice or otherwise taking an
action may be extended with the consent of all affected parties, including
the applicable Holder.
15.5 NOTICE TO HOLDERS. Any and all notices to be given and any
documents to be sent to any Holders may be given or sent to the address of
such Holder shown on the records of the Transfer Agent in any manner
permitted by the Exchangeable Share Provisions and shall be deemed to be
received (if given or sent in such manner) at the time specified in such
Exchangeable Share Provisions, the provisions of which Exchangeable Share
Provisions shall apply mutatis mutandis to notices or documents as aforesaid
sent to such Holders. If a notice to any Holder does not affect all Holders,
copies of such notice need not be sent to the parties above shown in Section
15.3 as to receive copies of notices to Holders.
15.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. One or more of the parties may sign
this Agreement and deliver this Agreement by facsimile transmission. The
parties agree that a facsimile of a signature shall be deemed an original
signature.
15.7 CONSTRUCTION. The parties hereto, except the Trustee, agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
15.8 JURISDICTION. Except to the extent that the Delaware and Nova
Scotia corporate laws under which the Parent, Newco I and Newco II are,
respectively, organized govern the determination of particular corporate
issues under this Agreement, this Agreement shall be construed and enforced
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
15.9 ATTORNMENT. Each of the parties hereto, on behalf of such party
and such party's heirs, personal representative, successors and permitted
assigns, agrees that any action or proceeding arising out of or relating to
this Agreement may be instituted in the courts of Ontario, waives any
objection which it may have now or hereafter to the venue of any such action
or proceeding, irrevocably submits to the jurisdiction of such courts in any
such action or proceeding, and agrees to be bound by any judgment of such
courts and agrees not to seek, and hereby waives, any review of the merits of
any such judgment by the courts of any other jurisdiction.
<PAGE>
- 47 -
15.10 EFFECTIVENESS OF AGREEMENT. This Agreement is being entered into
in anticipation of the "Closing" under the YPtel Agreement and the related
issuance of Class A Special Shares to certain of the Company shareholders in
exchange for some of their Company shares. This Agreement shall not become
effective until the Class A Special Shares are so issued at such Closing on
or before March 1, 2000, failing which, this Agreement shall be null and void.
15.11 TIME OF THE ESSENCE. Time shall be of the essence of this
Agreement and every party thereof.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this Exchange and
Voting Trust Agreement to be duly executed as of the date first above written.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Michael A. Pruss
--------------------------
ACG HOLDING COMPANY
By: /s/ Michael A. Pruss
--------------------------
ACG EXCHANGE COMPANY
By: /s/ Michael A. Pruss
--------------------------
1 + USA V ACQUISITION CORP.
By: /s/ Michael A. Pruss
--------------------------
CERTAIN HOLDERS OF SHARES OF YPTEL
LIMITED who will become Holders of
Class A Special Shares, as set out
on Schedule A hereto, by their
respective General Partners set out
on said Schedule
By: /s/ Edward Truant
--------------------------
Edward Truant,
Authorized Signing Officer for
each General Partner
YPtel/ACG Pledge Corporation will be a Holder of certain Class A Special
Shares pledged to it and joins in the above Agreement as a Holder pursuant to
the provisions of Section 7.3 of the Agreement.
YPTEL/ACG PLEDGE CORPORATION
By: /s/ Edward Truant
---------------------------
<PAGE>
MONTREAL TRUST COMPANY OF
CANADA
By: /s/ Emilia Casado
---------------------------
EMILIA CASADO
CORPORATE TRUST OFFICER
By: /s/ L. Green
---------------------------
LARRY GREEN
SENIOR CORPORATE TRUST OFFICER
[Exchange and Voting Trust Agreement among Advanced Communications Group, Inc.,
other parties and Montreal Trust Company of Canada, as Trustee]
<PAGE>
SCHEDULE A
THOSE OF THE FOLLOWING HOLDERS OF SHARES OF COMPANY (YPTEL LIMITED)
WHO BECOME HOLDERS OF CLASS A SPECIAL SHARES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GENERAL PARTNER LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
<S> <C>
ACG 1 Inc. ACG 1 Limited Partnership
- ------------------------------------------------------------------------------
ACG 2 Inc. ACG 2 Limited Partnership
- ------------------------------------------------------------------------------
ACG 3 Inc. ACG 3 Limited Partnership
- ------------------------------------------------------------------------------
ACG 4 Inc. ACG 4 Limited Partnership
- ------------------------------------------------------------------------------
ACG 5 Inc. ACG 5 Limited Partnership
- ------------------------------------------------------------------------------
ACG 6 Inc. ACG 6 Limited Partnership
- ------------------------------------------------------------------------------
ACG 7 Inc. ACG 7 Limited Partnership
- ------------------------------------------------------------------------------
ACG 8 Inc. ACG 8 Limited Partnership
- ------------------------------------------------------------------------------
ACG 9 Inc. ACG 9 Limited Partnership
- ------------------------------------------------------------------------------
ACG 10 Inc. ACG 10 Limited Partnership
- ------------------------------------------------------------------------------
ACG 11 Inc. ACG 11 Limited Partnership
- ------------------------------------------------------------------------------
ACG 12 Inc. ACG 12 Limited Partnership
- ------------------------------------------------------------------------------
ACG 13 Inc. ACG 13 Limited Partnership
- ------------------------------------------------------------------------------
ACG 14 Inc. ACG 14 Limited Partnership
- ------------------------------------------------------------------------------
ACG 15 Inc. ACG 15 Limited Partnership
- ------------------------------------------------------------------------------
ACG 16 Inc. ACG 16 Limited Partnership
- ------------------------------------------------------------------------------
ACG 17 Inc. ACG 17 Limited Partnership
- ------------------------------------------------------------------------------
ACG 18 Inc. ACG 18 Limited Partnership
- ------------------------------------------------------------------------------
ACG 19 Inc. ACG 19 Limited Partnership
- ------------------------------------------------------------------------------
ACG 20 Inc. ACG 20 Limited Partnership
- ------------------------------------------------------------------------------
ACG 21 Inc. ACG 21 Limited Partnership
- ------------------------------------------------------------------------------
ACG 22 Inc. ACG 22 Limited Partnership
- ------------------------------------------------------------------------------
ACG 23 Inc. ACG 23 Limited Partnership
- ------------------------------------------------------------------------------
ACG 24 Inc. ACG 24 Limited Partnership
- ------------------------------------------------------------------------------
ACG 25 Inc. ACG 25 Limited Partnership
- ------------------------------------------------------------------------------
ACG 26 Inc. ACG 26 Limited Partnership
- ------------------------------------------------------------------------------
ACG 27 Inc. ACG 27 Limited Partnership
- ------------------------------------------------------------------------------
ACG 28 Inc. ACG 28 Limited Partnership
- ------------------------------------------------------------------------------
ACG 29 Inc. ACG 29 Limited Partnership
- ------------------------------------------------------------------------------
ACG 30 Inc. ACG 30 Limited Partnership
- ------------------------------------------------------------------------------
ACG 31 Inc. ACG 31 Limited Partnership
- ------------------------------------------------------------------------------
ACG 32 Inc. ACG 32 Limited Partnership
- ------------------------------------------------------------------------------
ACG 33 Inc. ACG 33 Limited Partnership
- ------------------------------------------------------------------------------
ACG 34 Inc. ACG 34 Limited Partnership
- ------------------------------------------------------------------------------
ACG 35 Inc. ACG 35 Limited Partnership
- ------------------------------------------------------------------------------
ACG 36 Inc. ACG 36 Limited Partnership
- ------------------------------------------------------------------------------
ACG 37 Inc. ACG 37 Limited Partnership
- ------------------------------------------------------------------------------
ACG 38 Inc. ACG 38 Limited Partnership
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GENERAL PARTNER LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
<S> <C>
ACG 39 Inc. ACG 39 Limited Partnership
- ------------------------------------------------------------------------------
ACG 40 Inc. ACG 40 Limited Partnership
- ------------------------------------------------------------------------------
ACG 41 Inc. ACG 41 Limited Partnership
- ------------------------------------------------------------------------------
ACG 42 Inc. ACG 42 Limited Partnership
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
THIS NOTICE MAY BE EXERCISED AT ANY TIME
FORM 1
NOTICE OF EXCHANGE PUT RIGHT
TO: ACG Holding Company ("Newco I") and
Advanced Communications Group, Inc. ("Parent")
c/o Continental Stock Transfer & Trust Company
(the "Transfer Agent")
2 Broadway, 19th Floor
New York, NY 10004
Attention: Compliance Department
Fax: (212) 616-7608
This notice is given pursuant to Section 5.6 of the provisions of
the Exchange and Voting Trust Agreement referred to in the Exchange Agent
Letter referred to below and except as otherwise defined herein all
capitalized words and expressions used in this notice which are defined in
the Exchange and Voting Trust Agreement have the meaning attributed to such
words and expressions in the Exchange and Voting Trust Agreement.
The undersigned hereby notifies Parent and Newco I that the
undersigned hereby exercises the Exchange Put Right so as to require Parent
or Newco I to purchase from the undersigned in accordance with Article 5 of
the Exchange and Voting Trust Agreement:
/ / All share(s) represented by the certificates held for the
undersigned by the Transfer Agent; or
/ / Class A Special Share(s) only (a minimum of 1,000 shares)
The undersigned hereby notifies the Transfer Agent that the purchase
shall be in accordance with the Exchange Agent Letter between ACG Exchange
Company ("Newco II"), Newco I, 1 + USA V Acquisition Corp., Parent and the
Transfer Agent.
The undersigned hereby represents and warrants to Parent and Newco I
that the undersigned has good title to, and owns, the Class A Special
Share(s) represented by the undersigned's certificate(s) for the Class A
Special Shares
<PAGE>
held by the Transfer Agent free and clear of all liens, claims, encumbrances,
security interests and adverse claims or interests.
For value received, the undersigned does hereby sell, assign and
transfer unto Parent or Newco I (as applicable) the number of Class A Special
Shares of Newco II as referenced in the box checked above, and does hereby
irrevocably constitute and appoint the Transfer Agent attorney to transfer
the said stock on the books of Newco II with the full power of substitution
in the premises.
/ / Please check box if the legal or beneficial owner of the
Class A Special Shares is NOT a resident of Canada.
Parent Common Stock shall be delivered in accordance with instructions
previously provided to the Transfer Agent by or in behalf of the undersigned
unless contrary instructions are received by the Transfer Agent at least 48
hours prior to the Transfer Agent's receipt of this Notice of Exchange Put
Right or unless contrary instructions accompany this Notice.
____________________, 200__
Date
[Name of Shareholder Entity]
______________________________
Witness: Signature of Person Signing
Print Name: __________________
_________________________________________
Address:
______________________________
Street and Number City
______________________________
Province, Postal Code
<PAGE>
NOTE: PLEASE PROVIDE TELECOPY NUMBER AND
TELEPHONE NUMBER AT WHICH SHAREHOLDER
CAN BE REACHED:
__________________________
telecopy number
__________________________
telecopy number
NOTE: IF THE NOTICE OF EXCHANGE PUT RIGHT IS FOR
LESS THAN ALL OF THE SHARE(S) REPRESENTED BY
THE CERTIFICATE(S) HELD BY THE TRANSFER
AGENT FOR THE SHAREHOLDER, A CERTIFICATE
REPRESENTING THE REMAINING CLASS A SPECIAL
SHARES WILL BE ISSUED AND REGISTERED IN THE
NAME OF THE SHAREHOLDER AS IT APPEARS ON THE
REGISTER OF ACG EXCHANGE COMPANY.
<PAGE>
THIS FORM TO BE USED ONLY IF YOU RECEIVE NOTICE OR
YOU OTHERWISE BECOME AWARE OF AN INSOLVENCY EVENT AFFECTING
ACG EXCHANGE COMPANY
FORM 2
NOTICE OF EXCHANGE RIGHT
TO: ACG Holding Company ("Newco I") and
Advanced Communications Group, Inc. ("Parent")
c/o Continental Stock Transfer & Trust Company
(the "Transfer Agent")
2 Broadway, 19th Floor
New York, NY 10004
Attention: Compliance Department
Fax: (212) 616-7608
This notice is given pursuant to Section 5.6 of the provisions of
the Exchange and Voting Trust Agreement referred to in the Exchange Agent
Letter referred to below and except as otherwise defined herein all
capitalized words and expressions used in this notice which are defined in
the Exchange and Voting Trust Agreement have the meaning attributed to such
words and expressions in the Exchange and Voting Trust Agreement.
An Insolvency Event has occurred; a copy of the notice from Parent,
Newco I or ACG Exchange Company ("Newco II") to that effect is attached
hereto or a notarized affidavit of the applicable facts is attached hereto.
The undersigned hereby notifies Parent and Newco I that the
undersigned hereby exercises the Exchange Right so as to require Parent or
Newco I to purchase from the undersigned in accordance with Article 5 of the
Exchange and Voting Trust Agreement:
/ / all share(s) represented by the certificates held for
the undersigned by the Transfer Agent; or
/ / Class A Special Share(s) only (a minimum of 1,000 shares)
The undersigned hereby notifies the Transfer Agent that the purchase
shall be in accordance with the Exchange Agent Letter between Newco II, Newco
I, 1 + USA V Acquisition Corp., Parent and the Transfer Agent.
The undersigned hereby represents and warrants to Parent and Newco I
that the undersigned has good title to, and owns, the Class A Special
Share(s)
<PAGE>
represented by the undersigned's certificate(s) for the Class A Special
Shares held by the Transfer Agent free and clear of all liens, claims,
encumbrances, security interests and adverse claims or interests.
For value received, the undersigned does hereby sell, assign and
transfer unto Parent or Newco I (as applicable) the number of Class A Special
Shares of Newco II as referenced in the box checked above, and does hereby
irrevocably constitute and appoint the Transfer Agent attorney to transfer
the said stock on the books of Newco II with the full power of substitution
in the premises.
/ / Please check box if the legal or beneficial owner of the Class
A Special Shares is NOT a resident of Canada.
Parent Common Stock shall be delivered in accordance with instructions
previously provided to the Transfer Agent by or in behalf of the undersigned
unless contrary instructions are received by the Transfer Agent at least 48
hours prior to the Transfer Agent's receipt of this Notice of Exchange Right
or unless contrary instructions accompany this Notice.
____________________, 200__
Date
[Name of Shareholder Entity]
Witness:
___________________________
Signature of Person Signing
_________________________ Print Name: _______________
Address:
____________________________
Street and Number City
____________________________
Province, Postal Code
<PAGE>
NOTE: PLEASE PROVIDE TELECOPY NUMBER AND
TELEPHONE NUMBER AT WHICH SHAREHOLDER
CAN BE REACHED:
__________________________
telecopy number
__________________________
telecopy number
NOTE: IF THE NOTICE OF EXCHANGE RIGHT IS FOR LESS
THAN ALL OF THE SHARE(S) REPRESENTED BY THE
CERTIFICATE(S) HELD BY THE TRANSFER AGENT
FOR THE SHAREHOLDER, A CERTIFICATE
REPRESENTING THE REMAINING CLASS A SPECIAL
SHARES WILL BE ISSUED AND REGISTERED IN THE
NAME OF THE SHAREHOLDER AS IT APPEARS ON THE
REGISTER OF ACG EXCHANGE COMPANY.
<PAGE>
SUPPORT AGREEMENT
AMONG
ADVANCED COMMUNICATIONS GROUP, INC.
AND
ACG HOLDING COMPANY
AND
ACG EXCHANGE COMPANY
AND
1 + USA V ACQUISITION CORP.
AND
CERTAIN HOLDERS OF THE COMPANY
SHARES AS LISTED IN SCHEDULE A
AND
YPTEL/ACG PLEDGE CORPORATION
FEBRUARY 21, 2000
<PAGE>
INDEX
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION..................................... 2
1.1 DEFINED TERMS......................................................... 2
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS............................... 2
1.3 NUMBER, GENDER........................................................ 2
1.4 DATE FOR ANY ACTION................................................... 2
ARTICLE II COVENANTS OF PARENT, NEWCO I, USA V AND NEWCO II................... 3
2.1 COVENANTS OF PARENT, NEWCO I, USA V AND NEWCO II
REGARDING EXCHANGEABLE SHARES......................................... 3
2.2 SEGREGATION OF FUNDS.................................................. 4
2.3 RESERVATION OF SHARES OF PARENT COMMON STOCK.......................... 5
2.4 NOTIFICATION OF CERTAIN EVENTS........................................ 5
2.5 DELIVERY OF SHARES OF PARENT COMMON STOCK............................. 5
2.6 QUALIFICATION OF SHARES OF PARENT COMMON STOCK........................ 6
2.7 ECONOMIC EQUIVALENCE.................................................. 7
2.8 SALE OF PARENT........................................................ 10
2.9 OWNERSHIP OF OUTSTANDING SHARES OF NEWCO I, USA V AND NEWCO II........ 13
2.10 PARENT AND SUBSIDIARIES NOT TO VOTE EXCHANGEABLE SHARES.............. 13
2.11 RULE 10B-18 PURCHASES................................................. 14
ARTICLE III CERTAIN RESTRICTIONS.............................................. 14
3.1 NEWCO I RESTRICTIONS.................................................. 14
3.2 NEWCO II RESTRICTIONS................................................. 15
3.3 PARENT SUCCESSOR OR PURCHASER......................................... 15
ARTICLE IV GENERAL............................................................ 16
4.1 TERM.................................................................. 16
4.2 SEVERABILITY.......................................................... 16
4.3 AMENDMENTS, MODIFICATIONS, ETC........................................ 16
4.4 MINISTERIAL AMENDMENTS................................................ 16
4.5 MEETING TO CONSIDER AMENDMENTS........................................ 17
4.6 ENUREMENT............................................................. 17
4.7 NOTICE................................................................ 17
4.8 COUNTERPARTS.......................................................... 19
4.9 JURISDICTION.......................................................... 19
4.10 ATTORNMENT............................................................ 19
4.11 CONSTRUCTION.......................................................... 20
4.12 EXCHANGEABLE SHARE PROVISIONS......................................... 20
4.13 EFFECTIVENESS OF AGREEMENT............................................ 20
</TABLE>
<PAGE>
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of February 21, 2000, by
and among Advanced Communications Group, Inc., a corporation existing under
the laws of Delaware ("PARENT"), ACG Holding Company, a Nova Scotia unlimited
liability company and wholly owned subsidiary of Parent ("NEWCO I"), ACG
Exchange Company, a Nova Scotia limited liability company and a subsidiary of
Newco I ("NEWCO II"), 1 + USA V Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Parent and a shareholder of Newco II ("USA V"),
certain holders of shares of Company (defined below) as set out in Schedule A
hereto, and YPtel/ACG Pledge Corporation, an Ontario corporation.
WHEREAS, pursuant to an Agreement made as of June 3, 1999, as
amended and restated October 26, 1999 (as the same may be further amended
from time to time, the "YPTEL AGREEMENT"), by and among Parent, The Company,
a corporation then incorporated under the laws of Canada, continued under the
laws of Nova Scotia as YPtel Limited, to be amalgamated with a Nova Scotia
unlimited liability company prior to the Closing Date (as defined in the
YPtel Agreement) thus becoming a Nova Scotia unlimited liability company
which will become a subsidiary of Newco II on the Closing Date (the
"COMPANY"), the shareholders of the Company listed on Exhibit "A" attached
thereto, Cold Trust, Global Investment Trust, Freezer Trust, Storage Trust,
Directory Trust, Publisher Trust (collectively the "BARBADIAN TRUSTS"), The
J.L.R. Family Trust, The Paisley Family Trust, Edward Truant, and Douglas G.
McIntyre (collectively the "ICL PRINCIPALS") and Imperial Capital Limited, a
corporation incorporated under the laws of Ontario, the parties agreed that
on the Closing Date the parties hereto would execute and deliver the within
Support Agreement;
WHEREAS, pursuant to the YPtel Agreement, the shareholders of the
Company who are parties hereto will exchange certain of the issued and
outstanding common shares of the Company owned by them for all the initially
issued and outstanding Class A Special Shares of Newco II (the "CLASS A
SPECIAL SHARES");
WHEREAS, Appendix A to the Articles of Association of Newco II, as
amended, sets forth the rights, privileges, restrictions and conditions
attaching to the Class A Special Shares (as the same may be amended from time
to time, the "EXCHANGEABLE SHARE PROVISIONS");
WHEREAS, the parties hereto desire to make appropriate provision and
to establish a procedure whereby Parent, Newco I, Newco II and USA V will
take certain actions and make certain payments and deliveries necessary to
ensure that Newco I, Newco II or Parent will be able to make certain payments
and to deliver or cause to be delivered shares of common stock of Parent, par
value US$0.0001 per share ("PARENT COMMON STOCK") in satisfaction of the
obligations of Newco II with respect to the payment and satisfaction of
dividends, Liquidation Consideration, Retraction Prices, Exchangeable Share
Consideration and Redemption Prices, all in accordance with the Exchangeable
Share Provisions and the provisions of the Exchange and Voting Trust
Agreement
<PAGE>
- 2 -
between Newco I, Newco II, Parent, USA V, the holders of Exchangeable Shares
and the trustee named therein, dated as of February 21, 2000 (as the same may
be amended from time to time, the "EXCHANGE AND VOTING TRUST AGREEMENT"); and
WHEREAS, shortly after this Agreement becomes effective, Newco II
will amalgamate (the "NEWCO II AMALGAMATION") with various subsidiaries of
Newco II (other than the Company), and all the holders of common stock or of
Class A Special Shares of Newco II immediately prior to the amalgamation will
become all the holders of similar common shares and Class A Special Shares of
the amalgamated entity, which entity will also be named ACG Exchange Company
and be a Nova Scotia unlimited liability company (the "AMALGAMATED NEWCO II"
or "NEWCO II"), so that all references to Newco II herein shall refer to the
Newco II then existing and all references to the Class A Special Shares shall
refer to the Class A Special Shares of the Newco II then existing.
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters
and not otherwise defined herein shall have the meaning attributed thereto in
the Exchangeable Share Provisions or the Exchange and Voting Trust Agreement,
as applicable, unless the context otherwise requires.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this
Agreement into Articles, Sections and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. Unless otherwise indicated,
all references to an "ARTICLE" OR "SECTION" followed by a number and/or a
letter refer to the specified Article or Section of this Agreement. The terms
"THIS AGREEMENT", "HEREOF ", "HEREIN" and "HEREUNDER" and similar expressions
refer to this Agreement and not to any particular Article, Section or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto.
1.3 NUMBER AND GENDER. Words importing the singular number only shall
include the plural and vice versa. Words importing the use of any gender
shall include all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required
to be taken under this Agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day. For the purposes of
this Agreement, a "BUSINESS DAY" means any day on which commercial banks are
open for business in St. Louis, Missouri and Toronto, Ontario, other than a
<PAGE>
- 3 -
Saturday, a Sunday or a day observed as a holiday in Toronto, Ontario under
the laws of the Province of Ontario or the federal laws of Canada or in St.
Louis, Missouri under the laws of the State of Missouri or the federal laws
of the United States of America.
ARTICLE II
COVENANTS OF PARENT, NEWCO I, USA V AND NEWCO II
2.1 COVENANTS OF PARENT, NEWCO I, USA V AND NEWCO II REGARDING
EXCHANGEABLE SHARES. So long as any Exchangeable Shares held by a Holder are
outstanding:
(a) Parent will not declare or pay any dividend on Parent Common Stock
unless (i) Newco II will have sufficient assets, funds and other
property available (including but not limited to authorized but
unissued securities available) to enable the due declaration and
the due and punctual payment in accordance with applicable law of
a dividend on the Exchangeable Shares in accordance with Article 3
of the Exchangeable Share Provisions and (ii) Subsection 2.1(b)
shall be complied with in connection with such dividend;
(b) Parent, Newco I, USA V and Newco II will cause Newco II to declare
simultaneously with the declaration of any dividend on Parent
Common Stock a dividend on the Exchangeable Shares and, when such
dividend is paid on Parent Common Stock, cause Newco II to pay
simultaneously therewith such dividend on the Exchangeable Shares,
in each case in accordance with Article 3 of the Exchangeable
Share Provisions;
(c) Parent will advise Newco I and Newco II sufficiently in advance of
the declaration by Parent of any dividend on Parent Common Stock
and take all such other actions as are necessary, in cooperation
with Newco II, to ensure that the respective record date and
payment date for a dividend on the Exchangeable Shares shall be
the same as the record date and payment date for the corresponding
dividend on Parent Common Stock and that such dividend on the
Exchangeable Shares will correspond with any requirement of the
principal stock exchange on which Parent Common Stock or the
Exchangeable Shares are listed;
(d) Parent will ensure that the record date for any dividend declared
on Parent Common Stock is not less than ten Business Days after
the declaration date for such dividend;
(e) Subject to the exercise by Newco I of the Liquidation Call Right,
Redemption Call Right or Retraction Call Right pursuant to the
Exchange and Voting Trust Agreement, Parent, Newco I, USA V and
Newco II will, in accordance with applicable law, take all such
actions and do all such things as are necessary or desirable
to
<PAGE>
- 4 -
enable and permit Newco II, in accordance with applicable law, to
pay and otherwise perform its obligations with respect to the
satisfaction of the Liquidation Consideration or the Retraction
Price in respect of each issued and outstanding Exchangeable Share
upon the liquidation, dissolution or winding-up of Newco II or
the delivery of a Retraction Request by a holder of Exchangeable
Shares, as the case may be, including, without limitation, all
such actions and all such things as are necessary or desirable to
enable and permit Newco II to cause to be delivered Exchangeable
Share Consideration to the holders of Exchangeable Shares in
accordance with the provisions of Article 5, 6 or 7, as the case
may be, of the Exchangeable Share Provisions; and
(f) Parent, Newco I, USA V and Newco II will take all such actions
and do all such things as are necessary or desirable to enable
and permit Parent, Newco I, USA V or Newco II, as the case may
be, in accordance with applicable law, to perform their
obligations, as the case may be, pursuant to the Exchangeable
Share Provisions and the Exchange and Voting Trust Agreement,
including but not limited to, arising upon or from (i) the
exercise by Newco I of its Retraction Call Right, Liquidation
Call Right or Redemption Call Right pursuant to the Exchange and
Voting Trust Agreement; (ii) the exercise by a Holder of
Exchangeable Shares of such Holder's Exchange Put Right or
Exchange Right pursuant to the Exchangeable Share Provisions or
the Exchange and Voting Trust Agreement; (iii) the automatic
exchange of a Holder's Exchangeable Shares in accordance with
the rights set forth in Section 5.13 of the Exchange and
Voting Trust Agreement (the "AUTOMATIC EXCHANGE Rights"); or
(iv) the provisions of the Exchangeable Share Provisions,
including, without limitation, all such actions and all such
things as are necessary or desirable to enable and permit Parent,
Newco I or Newco II to cause Exchangeable Share Consideration to
be delivered to the holders of Exchangeable Shares in accordance
with the Exchangeable Share Provisions and the Exchange and Voting
Trust Agreement.
2.2 SEGREGATION OF FUNDS. Parent will cause Newco II to deposit a
sufficient amount of funds in a separate account, in trust, and segregate a
sufficient amount of such assets and other property, in trust, as is
necessary to enable Newco II to pay or otherwise satisfy the applicable
dividends, and if Parent has notice of a Liquidation Event or a Retraction
Request and if Newco I has not exercised or will not exercise its Liquidation
Call Right or Retraction Call Right with respect thereto, the Liquidation
Consideration or Retraction Price, as applicable, in each case for the
benefit of Holders from time to time of the Exchangeable Shares, and subject
to applicable law Newco II will use such funds, assets and other property so
segregated exclusively for the payment of dividends and the payment or other
satisfaction of the Liquidation Consideration or the Retraction Price, as
applicable, net of any corresponding withholding tax obligations and for the
remittance of such withholding tax obligations.
<PAGE>
- 5 -
2.3 RESERVATION OF SHARES OF PARENT COMMON STOCK. Parent hereby
represents, warrants and covenants that it has irrevocably reserved for
issuance and will at all times keep available, free from pre-emptive and
other rights, out of its authorized and unissued capital stock such number of
shares of Parent Common Stock (or other shares or securities into which
Parent Common Stock may be reclassified or changed as contemplated by Section
2.7 hereof) (a) as is equal to the number of shares of Parent Common Stock
for which the Exchangeable Shares issued and outstanding from time to time
and held by the Holders are exchangeable, and (b) as are now and may
hereafter be required to enable and permit Parent to meet its obligations
hereunder with respect to the Exchangeable Share Provisions and the Exchange
and Voting Trust Agreement and under any other security or commitment
pursuant to which Parent may now or hereafter be required to issue Parent
Common Stock, to enable and permit Newco II to meet its respective
obligations or exercise its rights hereunder, under the Exchange and Voting
Trust Agreement and the Exchangeable Share Provisions.
2.4 NOTIFICATION OF CERTAIN EVENTS. In order to assist Parent to
comply with its obligations hereunder and under the Exchange and Voting Trust
Agreement, Newco II will give or cause the Transfer Agent so acting to give
Parent notice of each of the following events at the time set forth below:
(i) immediately, in the event of any determination by the Board of
Directors of Newco II to take any action which would require a
vote or consent of the Holders of Exchangeable Shares for
approval; and
(ii) immediately, upon the earlier of (A) receipt by Newco II (directly
or from Newco I) of notice of, and (B) Newco II otherwise becoming
aware of, any threatened or instituted claim, suit, petition or
other proceedings with respect to the involuntary liquidation,
dissolution or winding-up of Newco II or to effect any other
distribution of the assets of Newco II among its shareholders for
the purpose of winding-up its affairs.
At least 30 days prior to any Automatic Redemption Date as determined by the
Board of Directors of Parent pursuant to the definition of Automatic
Redemption Date in the Exchange and Voting Trust Agreement, Parent shall
notify Newco II of an Automatic Redemption Date or possible Automatic
Redemption Date, as applicable. At least sixty (60) days prior to a
Redemption Date set by Newco II or Parent in accordance with the definition
of Redemption Date in the Exchangeable Share Provisions, the entity setting
the Redemption Date shall notify the other, whether Newco II or Parent, of
the applicable Redemption Date.
2.5 DELIVERY OF SHARES OF PARENT COMMON STOCK. In furtherance of its
obligations hereunder, upon notice from Newco II of any event which requires
Newco II to cause to be delivered shares of Parent Common Stock to any Holder
of Exchangeable Shares, Parent shall forthwith contribute to the capital of
Newco I in a 99% share and to the capital of USA V in a 1% share and cause
<PAGE>
- 6 -
Newco I and USA V to contribute to the capital of Newco II, or Parent shall
otherwise deliver or cause to be delivered to Newco II (directly or from
Newco I and USA V) the requisite shares of Parent Common Stock to be received
by, and issued to the order of, the former Holder of the surrendered
Exchangeable Shares, as Newco II shall direct. All such shares of Parent
Common Stock shall be duly issued as fully paid and non-assessable. Unless
Parent shall otherwise direct, in consideration of the issuance and delivery
of each such share of Parent Common Stock, Newco II shall issue to each of
Newco I and USA V, Common Shares of Newco II, and Newco I and USA V shall, in
turn, issue to Parent common shares of Newco I and USA V, respectively,
having substantially equivalent value to the Parent Common Stock so
contributed (such equivalence to be determined by Parent and Newco II from
time to time). Upon notice from Newco I of any event which requires Newco I
to cause to be delivered shares of Parent Common Stock to any Holder of
Exchangeable Shares, Parent shall similarly contribute to Newco I or
otherwise deliver to Newco I the requisite shares of Parent Common Stock to
be received by, and issued to the order of, the former Holder of the
surrendered Exchangeable Shares, as Newco I shall direct. The shares of
Parent Common Stock for the former Holders may be delivered directly to the
Transfer Agent (unless Newco II, USA V or Newco I, as applicable otherwise
directs) for delivery to such Holders. Notwithstanding the foregoing
provisions of this Section 2.5, in any case where a former Holder of
surrendered Exchangeable Shares is entitled to shares of Parent Common Stock
under the Exchangeable Share Provisions, the Exchange and Voting Trust
Agreement or this Agreement, Parent shall ensure that such shares of Parent
Common Stock are delivered to such Holder or as such Holder shall have
directed.
2.6 QUALIFICATION OF SHARES OF PARENT COMMON STOCK. If any shares of
Parent Common Stock (or other shares or securities into which Parent Common
Stock may be reclassified or changed as contemplated by Section 2.7 hereof)
to be issued or delivered hereunder require registration or qualification
with or approval of or the filing of any document including any prospectus or
similar document, the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or regulatory authority under
any Canadian or United States federal, provincial or state law or regulation
or pursuant to the rules and regulations of any regulatory authority, or the
fulfillment of any other legal requirement (collectively the "APPLICABLE
LAWS") before such shares (or such other shares or securities) may be issued
by Parent or delivered by Parent, Newco I or Newco II to the Holder of
surrendered Exchangeable Shares or in order that such shares (or such other
shares or securities) may be freely traded thereafter, Parent will in good
faith expeditiously take all such actions and do all such things as are
necessary to register, qualify or obtain required approvals for the resale by
such holders of such shares of Parent Common Stock. Parent will in good faith
take all actions and do all things as are reasonably necessary or desirable
under Applicable Laws as they exist at the relevant time to cause the shares
of Parent Common Stock (and such other shares or securities) to be issued or
delivered hereunder to be freely tradable thereafter, provided the first
trade of Parent Common Stock is required to be executed through the
facilities of a stock exchange or market outside of Canada
<PAGE>
- 7 -
(such as the New York Stock Exchange). Parent will in good faith
expeditiously take all such actions and do all such things as are necessary
to cause all shares of Parent Common Stock (or such other shares or
securities) to be delivered hereunder to be listed, quoted or posted for
trading on all stock exchanges and quotation systems on which outstanding
shares of Parent Common Stock (or such other shares or securities) are
listed, quoted or posted for trading at such time.
2.7 ECONOMIC EQUIVALENCE.
(a) Parent will not, without the prior approval of the Holders of the
Exchangeable Shares given in accordance with Article 10 of the Exchangeable
Share Provisions:
(i) issue or distribute shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
shares of Parent Common Stock) to the holders of all or
substantially all of the then outstanding shares of Parent Common
Stock by way of stock dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding shares of Parent
Common Stock entitling them to subscribe for or to purchase shares
of Parent Common Stock (or securities exchangeable for or
convertible into or carrying rights to acquire shares of Parent
Common Stock); or
(iii) issue or distribute to the holders of all or substantially all of
the then outstanding shares of Parent Common Stock (A) shares or
securities of Parent of any class other than Parent Common Stock
(other than shares convertible into or exchangeable for or
carrying rights to acquire shares of Parent Common Stock), (B)
rights, options or warrants other than those referred to in
Subsection 2.7(a)(ii) above, (C) evidences of indebtedness of
Parent or (D) assets of Parent;
unless one or both of Newco II and Parent is permitted under applicable law
to issue and distribute the economic equivalent on a per share basis of such
rights, options, warrants, securities, shares, evidences of indebtedness or
assets to Holders of the Exchangeable Shares and the economic equivalent
(determined on the basis of the number of shares of Parent Common Stock for
which the Exchangeable Shares then issued and outstanding and held by Holders
are exchangeable) of the items referred to in Subsections 2.7(a)(i), (ii) and
(iii) above, as applicable, is simultaneously issued or distributed to the
Holders of the Exchangeable Shares.
This Subsection 2.7(a) shall not apply to or restrict the issuance or
distribution of any of the foregoing items that are not part of an issuance
or distribution to be made available to all or substantially all of the
holders of
<PAGE>
- 8 -
outstanding Parent Common Stock in their capacity as such shareholders. By
way of example, but not limitation, the following are not restricted
hereunder, (a) the issuance or granting by Parent of stock options,
restricted stock, "SARS" or other securities to employees or directors of
Parent or any of its subsidiaries under a current or future employee
incentive plan or other plan not made available to all or substantially all
of the holders of outstanding Parent Common Stock, and (b) the issuance of
convertible securities (including, without limitation, notes and warrants)
unless issued or offered to all or substantially all of the holders of Parent
Common Stock. This Subsection 2.7(a) shall not apply to or restrict the
issuance or distribution of shares of Parent Common Stock or other securities
to the holders of rights, options, warrants, convertible securities or
evidences of indebtedness now outstanding or which are hereafter issued
without violation of this Subsection 2.7(a).
(b) Parent will not, without the prior approval of the Holders of the
Exchangeable Shares given in accordance with Article 10 of the Exchangeable
Share Provisions:
(i) subdivide, redivide or change the then outstanding shares of
Parent Common Stock into a greater number of shares of Parent
Common Stock; or
(ii) reduce, combine or consolidate or change the then outstanding
shares of Parent Common Stock into a lesser number of shares of
Parent Common Stock, or
(iii) reclassify or otherwise change the shares of Parent Common Stock
or effect an amalgamation, merger, reorganization or other
transaction affecting the shares of Parent Common Stock;
unless Newco II is permitted under applicable law to make the same or an
economically equivalent change to, or in the rights of holders of, the
Exchangeable Shares on a tax deferred basis if the change to the Parent
Common Stock is not a taxable event generally to the holders of Parent Common
Stock generally and the same or an economically equivalent change is
simultaneously made to, or in the rights of, the Holders of the Exchangeable
Shares.
(c) Parent will ensure that the record date for both Parent and Newco
II for any event referred to in Subsection 2.7 (a) or 2.7 (b) above, or (if
no record date is applicable for such event) the effective date for any such
event, is not less than 10 Business Days after the date on which such event
is declared or announced by Parent (with simultaneous notice thereof to be
given by Parent to Newco II).
(d) Newco II agrees that, to the extent required, upon due notice from
Parent, Newco II will take or cause to be taken such steps as may be
necessary in accordance with applicable law for the purposes of ensuring that
appropriate dividends are paid or other distributions are made by Newco II,
or subdivisions,
<PAGE>
- 9 -
redivisions or changes are made to the Exchangeable Shares, in order to
implement the required economic equivalence with respect to the Parent Common
Stock and Exchangeable Shares as provided for in this Section 2.7.
(e) The board of directors of Parent ("PARENT BOARD OF DIRECTORS")
shall determine, in good faith and in its sole discretion, economic
equivalence for the purposes of any event referred to in Section 2.7(a) or
2.7(b) above. With respect to situations in which the item distributed is
nontaxable generally to holders of Parent Common Stock but is taxable to
Holders of Exchangeable Shares, the lack of tax deferral shall be valued by
the Parent Board of Directors as provided in Section 2.8(j) below. In making
its determinations of economic equivalence, the following factors shall,
without excluding other factors determined by the Parent Board of Directors
to be relevant, be considered by the Parent Board of Directors:
(i) in the case of any stock dividend or other distribution payable in
Parent Common Stock, the number of such shares issued in
proportion to the number of shares of Parent Common Stock
previously outstanding;
(ii) in the case of the issuance or distribution of any rights, options
or warrants to subscribe for or purchase Parent Common Stock (or
securities exchangeable for or convertible into or carrying rights
to acquire Parent Common Stock), the relationship between the
exercise price of each such right, option or warrant and the
current market value (as determined by the boards of directors of
Newco II and Parent in the manner contemplated below) of a share
of Parent Common Stock;
(iii) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of
Parent of any class other than Parent Common Stock, any rights,
options or warrants other than those referred to in Subsection 2.7
(e)(ii) above, any evidences of indebtedness of Parent or any
assets of Parent), the relationship between the fair market value
(as determined by the Parent Board of Directors in the manner
contemplated below) of such property to be issued or distributed
with respect to each outstanding share of Parent Common Stock and
the current market value (as determined by the Parent Board of
Directors in the manner contemplated below) of a share of Parent
Common Stock;
(iv) in the case of any subdivision, redivision or change of the then
outstanding shares of Parent Common Stock into a greater number of
shares of Parent Common Stock or the reduction, combination,
consolidation or change of the then outstanding shares of Parent
Common Stock into a lesser number of shares of Parent Common Stock
or any amalgamation, merger, reorganization or other
<PAGE>
- 10 -
transaction affecting Parent Common Stock, the effect thereof upon
the then outstanding shares of Parent Common Stock;
(v) in all such cases, the general taxation consequences of the
relevant event to Holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of Parent Common Stock as a result of differences
between taxation laws of Canada and the United States (except for
any differing consequences arising as a result of differing
marginal taxation rates and without regard to the individual
circumstances of holders of Exchangeable Shares); and
(vi) in all such cases, the five (5) year deferral of tax available to
the Holders of Exchangeable Shares measured from the date of their
first issue.
For purposes of the foregoing determinations, the current market value of any
security listed and traded or quoted on a securities exchange shall be the
weighted average of the daily closing prices of such security during a period
of not less than 20 consecutive trading days ending not more than three
trading days before the date of determination on the principal securities
exchange on which such securities are listed and traded or quoted.
(f) In the event of a Liquidation Event, Section 5.13 of the Exchange
and Voting Trust Agreement shall be applicable and this Section 2.7 shall not
be applicable except to confirm the right of the holders of Parent Common
Stock received upon such exchange of Exchangeable Shares to participate in
the applicable Liquidation Event in the same manner as other holders of
Parent Common Stock.
(g) In the event the item to be distributed pursuant to this Section
2.7 is not readily marketable, reference shall be made to Section 2.8(i)
to the extent applicable.
2.8 SALE OF PARENT.
(a) In the event of a proposed transaction involving the sale of
Parent (whether by shareholder sale of stock, sale of all or substantially
all of its assets or by other means) which the Parent Board of Directors
desires to pursue or recommend (the "Proposed Sale"), the following
provisions shall apply.
(b) If the Proposed Sale involves the receipt by shareholders of
Parent of all cash, Parent shall ensure that the Holders of Exchangeable
Shares will be able to receive the same per share cash consideration as the
holders of Parent Common Stock and at the same time as the holders of Parent
Common Stock.
(c) If the consideration receivable by holders of Parent Common Stock
is property other than cash or partly cash and partly property other than
cash, then to the EXTENT that such non-cash consideration will be non-taxable
to such holders GENERALLY, Parent will use its best efforts to take all such
actions and do
<PAGE>
- 11 -
all such things as are necessary or desirable to enable and permit Holders of
Exchangeable Shares to participate in such Proposed Sale to the same extent
and on an equivalent basis (such equivalence based on the number of shares of
Parent Common Stock for which the Exchangeable Shares are exchangeable) as
the holders of shares of Parent Common Stock, without discrimination, and
Parent shall use its best efforts in good faith so that Holders of
Exchangeable Shares may participate in the Proposed Sale without being
required to exchange Exchangeable Shares except to the extent of the cash
component of the Proposed Sale.
(d) To the extent that the consideration receivable by holders of the
Parent Common Stock is represented in whole or in part by property other than
cash and such other property is non-taxable to such holders GENERALLY in
whole or in part, and the Parent Board of Directors, after using its best
efforts to attempt to ensure that Holders of Exchangeable Shares do not have
to exchange their shares, determines in good faith that it is not practicable
in the circumstances of the Proposed Sale to provide for the deferral of the
taxable event that will arise from such Proposed Sale in so far as it affects
the Holders of Exchangeable Shares GENERALLY (by continuation of the tax
deferral provided by the Newco II Exchangeable Shares structure or
otherwise), Parent may nevertheless enter into the Proposed Sale, ensuring
firstly that the consideration to be received by the Holders of the
Exchangeable Shares is equivalent on a per share pre-tax basis to the
consideration to be received by holders of Parent Common Stock and shall
FURTHER use its best efforts to maintain the economic equivalency of the
Proposed Sale to such Holders of Exchangeable Shares GENERALLY, compared to
the situation of the holders of Parent Common Stock GENERALLY, taking into
account such Holders' loss of tax deferral for Canadian income tax purposes,
by:
(i) adjustment upward of the economic consideration to be received by
the Holders of the Exchangeable Shares relative to such
consideration received by holders of Parent Common Stock; or
(ii) compensating such Holders by other means.
Any issues of economic equivalency shall be determined by the Parent Board of
Directors in good faith and in its sole discretion.
(e) Parent will take all necessary steps to ensure that any exchange
of Exchangeable Shares required in connection with such Proposed Sale shall
be effective only upon, and shall be conditional upon, the closing of the
Proposed Sale.
(f) To the extent that implementation of the Proposed Sale necessarily
involves the exchange by the Holders of Exchangeable Shares of such shares,
the Parent Board of Directors shall ensure that the consideration receivable
by the Holders of Exchangeable Shares is not subject to any escrow or
transfer restrictions which would prevent immediate liquidation of such
consideration to pay tax, except as a Holder may otherwise agree.
<PAGE>
- 12 -
(g) To the extent that any cash or non-cash consideration received by
holders of Parent Common Stock is taxable on the completion of the Proposed
Sale, the Parent Board of Directors need not consider the economic
equivalency to Holders of Exchangeable Shares beyond ensuring that they are
able to receive the same consideration per share and that such non-cash
consideration is to the extent taxable not subject to any escrow or other
restriction and can be liquidated immediately to pay tax, except as a Holder
may otherwise agree.
(h) Subject to the foregoing provisions of this Section 2.8, if the
Proposed Sale is approved at a meeting of stockholders of Parent and the
Holders of Exchangeable Shares were entitled to vote on such Proposed Sale
through the voting trust arrangement as provided in Article 4 of the Exchange
and Voting Trust Agreement, the Proposed Sale may occur without the further
approval of the Holders of Exchangeable Shares under Article 10 of the
Exchangeable Share Provisions.
(i) If the consideration receivable by holders of the Parent Common
Stock is non-taxable to such holders generally but such consideration to be
received by Holders of Exchangeable Shares is taxable generally to Holders of
Exchangeable Shares, and if such consideration or additional compensation to
be received by Holders of Exchangeable Shares is not readily marketable, (the
"NON MARKETABLE CONSIDERATION") then Parent Board of Directors shall use its
best efforts to issue Parent Common Stock in exchange for a portion of the
Non Marketable Consideration, acquire or arrange for the acquisition of a
portion of the Non Marketable Consideration for cash or other readily
marketable consideration, or in some other manner provide a means for the
Holders of Exchangeable Shares to similarly liquidate a portion of such Non
Marketable Consideration, such portion to be in an amount sufficient only to
permit the Holders of Exchangeable Shares to satisfy the tax liability
incurred by such Holders in connection with the Non Marketable Consideration
so received.
(j) Economic equivalency for purposes of the Holders' loss of tax
deferral for Canadian income tax purposes shall be valued in Section
3.8(d)(i) above as the amount of income tax payable upon the loss of such tax
deferral multiplied by an interest factor equal to the "PRIME RATE" per
annum, which product shall be multiplied by the period stated in years (and
any fraction thereof) from the date of the closing of the Proposed Sale to
the fifth anniversary of the date of initial issuance of the Class A Special
Shares. The "Prime Rate" shall be the average U.S. Prime Rate as last
reported in the Wall Street Journal on the Business Day closest to 60 days
prior to the Proposed Sale Date. The income tax payable shall be estimated in
good faith by the Parent Board of Directors based on the estimated fair
market value of the consideration to be received. The amount of income tax
shall be calculated on an aggregate hypothetical basis for all Holders of
Exchangeable Shares (assuming there is a capital gain and income taxes are
paid based on an assumed tax rate of 50 percent) but without additional gross
up for taxes based on the additional consideration. The determinations under
this subsection shall be made by the Parent Board of Directors in good faith.
<PAGE>
- 13 -
(k) In the event of any dispute concerning the application of the
provisions of this Section 2.8 in connection with a Proposed Sale, the Board
of Directors shall determine in good faith what is fair in the circumstances
to settle the matter.
(l) This Section 2.8 shall be applicable notwithstanding any
provisions in this Agreement, the Exchange and Voting Trust Agreement, or the
Exchangeable Share Provisions to the contrary and is intended to provide the
Parent Board of Directors with the authority to take the actions reasonably
necessary to implement a Proposed Sale without the prior approval of the
Holders of the Exchangeable Shares as may be otherwise required under the
Support Agreement, the Exchange and Voting Trust Agreement, or the
Exchangeable Share Provisions, but subject nevertheless to any required vote
of shareholders.
2.9 OWNERSHIP OF OUTSTANDING SHARES OF NEWCO I, USA V AND NEWCO II.
Without the prior approval of Newco I, USA V and Newco II and the prior
approval of the Holders of the Exchangeable Shares given in accordance with
Article 10 of the Exchangeable Share Provisions, Parent covenants and agrees
in favor of Newco I, USA V, Newco II and the Holders that, as long as any
outstanding Exchangeable Shares are owned by a Holder, Parent will be and
remain the direct or indirect beneficial owner of all issued and outstanding
shares in the capital of Newco I and USA V and Newco I and USA V shall remain
the direct or indirect beneficial owner of all issued and outstanding Common
Shares in the capital of Newco II; provided this shall not restrict the
pledging by Parent of any such shares to a commercial lender or financial
institution in connection with a loan or other financial accommodation to
Parent or any of its subsidiaries, but upon a foreclosure of any such shares,
the purchaser of such shares shall be bound by the covenants of Parent, Newco
I, USA V and Newco II, as applicable, hereunder.
2.10 PARENT AND SUBSIDIARIES NOT TO VOTE EXCHANGEABLE SHARES. Parent
covenants and agrees that it will appoint and cause to be appointed proxy
holders with respect to all Exchangeable Shares held by Parent and its
Subsidiaries for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each
such meeting to the extent but only to the extent that such presence is
required under the provisions of the applicable corporate statute or the
Exchangeable Share Provisions in order to obtain a quorum to conduct a
meeting of holders of Exchangeable Shares (the "REQUIRED PRESENCE"). Parent
further covenants and agrees that it will not, and will cause its
Subsidiaries not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the applicable corporate
statute (or any successor or other corporate statute by which Newco I, USA V
or Newco II may in the future be governed) with respect to any Exchangeable
Shares held by it or by its Subsidiaries in respect of any matter considered
at any meeting of holders of Exchangeable Shares; provided that to the
extent, if any, of the Required Presence, Parent or its Subsidiaries may
exercise the voting rights, if any, with
<PAGE>
- 14 -
respect to such Required Presence to vote such Exchangeable Shares on the
same side as the Holders of Exchangeable Shares who have cast the majority of
votes (excluding those cast by a holder not a Holder) for or against the
applicable resolution to be voted upon.
2.11 RULE 10b-18 PURCHASES. Anything to the contrary in this Agreement
notwithstanding, Parent shall not be obligated to take any action hereunder
which would prevent Parent from effecting repurchases of Parent Common Stock
pursuant to the "safe harbor" provisions of Rule 10b-18 promulgated under the
U.S. Securities Exchange Act of 1934 as amended or any successor provision
thereof.
ARTICLE III
CERTAIN RESTRICTIONS
3.1 NEWCO I RESTRICTIONS. Subject to what is hereinafter provided, so
long as any of the Exchangeable Shares are outstanding and held by Holders,
Newco I shall not at any time without, but may at any time with, the approval
of the Holders of the Exchangeable Shares given as specified in Article 10 of
the Exchangeable Share Provisions:
(a) incur indebtedness or other liabilities except as may be desirable
for or reasonably required or incidental to performance of the
terms and conditions of this Agreement, the Exchange and Voting
Trust Agreement or the Exchangeable Share Provisions or the rights
and obligations of Newco I, Parent or Newco II relating thereto,
or to guarantee the obligations of any other party except as set
forth in the preceding exception or insofar as recourse of the
obligee on the guarantee is limited to the preferred shares of
YPtel Inc. held by the Company on or after the Closing Date and
the dividends and other distributions and proceeds with respect to
such preferred shares, and any dividends issued or other
distributions made with respect to the common stock of the Company
or Newco II or the proceeds thereof (collectively, the
"COLLATERAL");
(b) voluntarily liquidate, dissolve or wind-up or otherwise distribute
substantially all of its assets or cause Newco II to do so;
(c) issue any shares other than to Parent; or
(d) transfer any of the Common Shares of Newco II other than to
Parent, USA V or Newco II, except in connection with a pledge
thereof as set forth below; or
(e) enter into or operate any business other than that of a holding
company owning the shares of Newco II and any business incidental
thereto or other than any business reasonably required or
appropriate for Newco I to carry out its rights, duties or
obligations pursuant to the provisions of the Exchangeable Share
Provisions, the Exchange and Voting Trust Agreement or this
Agreement or in
<PAGE>
- 15 -
connection with the investment and distribution of any dividends
of or distributions by Newco II or the Company.
Nothing contained herein or in Section 3.2 below shall restrict the pledging
by Newco I of the Common Shares of Newco II (or indirectly the common stock
of the Company) or the pledging by Newco II of the common stock of the
Company, in either case to secure a loan or other financial accommodation to
Parent or any of its subsidiaries by a commercial lender or financial
institution ("LENDER") to the extent such security is required by such Lender
in order to preserve or better protect its lien on or rights in the
Collateral or to the extent that the Lender agrees that upon a foreclosure or
sale by Lender of such shares, the purchaser of such shares shall be bound by
the covenants of Parent, Newco I, USA V and Newco II, as applicable
hereunder, each of which shall remain liable under its respective covenants.
3.2 NEWCO II RESTRICTIONS. Subject to what is otherwise provided in
Section 3.1 above, so long as any of the Exchangeable Shares are outstanding
and held by a Holder, Newco II shall not at any time without, but may at any
time with, the approval of the Holders of the Exchangeable Shares given as
specified in Article 10 of the Exchangeable Share Provisions:
(a) incur indebtedness or other liabilities except as may be desirable
for or reasonably required or incidental to performance of the
terms and conditions of this Agreement, the Exchange and Voting
Trust Agreement or the Exchangeable Share Provisions or the rights
and obligations of Newco I, Parent, USA V or Newco II relating
thereto, or to guarantee the obligations of any other party except
insofar as recourse of the obligee on the guarantee is limited to
the Collateral;
(b) transfer any of the common stock of the Company, other than to
Newco I and USA V, except in connection with a pledge thereof as
set forth in Section 3.1 hereof;
(c) issue any Common Shares other than to Newco I or USA V; or
(d) amend its Articles of Association after the effective date hereof,
except for minor amendments consistent with the purposes set
forth in Section 4.4 hereof.
3.3 PARENT SUCCESSOR OR PURCHASER. Subject to Section 2.8 hereof, in
the event there is a Parent Successor pursuant to Section 12.1 of the
Exchange and Voting Trust Agreement or other purchaser of substantially all
the outstanding shares of Parent Common Stock, the covenants of and
restrictions applicable to Newco I, USA V and Newco II shall continue in full
force and effect (substituting the Parent Successor or such purchaser for
Parent, as applicable), Subject to the terms of any applicable supplemental
agreement referred to in said Section 12.1, and Parent shall not thereby be
released from any obligations or liabilities then accrued hereunder except to
the extent that such obligations or liabilities are assumed by the Parent
Successor or such purchaser.
<PAGE>
- 16 -
ARTICLE IV
GENERAL
4.1 TERM. This Agreement shall come into force and be effective when
and as provided in Section 4.13 below, and shall terminate and be of no
further force and effect at such time as the Exchange and Voting Trust
Agreement shall terminate (or shall no longer continue) as provided in
Section 14.2 of the Exchange and Voting Trust Agreement.
4.2 SEVERABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability
of the remainder of this Agreement shall not in any way be affected or
impaired thereby and this Agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
4.3 AMENDMENTS, MODIFICATIONS, ETC. Subject to amendments of the
nature contemplated by Section 13.4 of the Exchange and Voting Trust
Agreement, this Agreement may not be amended, modified or waived except by an
agreement in writing executed by Newco I, Newco II and Parent and approved by
the Holders of the Exchangeable Shares in accordance with Article 10 of the
Exchangeable Share Provisions.
4.4 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section
4.3, Newco I, USA V, Newco II and Parent may in writing, at any time and from
time to time, upon reasonable notice to (including sufficient details of the
proposed changes) but without the approval of the Holders of the Exchangeable
Shares, amend or modify this Agreement for the purposes of:
(a) adding to the covenants of any or all parties hereto for the
protection of the Holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters
or questions which, in the good faith opinion of the board of
directors of each of Parent, Newco I and Newco II, having in mind
the best interests of the Holders as a whole, it may be expedient
to make, provided that each such board of directors shall be of
the good faith opinion that such amendments or modifications will
not be prejudicial to the interests of the Holders as a whole; or
(c) making such changes or corrections which, on the advice of counsel
to Parent, Newco I and Newco II, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error,
provided that the boards of directors of each of Parent, Newco I
and Newco II shall be of the opinion that such changes or
corrections will not be prejudicial to the interests of the
Holders as a whole.
<PAGE>
- 17 -
4.5 MEETING TO CONSIDER AMENDMENTS. Newco II, at the request of
Parent, Newco I or any ten Holders, shall call a meeting or meetings of the
Holders of the Exchangeable Shares for the purpose of considering any
proposed amendment or modification requiring approval pursuant hereto. Any
such meeting or meetings shall be called and held in accordance with the
Exchangeable Share Provisions and, to the extent applicable, the Articles of
Association of Newco II and all applicable laws and shall be held in the City
of Toronto. An approval of Holders may be obtained by written consents in
lieu of a meeting, as provided in Article 10 of the Exchangeable Share
Provisions.
4.6 ENUREMENT. This Agreement shall be binding upon and enure to the
benefit of the parties hereto, the Holders, from time to time, of
Exchangeable Shares and each of their respective heirs, successors and
assigns. The Company shareholders party to this Agreement are contemplated to
become Holders hereunder when the Class A Special Shares are issued on the
Closing Date. Upon any such party becoming a Holder hereunder, such party
will be party to this Agreement in its capacity as a Holder, and upon any
substitution of Class A Special Shares in connection with the Newco II
Amalgamation, shall remain a Holder hereunder. Any transferee hereafter
becoming a Holder shall be substituted for its transferor under this
Agreement upon the date of such transfer, and the transferor shall be
released from any obligations or liability thereafter arising under this
Agreement. From and after the Newco II Amalgamation, the parties expressly
confirm that the Amalgamated Newco II shall automatically succeed to and
become obligated to perform all the obligations of Newco II hereunder and
shall be entitled to all the rights of Newco II and for all intents and
purposes of this Agreement shall thereupon become the Newco II party
hereunder.
4.7 NOTICE. All notices and other communications hereunder shall be in
writing and shall be deemed given to a party if delivered, sent by facsimile
transmission with confirmation of transmission, or mailed by registered or
certified mail (postage prepaid and return receipt requested) to the parties
at the following addresses and facsimile numbers (or at such other address or
facsimile number for the parties as the parties shall specify by like
notice), and such notice shall be deemed given: (i) if delivered to the
party, on the date of such delivery; (ii) if telecopied, on the date of
confirmation of receipt or transmission, unless such day is not a Business
Day, in which case it shall be deemed to have been given and received upon
the immediately following Business Day; or (iii) if mailed, five (5) Business
Days after mailing:
TO PARENT, NEWCO I, USA V OR NEWCO II:
c/o 390 South Woods Mill Road
Suite 260
St. Louis, Missouri
U.S.A. 63017
Attention: the President
FACSIMILE NO.: (314) 205-8141
<PAGE>
- 18 -
WITH COPIES TO:
Blackwell Sanders Peper Martin LLP
720 Olive Street
Suite 2400
St. Louis, Missouri
U.S.A. 63101-4834
Attention: Craig Adoor
FACSIMILE NO.: (314) 345-6060
AND
McInnes Cooper
1601 Lower Water Street
Halifax, Nova Scotia
Canada
B3J 2V1
Attention: Marcia Brennan
FACSIMILE NO: (902) 425-6350
AND
c/o Imperial Capital Limited
1 First Canadian Place
P.O. Box 438
Suite 5102
Toronto ON M5X 1E3
Attention: Managing Partner
FACSIMILE NO.: (416) 362-8660
AND
Cassels, Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Maxwell Gotlieb
FACSIMILE NO.: (416) 360-8877
TO THE HOLDERS:
At their respective addresses
appearing on the records of
the Transfer Agent
<PAGE>
- 19 -
WITH COPIES TO:
Imperial Capital Limited
1 First Canadian Place
P.O. Box 438
Suite 5102
Toronto ON M5X 1E3
Attention: Managing Partner
FACSIMILE NO.: (416) 362-8660
AND:
Cassels, Brock & Blackwell LLP
Scotia Plaza, Suite 2100
40 King Street West
Toronto, Ontario M5H 3C2
CANADA
Attention: Maxwell Gotlieb
FACSIMILE NO.: (416) 360-8877
Any notice period providing for notice to be given twenty (20) or more days
before a specified date or event may be calculated as if the date of mailing
were the date of giving notice. Notwithstanding any requirement for written
notice in this Agreement, any notices provided herein to be given as between
Newco I, USA V, Newco II, Parent and Transfer Agent may be given by
telephone, by fax or otherwise in an informal manner as such entities may
agree among themselves from time to time and such notices may be subject to
standing orders as to particular notices.
4.8 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument. One or more of the parties may sign
this Agreement and deliver this Agreement by facsimile transmission. The
parties agree that a facsimile of a signature shall be deemed an original
signature.
4.9 JURISDICTION. Except to the extent that the Delaware and Nova
Scotia corporate laws under which Parent, Newco I and Newco II are,
respectively, organized govern the determination of particular corporate
issues under this Agreement, this Agreement shall be construed and enforced
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
4.10 ATTORNMENT. Each of the parties hereto, on behalf of such party
and such party's heirs, personal representatives, successors and permitted
assigns, agrees that any action or proceeding arising out of or relating to
this Agreement may be instituted in the courts of Ontario, waives any
objection which it may have now or hereafter to the venue of any such action
or proceeding, irrevocably submits to the jurisdiction of such courts in any
such action or proceeding, agrees to be bound by any judgment of such courts
and not to seek,
<PAGE>
- 20 -
and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction.
4.11 CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
4.12 EXCHANGEABLE SHARE PROVISIONS. The parties hereto agree to take
such actions, execute such documents, and vote such securities as are
necessary to give full effect to the Exchangeable Share Provisions, as if
they comprised a contract among such parties.
4.13 EFFECTIVENESS OF AGREEMENT. This Agreement is being entered into
in anticipation of the "Closing" under the YPtel Agreement and the related
issuance of Class A Special Shares to certain of the Company shareholders in
exchange for some of their Company shares. This Agreement shall not become
effective until the Class A Special Shares are so issued on or before March
1, 2000, failing which this Agreement shall be null and void.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Support Agreement to be
signed by their respective officers duly authorized, all as of the date first
written above.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Michael A. Pruss
-------------------------
ACG HOLDING COMPANY
By: /s/ Michael A. Pruss
-------------------------
ACG EXCHANGE COMPANY
By: /s/ Michael A. Pruss
-------------------------
1 + USA V ACQUISITION CORP.
By: /s/ Michael A. Pruss
-------------------------
CERTAIN HOLDERS OF SHARES OF YPTEL
LIMITED who will become Holders of
Class A Special Shares, as set out
on Schedule A hereto, by their
respective General Partners set out
on said Schedule
By: /s/ Edward Truant
-------------------------
Edward Truant,
Authorised Signing Officer
for each General Partner
YPtel/ACG Pledge Corporation will be a Holder of certain Class A Special
Shares pledged to it and joins in the above Agreement as a Holder pursuant to
the provisions of Section 7.3 of the Agreement.
YPTEL/ACG PLEDGE CORPORATION
By: /s/ Edward Truant
-------------------------
<PAGE>
SCHEDULE A
THOSE OF THE FOLLOWING HOLDERS OF SHARES OF COMPANY (YPTEL LIMITED)
WHO BECOME HOLDERS OF CLASS A SPECIAL SHARES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GENERAL PARTNER LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
<S> <C>
ACG 1 Inc. ACG 1 Limited Partnership
- ------------------------------------------------------------------------------
ACG 2 Inc. ACG 2 Limited Partnership
- ------------------------------------------------------------------------------
ACG 3 Inc. ACG 3 Limited Partnership
- ------------------------------------------------------------------------------
ACG 4 Inc. ACG 4 Limited Partnership
- ------------------------------------------------------------------------------
ACG 5 Inc. ACG 5 Limited Partnership
- ------------------------------------------------------------------------------
ACG 6 Inc. ACG 6 Limited Partnership
- ------------------------------------------------------------------------------
ACG 7 Inc. ACG 7 Limited Partnership
- ------------------------------------------------------------------------------
ACG 8 Inc. ACG 8 Limited Partnership
- ------------------------------------------------------------------------------
ACG 9 Inc. ACG 9 Limited Partnership
- ------------------------------------------------------------------------------
ACG 10 Inc. ACG 10 Limited Partnership
- ------------------------------------------------------------------------------
ACG 11 Inc. ACG 11 Limited Partnership
- ------------------------------------------------------------------------------
ACG 12 Inc. ACG 12 Limited Partnership
- ------------------------------------------------------------------------------
ACG 13 Inc. ACG 13 Limited Partnership
- ------------------------------------------------------------------------------
ACG 14 Inc. ACG 14 Limited Partnership
- ------------------------------------------------------------------------------
ACG 15 Inc. ACG 15 Limited Partnership
- ------------------------------------------------------------------------------
ACG 16 Inc. ACG 16 Limited Partnership
- ------------------------------------------------------------------------------
ACG 17 Inc. ACG 17 Limited Partnership
- ------------------------------------------------------------------------------
ACG 18 Inc. ACG 18 Limited Partnership
- ------------------------------------------------------------------------------
ACG 19 Inc. ACG 19 Limited Partnership
- ------------------------------------------------------------------------------
ACG 20 Inc. ACG 20 Limited Partnership
- ------------------------------------------------------------------------------
ACG 21 Inc. ACG 21 Limited Partnership
- ------------------------------------------------------------------------------
ACG 22 Inc. ACG 22 Limited Partnership
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GENERAL PARTNER LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
<S> <C>
ACG 23 Inc. ACG 23 Limited Partnership
- ------------------------------------------------------------------------------
ACG 24 Inc. ACG 24 Limited Partnership
- ------------------------------------------------------------------------------
ACG 25 Inc. ACG 25 Limited Partnership
- ------------------------------------------------------------------------------
ACG 26 Inc. ACG 26 Limited Partnership
- ------------------------------------------------------------------------------
ACG 27 Inc. ACG 27 Limited Partnership
- ------------------------------------------------------------------------------
ACG 28 Inc. ACG 28 Limited Partnership
- ------------------------------------------------------------------------------
ACG 29 Inc. ACG 29 Limited Partnership
- ------------------------------------------------------------------------------
ACG 30 Inc. ACG 30 Limited Partnership
- ------------------------------------------------------------------------------
ACG 31 Inc. ACG 31 Limited Partnership
- ------------------------------------------------------------------------------
ACG 32 Inc. ACG 32 Limited Partnership
- ------------------------------------------------------------------------------
ACG 33 Inc. ACG 33 Limited Partnership
- ------------------------------------------------------------------------------
ACG 34 Inc. ACG 34 Limited Partnership
- ------------------------------------------------------------------------------
ACG 35 Inc. ACG 35 Limited Partnership
- ------------------------------------------------------------------------------
ACG 36 Inc. ACG 36 Limited Partnership
- ------------------------------------------------------------------------------
ACG 37 Inc. ACG 37 Limited Partnership
- ------------------------------------------------------------------------------
ACG 38 Inc. ACG 38 Limited Partnership
- ------------------------------------------------------------------------------
ACG 39 Inc. ACG 39 Limited Partnership
- ------------------------------------------------------------------------------
ACG 40 Inc. ACG 40 Limited Partnership
- ------------------------------------------------------------------------------
ACG 41 Inc. ACG 41 Limited Partnership
- ------------------------------------------------------------------------------
ACG 42 Inc. ACG 42 Limited Partnership
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.26
ADVANCED COMMUNICATIONS GROUP, INC.
SERIES N WARRANT
Total Number of Series N Warrants: 90,000 Warrant No. N-1
Number of Series N Warrants represented
by this Warrant Certificate: 30,000
This Warrant Certificate certifies that, for value received,
Robert F. Benton
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of the
Company, or such other class of securities as shall then represent the common
equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 7 hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in Section
3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth anniversary
of the Grant Date, or, if earlier, the first anniversary of the Holder's date of
death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such date
or such national securities exchange as may be designated by the Board or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the employee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or the
employee) own more than fifty percent of the voting interests.
<PAGE>
"GRANT DATE" means June 3, 1999.
"HOLDER" means the registered holder identified above of the number of
Warrants represented by this Warrant Certificate or any Permitted Transferee, to
the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift or
a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series N Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants evidenced by this
Warrant Certificate may be exercised in whole or in part at any time on or after
the Shareholder Approval Date and before the Expiration Date by presentation and
surrender at the office of the Company specified herein of (i) this Warrant
Certificate with the Election to Exercise duly completed and executed, and (ii)
payment of the Exercise Price as then in effect, by bank draft or cashier's
check, for the number of Warrants being exercised. If Holder at any time
exercises less than all the Warrants evidenced by this Warrant Certificate, the
number of Warrants represented by this Warrant Certificate shall be reduced to
the number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the cumulative number of Warrants previously
exercised.
(b) To the extent that the Warrants evidenced by this Warrant
Certificate have not been exercised at or prior to the Expiration Date, such
Warrants shall expire and the rights of Holder shall become void and of no
effect.
(c) In its discretion, the Company may permit the Holder to exercise
an Warrant through a "cashless exercise" procedure involving a broker or dealer
approved by the Company, provided that the Holder has delivered an irrevocable
notice of exercise (the "NOTICE") to the broker or dealer and such broker or
dealer agrees: (i) to sell immediately the number of shares of Common Stock
specified in the Notice to be acquired upon exercise of the Warrant in the
ordinary course of its business, (ii) to pay promptly to the Company the
aggregate exercise price (plus the amount necessary to satisfy any applicable
tax liability), and (iii) to pay to the Holder the balance of the proceeds of
the sale of such shares over the amount determined under clause (ii) of this
sentence, less applicable commissions and fees; PROVIDED, HOWEVER, that the
Company may modify the provisions of this sentence to the extent necessary to
conform the exercise of the Warrant to Regulation T under the Exchange Act. The
manner in which the Exercise Price may be paid may be subject to certain
conditions specified by the Company. No fractional shares (or cash in lieu
thereof) shall be issued upon exercise of a Warrant and the number of shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole shares.
<PAGE>
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act shall have
the unfettered right (but not the obligation) to pay the Exercise Price in
full in shares of Common Stock with a Fair Market Value (determined as of
the date of exercise of such Warrant and, where such shares are withheld
(as described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be shares
that are already owned by the Holder who is subject to Section 16 of the
Exchange Act, or such Holder shall have the right but not the obligation to
direct the Company to withhold shares of Common Stock that would otherwise
have been received by such Holder upon exercise of the Warrant. It is the
intent of this Section 1(d) that the transactions described in this Section
1(d) qualify for the exemption from short-swing profit liability under
Section 16 of the Exchange Act pursuant to the "disposition to the issuer"
exemption set forth at Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this Warrant
Certificate shall not be assignable or otherwise transferable by Holder
otherwise than (i) to a Permitted Transferee; (ii) by Holder's will; or (iii)
by the laws of descent and distribution. During the lifetime of Holder, the
Warrants shall be exercisable only by Holder; after Holder's death, the
Warrants shall be exercisable only by the personal representative of Holder's
estate. Compliance with this provision is the responsibility of the Holder.
No transfer to heirs or legatees of Holder shall be effective to bind the
Company unless the Company shall have been furnished with written notice
thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common Stock
purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case of any
reclassification or change of outstanding securities issuable upon exercise of
the Warrants evidenced by this Warrant Certificate at any time (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 to which paragraph (b)
of this Section 3 applies), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change 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 to which paragraph (b) of this Section 3
applies in the securities issuable upon exercise of this Warrant), Holder shall
have, and the Company, or such successor corporation or other entity, shall
covenant in the constituent documents effecting any of the foregoing
transactions that Holder does have, the right to obtain upon the exercise of the
Warrants evidenced by this Warrant Certificate, in lieu of each share of Common
Stock, other securities, money or other property theretofore issuable upon
exercise of a Warrant, the kind and amount of shares of stock, other securities,
money or other property receivable upon such reclassification, change,
consolidation or merger by a holder of
<PAGE>
the shares of Common Stock, other securities, money or other property
issuable upon exercise of a Warrant if the Warrants evidenced by this Warrant
Certificate had been exercised immediately prior to such reclassification,
change, consolidation or merger. The constituent documents effecting any such
reclassification, change, consolidation or merger shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided in paragraph (a) of this Section 3. The provisions of
paragraph (a) of this Section 3 shall similarly apply to successive
reclassifications, changes, consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company shall subdivide its
shares of Common Stock into a greater number of shares (or pay to any holders of
securities of the Company a dividend payable in, or make any other distribution
of, Common Stock), the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of shares of Common
Stock purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately increased, as at the effective date of such
subdivision, dividend or distribution or if the Company shall take a record of
holders of its Common Stock for such purpose, as at such record date, whichever
is earlier. If the Company shall combine its shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, and the number of shares of
Common Stock purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of such
combination, or if the Company shall take a record of holders of its Common
Stock for purposes of such combination, as at such record date, whichever is
earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price in effect from
time to time shall be calculated to four decimal places and rounded to the
nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price is required
to be adjusted as provided in Section 3, the Company shall forthwith compute the
adjusted Exercise Price and shall maintain a record setting forth such adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially all of the
assets of the Company, or of any reclassification or change of the Common Stock
or other securities issuable upon exercise of the Warrants (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), or a tender offer or
exchange offer for all shares of Common Stock (or other securities issuable upon
the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
<PAGE>
(c) the Company shall authorize the granting to the holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
any class or series of capital stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares pursuant
to the exercise of the Warrants, Holder (or Holder's estate if applicable)
will enter into such written representations, warranties and agreements as
the Company may reasonably request in order to comply with applicable
securities laws. Notwithstanding any of the other provisions hereof, Holder
agrees that he will not exercise the Warrants, and that the Company will not
be obligated to issue any shares pursuant to this Warrant Certificate, if the
exercise of the Warrants or the issuance of such shares of Common Stock would
constitute a violation by Holder or by the Company of any provision of any
law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) Until the Expiration Date, the Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock (and other securities), for the
purpose of enabling it to satisfy any obligation to issue shares of Common
Stock (and other securities) upon the exercise of the Warrants evidenced by
this Warrant Certificate, the number of shares of Common Stock (and other
securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may be issued
upon exercise of the Warrants evidenced by this Warrant Certificate shall
upon issuance be validly issued, fully paid, non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof.
<PAGE>
8. WITHHOLDING OF TAX. The Company may make such provisions as it may
deem appropriate for the withholding of any taxes which it determines is
required in connection with the Warrants.
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of holding such
Warrants, be entitled to any rights of a stockholder of the Company either at
law or in equity, and the rights of Holder are limited to those expressed
herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of Holder
and Holder's heirs, personal representatives and successors, that the resolution
of any dispute or disagreement which may arise hereunder shall be determined by
the Board in its sole discretion and judgment, and that any such determination
and any interpretation by the Board of the terms of this Warrant Certificate
shall be final and shall be binding and conclusive, for all purposes, upon the
Company, Holder and Holder's heirs, personal representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in writing and
may be given by registered or certified mail, return receipt requested, telex,
telegram, telecopier, air courier guaranteeing overnight delivery of personal
delivery, if to Holder at the following address:
Robert F. Benton
350 B Gulf of Mexico Dr., Unit 236
Longboat Key, FL 34228
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
(The remainder of this page is intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed this 23rd day of February, 2000 by its Chairman of the Board
and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Richard O'Neal
------------------------------------------
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced by this Warrant
Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise _______ Warrants,
and herewith makes payment of______________________($_______) representing
the aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name of
______________________________________ and delivered to
______________________, whose address is _____________________________________.
Dated: ___________ --------------------------------------------
-------------------------------------------
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<PAGE>
Exhibit 10.27
ADVANCED COMMUNICATIONS GROUP, INC.
SERIES N WARRANT
Total Number of Series N Warrants: 90,000 Warrant No. N-2
Number of Series N Warrants represented
by this Warrant Certificate: 30,000
This Warrant Certificate certifies that, for value received,
Rod K. Cutsinger
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of the
Company, or such other class of securities as shall then represent the common
equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 7 hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in Section
3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth anniversary
of the Grant Date, or, if earlier, the first anniversary of the Holder's date of
death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such
date or such national securities exchange as may be designated by the Board
or, if Common Stock was not traded on such date, on the next preceding day on
which Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the employee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or the
employee) own more than fifty percent of the voting interests.
<PAGE>
"GRANT DATE" means June 3, 1999.
"HOLDER" means the registered holder identified above of the number of
Warrants represented by this Warrant Certificate or any Permitted Transferee, to
the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift or
a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series N Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants evidenced by this
Warrant Certificate may be exercised in whole or in part at any time on or after
the Shareholder Approval Date and before the Expiration Date by presentation and
surrender at the office of the Company specified herein of (i) this Warrant
Certificate with the Election to Exercise duly completed and executed, and (ii)
payment of the Exercise Price as then in effect, by bank draft or cashier's
check, for the number of Warrants being exercised. If Holder at any time
exercises less than all the Warrants evidenced by this Warrant Certificate, the
number of Warrants represented by this Warrant Certificate shall be reduced to
the number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the cumulative number of Warrants previously
exercised.
(b) To the extent that the Warrants evidenced by this Warrant
Certificate have not been exercised at or prior to the Expiration Date, such
Warrants shall expire and the rights of Holder shall become void and of no
effect.
(c) In its discretion, the Company may permit the Holder to exercise
an Warrant through a "cashless exercise" procedure involving a broker or dealer
approved by the Company, provided that the Holder has delivered an irrevocable
notice of exercise (the "NOTICE") to the broker or dealer and such broker or
dealer agrees: (i) to sell immediately the number of shares of Common Stock
specified in the Notice to be acquired upon exercise of the Warrant in the
ordinary course of its business, (ii) to pay promptly to the Company the
aggregate exercise price (plus the amount necessary to satisfy any applicable
tax liability), and (iii) to pay to the Holder the balance of the proceeds of
the sale of such shares over the amount determined under clause (ii) of this
sentence, less applicable commissions and fees; PROVIDED, HOWEVER, that the
Company may modify the provisions of this sentence to the extent necessary to
conform the exercise of the Warrant to Regulation T under the Exchange Act. The
manner in which the Exercise Price may be paid may be subject to certain
conditions specified by the Company. No fractional shares (or cash in lieu
thereof) shall be issued upon exercise of a Warrant and the number of shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole shares.
<PAGE>
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act shall have
the unfettered right (but not the obligation) to pay the Exercise Price in
full in shares of Common Stock with a Fair Market Value (determined as of
the date of exercise of such Warrant and, where such shares are withheld
(as described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be shares
that are already owned by the Holder who is subject to Section 16 of the
Exchange Act, or such Holder shall have the right but not the obligation to
direct the Company to withhold shares of Common Stock that would otherwise
have been received by such Holder upon exercise of the Warrant. It is the
intent of this Section 1(d) that the transactions described in this Section
1(d) qualify for the exemption from short-swing profit liability under
Section 16 of the Exchange Act pursuant to the "disposition to the issuer"
exemption set forth at Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this Warrant
Certificate shall not be assignable or otherwise transferable by Holder
otherwise than (i) to a Permitted Transferee; (ii) by Holder's will; or (iii) by
the laws of descent and distribution. During the lifetime of Holder, the
Warrants shall be exercisable only by Holder; after Holder's death, the Warrants
shall be exercisable only by the personal representative of Holder's estate.
Compliance with this provision is the responsibility of the Holder. No transfer
to heirs or legatees of Holder shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of such
evidence as the Board may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common Stock
purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case of any
reclassification or change of outstanding securities issuable upon exercise of
the Warrants evidenced by this Warrant Certificate at any time (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 to which paragraph (b)
of this Section 3 applies), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with another
corporation in which the Company is the surviving corporation and which does not
result in any reclassification or change 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 to which paragraph (b) of this Section 3
applies in the securities issuable upon exercise of this Warrant), Holder shall
have, and the Company, or such successor corporation or other entity, shall
covenant in the constituent documents effecting any of the foregoing
transactions that Holder does have, the right to obtain upon the exercise of the
Warrants evidenced by this Warrant Certificate, in lieu of each share of Common
Stock, other securities, money or other property theretofore issuable upon
exercise of a Warrant, the kind and amount of shares of stock, other securities,
money or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of
<PAGE>
a Warrant if the Warrants evidenced by this Warrant Certificate had been
exercised immediately prior to such reclassification, change, consolidation
or merger. The constituent documents effecting any such reclassification,
change, consolidation or merger shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclasifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company shall subdivide
its shares of Common Stock into a greater number of shares (or pay to any
holders of securities of the Company a dividend payable in, or make any other
distribution of, Common Stock), the Exercise Price in effect immediately prior
to such subdivision shall be proportionately reduced, and the number of shares
of Common Stock purchasable upon exercise of the Warrants evidenced by this
Warrant Certificate shall be proportionately increased, as at the effective date
of such subdivision, dividend or distribution or if the Company shall take a
record of holders of its Common Stock for such purpose, as at such record date,
whichever is earlier. If the Company shall combine its shares of Common Stock
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased, and the number of shares
of Common Stock purchasable upon exercise of the Warrants evidenced by this
Warrant Certificate shall be proportionately reduced, as at the effective date
of such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date, whichever
is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price in effect from
time to time shall be calculated to four decimal places and rounded to the
nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price is required
to be adjusted as provided in Section 3, the Company shall forthwith compute the
adjusted Exercise Price and shall maintain a record setting forth such adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially all of the
assets of the Company, or of any reclassification or change of the Common Stock
or other securities issuable upon exercise of the Warrants (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), or a tender offer or
exchange offer for all shares of Common Stock (or other securities issuable upon
the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of any class
or series of capital stock; or
<PAGE>
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior to the
applicable record date hereinafter specified, or promptly in the case of events
for which there is no record date, a written notice stating (x) the date for the
determination of the holders of record of shares of Common Stock (or other
securities issuable upon the exercise of the Warrants) entitled to receive any
such dividends or other distribution, (y) the initial expiration date set forth
in any tender offer or exchange offer for shares of Common Stock (or other
securities issuable upon the exercise of the Warrants), or (z) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock (or other
securities issuable upon the exercise of the Warrants) shall be entitled to
exchange such shares for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of any distribution, right, option,
warrant, issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares pursuant to
the exercise of the Warrants, Holder (or Holder's estate if applicable) will
enter into such written representations, warranties and agreements as the
Company may reasonably request in order to comply with applicable securities
laws. Notwithstanding any of the other provisions hereof, Holder agrees that he
will not exercise the Warrants, and that the Company will not be obligated to
issue any shares pursuant to this Warrant Certificate, if the exercise of the
Warrants or the issuance of such shares of Common Stock would constitute a
violation by Holder or by the Company of any provision of any law or regulation
of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) Until the Expiration Date, the Company shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock (and other securities), for the purpose of
enabling it to satisfy any obligation to issue shares of Common Stock (and other
securities) upon the exercise of the Warrants evidenced by this Warrant
Certificate, the number of shares of Common Stock (and other securities)
issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may be issued upon
exercise of the Warrants evidenced by this Warrant Certificate shall upon
issuance be validly issued, fully paid, non-assessable and free from all taxes,
liens and charges with respect to the issuance thereof.
8. WITHHOLDING OF TAX. The Company may make such provisions as it may
deem appropriate for the withholding of any taxes which it determines is
required in connection with the Warrants.
<PAGE>
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of holding such
Warrants, be entitled to any rights of a stockholder of the Company either at
law or in equity, and the rights of Holder are limited to those expressed
herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of Holder
and Holder's heirs, personal representatives and successors, that the resolution
of any dispute or disagreement which may arise hereunder shall be determined by
the Board in its sole discretion and judgment, and that any such determination
and any interpretation by the Board of the terms of this Warrant Certificate
shall be final and shall be binding and conclusive, for all purposes, upon the
Company, Holder and Holder's heirs, personal representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in writing and
may be given by registered or certified mail, return receipt requested, telex,
telegram, telecopier, air courier guaranteeing overnight delivery of personal
delivery, if to Holder at the following address:
Rod K. Cutsinger
4 Briarwood Ct.
Houston, TX 77019
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Chairman and Chief Executive Officer
Telecopier: (314) 530-9432
12. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
(The remainder of this page is intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed this 23rd day of February, 2000 by its Chairman of the Board and
Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By:/s/ Richard O'Neal
-------------------------------------------
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced by this
Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise _________ Warrants,
and herewith makes payment of_____________________ ($_________) representing
the aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name of
______________________________________ and delivered to_________________
______________________________________, whose address is __________________
____________________________________________________________.
Dated:
_____________________________
_____________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<PAGE>
Exhibit 10.28
ADVANCED COMMUNICATIONS GROUP, INC.
SERIES N WARRANT
Total Number of Series N Warrants: 90,000 Warrant No. N-3
Number of Series N Warrants represented
by this Warrant Certificate: 30,000
This Warrant Certificate certifies that, for value received,
Marvin C. Moses
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of the
Company, or such other class of securities as shall then represent the common
equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 7 hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in Section
3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth anniversary
of the Grant Date, or, if earlier, the first anniversary of the Holder's date of
death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such date
or such national securities exchange as may be designated by the Board or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the employee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or the
employee) own more than fifty percent of the voting interests.
<PAGE>
"GRANT DATE" means June 3, 1999.
"HOLDER" means the registered holder identified above of the number of
Warrants represented by this Warrant Certificate or any Permitted Transferee,
to the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift
or a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series N Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants evidenced by this
Warrant Certificate may be exercised in whole or in part at any time on or
after the Shareholder Approval Date and before the Expiration Date by
presentation and surrender at the office of the Company specified herein of
(i) this Warrant Certificate with the Election to Exercise duly completed and
executed, and (ii) payment of the Exercise Price as then in effect, by bank
draft or cashier's check, for the number of Warrants being exercised. If
Holder at any time exercises less than all the Warrants evidenced by this
Warrant Certificate, the number of Warrants represented by this Warrant
Certificate shall be reduced to the number of Warrants equal to the number of
Warrants originally represented by this Warrant Certificate less the
cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this Warrant
Certificate have not been exercised at or prior to the Expiration Date, such
Warrants shall expire and the rights of Holder shall become void and of no
effect.
(c) In its discretion, the Company may permit the Holder to
exercise an Warrant through a "cashless exercise" procedure involving a
broker or dealer approved by the Company, provided that the Holder has
delivered an irrevocable notice of exercise (the "NOTICE") to the broker or
dealer and such broker or dealer agrees: (i) to sell immediately the number
of shares of Common Stock specified in the Notice to be acquired upon
exercise of the Warrant in the ordinary course of its business, (ii) to pay
promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
<PAGE>
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act shall have
the unfettered right (but not the obligation) to pay the Exercise Price in
full in shares of Common Stock with a Fair Market Value (determined as of
the date of exercise of such Warrant and, where such shares are withheld
(as described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be shares
that are already owned by the Holder who is subject to Section 16 of the
Exchange Act, or such Holder shall have the right but not the obligation to
direct the Company to withhold shares of Common Stock that would otherwise
have been received by such Holder upon exercise of the Warrant. It is the
intent of this Section 1(d) that the transactions described in this Section
1(d) qualify for the exemption from short-swing profit liability under
Section 16 of the Exchange Act pursuant to the "disposition to the issuer"
exemption set forth at Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this Warrant
Certificate shall not be assignable or otherwise transferable by Holder
otherwise than (i) to a Permitted Transferee; (ii) by Holder's will; or (iii)
by the laws of descent and distribution. During the lifetime of Holder, the
Warrants shall be exercisable only by Holder; after Holder's death, the
Warrants shall be exercisable only by the personal representative of Holder's
estate. Compliance with this provision is the responsibility of the Holder.
No transfer to heirs or legatees of Holder shall be effective to bind the
Company unless the Company shall have been furnished with written notice
thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common Stock
purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case of any
reclassification or change of outstanding securities issuable upon exercise
of the Warrants evidenced by this Warrant Certificate at any time (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 to which
paragraph (b) of this Section 3 applies), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger
with another corporation in which the Company is the surviving corporation
and which does not result in any reclassification or change 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 to which
paragraph (b) of this Section 3 applies in the securities issuable upon
exercise of this Warrant), Holder shall have, and the Company, or such
successor corporation or other entity, shall covenant in the constituent
documents effecting any of the foregoing transactions that Holder does have,
the right to obtain upon the exercise of the Warrants evidenced by this
Warrant Certificate, in lieu of each share of Common Stock, other securities,
money or other property theretofore issuable upon exercise of a Warrant, the
kind and amount of shares of stock, other securities, money or other property
receivable upon such reclassification, change, consolidation or merger by a
holder of
<PAGE>
the shares of Common Stock, other securities, money or other property
issuable upon exercise of a Warrant if the Warrants evidenced by this Warrant
Certificate had been exercised immediately prior to such reclassification,
change, consolidation or merger. The constituent documents effecting any
such reclassification, change, consolidation or merger shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided in paragraph (a) of this Section 3. The provisions of
paragraph (a) of this Section 3 shall similarly apply to successive
reclssifications, changes, consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company shall subdivide
its shares of Common Stock into a greater number of shares (or pay to any
holders of securities of the Company a dividend payable in, or make any other
distribution of, Common Stock), the Exercise Price in effect immediately prior
to such subdivision shall be proportionately reduced, and the number of shares
of Common Stock purchasable upon exercise of the Warrants evidenced by this
Warrant Certificate shall be proportionately increased, as at the effective date
of such subdivision, dividend or distribution or if the Company shall take a
record of holders of its Common Stock for such purpose, as at such record date,
whichever is earlier. If the Company shall combine its shares of Common Stock
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination shall be proportionately increased, and the number of shares
of Common Stock purchasable upon exercise of the Warrants evidenced by this
Warrant Certificate shall be proportionately reduced, as at the effective date
of such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date, whichever
is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price in effect from
time to time shall be calculated to four decimal places and rounded to the
nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price is required
to be adjusted as provided in Section 3, the Company shall forthwith compute the
adjusted Exercise Price and shall maintain a record setting forth such adjusted
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially all of the
assets of the Company, or of any reclassification or change of the Common Stock
or other securities issuable upon exercise of the Warrants (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), or a tender offer or
exchange offer for all shares of Common Stock (or other securities issuable upon
the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of any class
or series of capital stock; or
<PAGE>
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares pursuant
to the exercise of the Warrants, Holder (or Holder's estate if applicable)
will enter into such written representations, warranties and agreements as
the Company may reasonably request in order to comply with applicable
securities laws. Notwithstanding any of the other provisions hereof, Holder
agrees that he will not exercise the Warrants, and that the Company will not
be obligated to issue any shares pursuant to this Warrant Certificate, if the
exercise of the Warrants or the issuance of such shares of Common Stock would
constitute a violation by Holder or by the Company of any provision of any
law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) Until the Expiration Date, the Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock (and other securities), for the
purpose of enabling it to satisfy any obligation to issue shares of Common
Stock (and other securities) upon the exercise of the Warrants evidenced by
this Warrant Certificate, the number of shares of Common Stock (and other
securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may be issued
upon exercise of the Warrants evidenced by this Warrant Certificate shall
upon issuance be validly issued, fully paid, non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof.
8. WITHHOLDING OF TAX. The Company may make such provisions as it may
deem appropriate for the withholding of any taxes which it determines is
required in connection with the Warrants.
<PAGE>
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of holding
such Warrants, be entitled to any rights of a stockholder of the Company
either at law or in equity, and the rights of Holder are limited to those
expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of Holder
and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in writing
and may be given by registered or certified mail, return receipt requested,
telex, telegram, telecopier, air courier guaranteeing overnight delivery of
personal delivery, if to Holder at the following address:
Marvin C. Moses
2942 Chestnut Run Dr.
Bloomfield Hills, MI 48302
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
(The remainder of this page is intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed this 23rd day of February, 2000 by its Chairman of the Board and
Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By: /s/ Richard O'Neal
-------------------------------------------
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced by this
Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise _________ Warrants,
and herewith makes payment of_________________ ($__________) representing
the aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name of
___________________________________________ and delivered to__________
_______________________, whose address is_____________________.
Dated:_______________ ______________________________
_____________________________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE
NAME AS WRITTEN ON THE FACE OF THIS WARRANT CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATSOEVER.
<PAGE>
Exhibit 10.29
ADVANCED COMMUNICATIONS GROUP, INC.
FORM OF SERIES P WARRANT
Total Number of Series P Warrants: 75,000 Warrant No. P-1
Number of Series P Warrants represented
by this Warrant Certificate: 30,000
This Warrant Certificate certifies that, for value received,
Wilmot Matthews
is the registered holder of the number of Warrants set forth above. Each
Warrant entitles Holder, at any time or from time to time on or before the
Expiration Date, to purchase from the Company one fully paid and
nonassessable share of Common Stock at the Exercise Price, subject to
adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share,
of the Company, or such other class of securities as shall then represent the
common equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 8
hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in
Section 3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth
anniversary of the Grant Date, or, if earlier, the first anniversary of the
Holder's date of death.
"FAIR MARKET VALUE" means, on any given date, the closing price of
the shares of Common Stock, as reported on the New York Stock Exchange for
such date or such national securities exchange as may be designated by the
Board or, if Common Stock was not traded on such date, on the next preceding
day on which Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the employee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or the
employee) own more than fifty percent of the voting interests.
"GRANT DATE" means June 3, 1999.
<PAGE>
"HOLDER" means the registered holder identified above of the number
of Warrants represented by this Warrant Certificate or any Permitted
Transferee, to the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift
or a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series P Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants evidenced
by this Warrant Certificate may be exercised in whole or in part at any time
on or after the Shareholder Approval Date and before the Expiration Date by
presentation and surrender at the office of the Company specified herein of
(i) this Warrant Certificate with the Election to Exercise duly completed and
executed, and (ii) payment of the Exercise Price as then in effect, by bank
draft or cashier's check, for the number of Warrants being exercised. If
Holder at any time exercises less than all the Warrants evidenced by this
Warrant Certificate, the number of Warrants represented by this Warrant
Certificate shall be reduced to the number of Warrants equal to the number of
Warrants originally represented by this Warrant Certificate less the
cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this
Warrant Certificate have not been exercised at or prior to the Expiration
Date, such Warrants shall expire and the rights of Holder shall become void
and of no effect.
(c) In its discretion, the Company may permit the Holder to
exercise an Warrant through a "cashless exercise" procedure involving a
broker or dealer approved by the Company, provided that the Holder has
delivered an irrevocable notice of exercise (the "NOTICE") to the broker or
dealer and such broker or dealer agrees: (i) to sell immediately the number
of shares of Common Stock specified in the Notice to be acquired upon
exercise of the Warrant in the ordinary course of its business, (ii) to pay
promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act
shall have the unfettered right (but not the obligation) to pay the
Exercise Price in full in shares of
2
<PAGE>
Common Stock with a Fair Market Value (determined as of the date of
exercise of such Warrant and, where such shares are withheld (as
described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be
shares that are already owned by the Holder who is subject to
Section 16 of the Exchange Act, or such Holder shall have the right
but not the obligation to direct the Company to withhold shares of
Common Stock that would otherwise have been received by such Holder
upon exercise of the Warrant. It is the intent of this Section 1(d)
that the transactions described in this Section 1(d) qualify for the
exemption from short-swing profit liability under Section 16 of the
Exchange Act pursuant to the "disposition to the issuer" exemption
set forth at Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this
Warrant Certificate shall not be assignable or otherwise transferable by
Holder otherwise than (i) to a Permitted Transferee; (ii) by Holder's will;
or (iii) by the laws of descent and distribution. During the lifetime of
Holder, the Warrants shall be exercisable only by Holder; after Holder's
death, the Warrants shall be exercisable only by the personal representative
of Holder's estate. Compliance with this provision is the responsibility of
the Holder. No transfer to heirs or legatees of Holder shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common
Stock purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case
of any reclassification or change of outstanding securities issuable upon
exercise of the Warrants evidenced by this Warrant Certificate at any time
(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 to
which paragraph (b) of this Section 3 applies), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change 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 to which paragraph (b) of this Section 3 applies in the
securities issuable upon exercise of this Warrant), Holder shall have, and
the Company, or such successor corporation or other entity, shall covenant in
the constituent documents effecting any of the foregoing transactions that
Holder does have, the right to obtain upon the exercise of the Warrants
evidenced by this Warrant Certificate, in lieu of each share of Common Stock,
other securities, money or other property theretofore issuable upon exercise
of a Warrant, the kind and amount of shares of stock, other securities, money
or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if
the Warrants evidenced by this Warrant Certificate had been exercised
immediately
3
<PAGE>
prior to such reclassification, change, consolidation or merger. The
constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company shall
subdivide its shares of Common Stock into a greater number of shares (or pay
to any holders of securities of the Company a dividend payable in, or make
any other distribution of, Common Stock), the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares of Common Stock purchasable upon exercise of the
Warrants evidenced by this Warrant Certificate shall be proportionately
increased, as at the effective date of such subdivision, dividend or
distribution or if the Company shall take a record of holders of its Common
Stock for such purpose, as at such record date, whichever is earlier. If the
Company shall combine its shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of shares of Common Stock
purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of
such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date,
whichever is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price in
effect from time to time shall be calculated to four decimal places and
rounded to the nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price
is required to be adjusted as provided in Section 3, the Company shall
forthwith compute the adjusted Exercise Price and shall maintain a record
setting forth such adjusted Exercise Price and showing in reasonable detail
the facts upon which such adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially all
of the assets of the Company, or of any reclassification or change of the
Common Stock or other securities issuable upon exercise of the Warrants
(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), or
a tender offer or exchange offer for all shares of Common Stock (or other
securities issuable upon the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the holders
of Common Stock of rights or warrants to subscribe for or purchase any shares
of any class or series of capital stock; or
4
<PAGE>
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior
to the applicable record date hereinafter specified, or promptly in the case
of events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares
pursuant to the exercise of the Warrants, Holder (or Holder's estate if
applicable) will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws. Notwithstanding any of the other provisions
hereof, Holder agrees that he will not exercise the Warrants, and that the
Company will not be obligated to issue any shares pursuant to this Warrant
Certificate, if the exercise of the Warrants or the issuance of such shares
of Common Stock would constitute a violation by Holder or by the Company of
any provision of any law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. THE COMPANY COVENANTS AND AGREES
THAT:
(a) Until the Expiration Date, the Company shall at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants
evidenced by this Warrant Certificate, the number of shares of Common Stock
(and other securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may be
issued upon exercise of the Warrants evidenced by this Warrant Certificate
shall upon issuance be validly issued, fully paid, non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.
5
<PAGE>
8. WITHHOLDING OF TAX. The Company may make such provisions as
it may deem appropriate for the withholding of any taxes which it determines
is required in connection with the Warrants.
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of
holding such Warrants, be entitled to any rights of a stockholder of the
Company either at law or in equity, and the rights of Holder are limited to
those expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of
Holder and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in
writing and may be given by registered or certified mail, return receipt
requested, telex, telegram, telecopier, air courier guaranteeing overnight
delivery of personal delivery, if to Holder at the following address:
Wilmot Matthews
---------------------------------------------
---------------------------------------------
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be
governed by and construed in accordance with the laws of the State of
Delaware.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed this 23rd day of February, 2000 by its Chairman of the Board
and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By:
--------------------------------
Richard O'Neal, Chairman of the
Board and Chief Executive Officer
7
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants
evidenced by this Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise ______
Warrants, and herewith makes payment of____ ($____) representing the
aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name of
______________________________ and delivered to_____________________________,
whose address is__________________________________________________.
Dated: ____________ ____________________________________
____________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
8
<PAGE>
EXHIBIT 10.30
ADVANCED COMMUNICATIONS GROUP, INC.
FORM OF SERIES P WARRANT
Total Number of Series P Warrants: 75,000 Warrant No. P-2
Number of Series P Warrants represented
by this Warrant Certificate: 10,000
This Warrant Certificate certifies that, for value received,
Nicholas J. Ross
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of
the Company, or such other class of securities as shall then represent the
common equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 8 hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in
Section 3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth
anniversary of the Grant Date, or, if earlier, the first anniversary of the
Holder's date of death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such date
or such national securities exchange as may be designated by the Board or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interests, a foundation
in which these persons (or the employee) control the management of assets, and
any other entity in which these persons (or the employee) own more than fifty
percent of the voting interests.
"GRANT DATE" means June 3, 1999.
1
<PAGE>
"HOLDER" means the registered holder identified above of the number of
Warrants represented by this Warrant Certificate or any Permitted Transferee, to
the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift or
a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series P Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants
evidenced by this Warrant Certificate may be exercised in whole or in part at
any time on or after the Shareholder Approval Date and before the Expiration
Date by presentation and surrender at the office of the Company specified
herein of (i) this Warrant Certificate with the Election to Exercise duly
completed and executed, and (ii) payment of the Exercise Price as then in
effect, by bank draft or cashier's check, for the number of Warrants being
exercised. If Holder at any time exercises less than all the Warrants
evidenced by this Warrant Certificate, the number of Warrants represented by
this Warrant Certificate shall be reduced to the number of Warrants equal to
the number of Warrants originally represented by this Warrant Certificate
less the cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this
Warrant Certificate have not been exercised at or prior to the Expiration
Date, such Warrants shall expire and the rights of Holder shall become void
and of no effect.
(c) In its discretion, the Company may permit the
Holder to exercise an Warrant through a "cashless exercise" procedure
involving a broker or dealer approved by the Company, provided that the
Holder has delivered an irrevocable notice of exercise (the "NOTICE") to the
broker or dealer and such broker or dealer agrees: (i) to sell immediately
the number of shares of Common Stock specified in the Notice to be acquired
upon exercise of the Warrant in the ordinary course of its business, (ii) to
pay promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act
shall have the unfettered right (but not the obligation) to pay the
Exercise Price in full in shares of
2
<PAGE>
Common Stock with a Fair Market Value (determined as of the date of
exercise of such Warrant and, where such shares are withheld (as
described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may
be shares that are already owned by the Holder who is subject to
Section 16 of the Exchange Act, or such Holder shall have the right but
not the obligation to direct the Company to withhold shares of Common
Stock that would otherwise have been received by such Holder upon
exercise of the Warrant. It is the intent of this Section 1(d) that the
transactions described in this Section 1(d) qualify for the exemption
from short-swing profit liability under Section 16 of the Exchange Act
pursuant to the "disposition to the issuer" exemption set forth at Rule
16b-3(e) promulgated under Section 16 of the Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this
Warrant Certificate shall not be assignable or otherwise transferable by
Holder otherwise than (i) to a Permitted Transferee; (ii) by Holder's will;
or (iii) by the laws of descent and distribution. During the lifetime of
Holder, the Warrants shall be exercisable only by Holder; after Holder's
death, the Warrants shall be exercisable only by the personal representative
of Holder's estate. Compliance with this provision is the responsibility of
the Holder. No transfer to heirs or legatees of Holder shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common
Stock purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In
case of any reclassification or change of outstanding securities issuable
upon exercise of the Warrants evidenced by this Warrant Certificate at any
time (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
to which paragraph (b) of this Section 3 applies), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change 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 to which paragraph (b) of this Section 3 applies in the
securities issuable upon exercise of this Warrant), Holder shall have, and
the Company, or such successor corporation or other entity, shall covenant in
the constituent documents effecting any of the foregoing transactions that
Holder does have, the right to obtain upon the exercise of the Warrants
evidenced by this Warrant Certificate, in lieu of each share of Common Stock,
other securities, money or other property theretofore issuable upon exercise
of a Warrant, the kind and amount of shares of stock, other securities, money
or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if
the Warrants evidenced by this Warrant Certificate had been exercised
immediately
3
<PAGE>
prior to such reclassification, change, consolidation or merger. The
constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company
shall subdivide its shares of Common Stock into a greater number of shares
(or pay to any holders of securities of the Company a dividend payable in, or
make any other distribution of, Common Stock), the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares of Common Stock purchasable upon exercise of the
Warrants evidenced by this Warrant Certificate shall be proportionately
increased, as at the effective date of such subdivision, dividend or
distribution or if the Company shall take a record of holders of its Common
Stock for such purpose, as at such record date, whichever is earlier. If the
Company shall combine its shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of shares of Common Stock
purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of
such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date,
whichever is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price
in effect from time to time shall be calculated to four decimal places and
rounded to the nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price
is required to be adjusted as provided in Section 3, the Company shall
forthwith compute the adjusted Exercise Price and shall maintain a record
setting forth such adjusted Exercise Price and showing in reasonable detail
the facts upon which such adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially
all of the assets of the Company, or of any reclassification or change of the
Common Stock or other securities issuable upon exercise of the Warrants
(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), or
a tender offer or exchange offer for all shares of Common Stock (or other
securities issuable upon the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any
other distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or series of capital stock; or
4
<PAGE>
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, a written notice stating (x) the date
for the determination of the holders of record of shares of Common Stock (or
other securities issuable upon the exercise of the Warrants) entitled to receive
any such dividends or other distribution, (y) the initial expiration date set
forth in any tender offer or exchange offer for shares of Common Stock (or other
securities issuable upon the exercise of the Warrants), or (z) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock (or other
securities issuable upon the exercise of the Warrants) shall be entitled to
exchange such shares for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of any distribution, right, option,
warrant, issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares
pursuant to the exercise of the Warrants, Holder (or Holder's estate if
applicable) will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws. Notwithstanding any of the other provisions
hereof, Holder agrees that he will not exercise the Warrants, and that the
Company will not be obligated to issue any shares pursuant to this Warrant
Certificate, if the exercise of the Warrants or the issuance of such shares
of Common Stock would constitute a violation by Holder or by the Company of
any provision of any law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) Until the Expiration Date, the Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants
evidenced by this Warrant Certificate, the number of shares of Common Stock
(and other securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may
be issued upon exercise of the Warrants evidenced by this Warrant Certificate
shall upon issuance be validly issued, fully paid, non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.
5
<PAGE>
8. WITHHOLDING OF TAX. The Company may make such provisions as
it may deem appropriate for the withholding of any taxes which it determines
is required in connection with the Warrants.
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of
holding such Warrants, be entitled to any rights of a stockholder of the
Company either at law or in equity, and the rights of Holder are limited to
those expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of
Holder and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in
writing and may be given by registered or certified mail, return receipt
requested, telex, telegram, telecopier, air courier guaranteeing overnight
delivery of personal delivery, if to Holder at the following address:
Nicholas J. Ross
____________________________________________________________
____________________________________________________________
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of Delaware.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed this 23rd day of February, 2000 by its Chairman of the
Board and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By:_____________________________________________
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
7
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced by this
Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise _________
Warrants, and herewith makes payment of _______($_____ ) representing the
aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name of
______________________________________ and delivered to ____________________,
whose address is __________________________.
Dated: ______________ ____________________________________
____________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
8
<PAGE>
EXHIBIT 10.31
ADVANCED COMMUNICATIONS GROUP, INC.
FORM OF SERIES P WARRANT
Total Number of Series P Warrants: 75,000 Warrant No. P-3
Number of Series P Warrants represented
by this Warrant Certificate: 10,000
This Warrant Certificate certifies that, for value received,
George Anderson
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of
the Company, or such other class of securities as shall then represent the
common equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 8 hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in
Section 3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth
anniversary of the Grant Date, or, if earlier, the first anniversary of the
Holder's date of death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such date
or such national securities exchange as may be designated by the Board or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interests, a foundation
in which these persons (or the employee) control the management of assets, and
any other entity in which these persons (or the employee) own more than fifty
percent of the voting interests.
"GRANT DATE" means June 3, 1999.
<PAGE>
"HOLDER" means the registered holder identified above of the number
of Warrants represented by this Warrant Certificate or any Permitted
Transferee, to the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift
or a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series P Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants
evidenced by this Warrant Certificate may be exercised in whole or in part at
any time on or after the Shareholder Approval Date and before the Expiration
Date by presentation and surrender at the office of the Company specified
herein of (i) this Warrant Certificate with the Election to Exercise duly
completed and executed, and (ii) payment of the Exercise Price as then in
effect, by bank draft or cashier's check, for the number of Warrants being
exercised. If Holder at any time exercises less than all the Warrants
evidenced by this Warrant Certificate, the number of Warrants represented by
this Warrant Certificate shall be reduced to the number of Warrants equal to
the number of Warrants originally represented by this Warrant Certificate
less the cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this
Warrant Certificate have not been exercised at or prior to the Expiration
Date, such Warrants shall expire and the rights of Holder shall become void
and of no effect.
(c) In its discretion, the Company may permit the
Holder to exercise an Warrant through a "cashless exercise" procedure
involving a broker or dealer approved by the Company, provided that the
Holder has delivered an irrevocable notice of exercise (the "NOTICE") to the
broker or dealer and such broker or dealer agrees: (i) to sell immediately
the number of shares of Common Stock specified in the Notice to be acquired
upon exercise of the Warrant in the ordinary course of its business, (ii) to
pay promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act
shall have the unfettered right (but not the obligation) to pay the
Exercise Price in full in shares of
2
<PAGE>
Common Stock with a Fair Market Value (determined as of the date of
exercise of such Warrant and, where such shares are withheld (as
described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may
be shares that are already owned by the Holder who is subject to
Section 16 of the Exchange Act, or such Holder shall have the right but
not the obligation to direct the Company to withhold shares of Common
Stock that would otherwise have been received by such Holder upon
exercise of the Warrant. It is the intent of this Section 1(d) that the
transactions described in this Section 1(d) qualify for the exemption
from short-swing profit liability under Section 16 of the Exchange Act
pursuant to the "disposition to the issuer" exemption set forth at Rule
16b-3(e) promulgated under Section 16 of the Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this
Warrant Certificate shall not be assignable or otherwise transferable by
Holder otherwise than (i) to a Permitted Transferee; (ii) by Holder's will;
or (iii) by the laws of descent and distribution. During the lifetime of
Holder, the Warrants shall be exercisable only by Holder; after Holder's
death, the Warrants shall be exercisable only by the personal representative
of Holder's estate. Compliance with this provision is the responsibility of
the Holder. No transfer to heirs or legatees of Holder shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common
Stock purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In
case of any reclassification or change of outstanding securities issuable
upon exercise of the Warrants evidenced by this Warrant Certificate at any
time (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
to which paragraph (b) of this Section 3 applies), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change 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 to which paragraph (b) of this Section 3 applies in the
securities issuable upon exercise of this Warrant), Holder shall have, and
the Company, or such successor corporation or other entity, shall covenant in
the constituent documents effecting any of the foregoing transactions that
Holder does have, the right to obtain upon the exercise of the Warrants
evidenced by this Warrant Certificate, in lieu of each share of Common Stock,
other securities, money or other property theretofore issuable upon exercise
of a Warrant, the kind and amount of shares of stock, other securities, money
or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if
the Warrants evidenced by this Warrant Certificate had been exercised
immediately
3
<PAGE>
prior to such reclassification, change, consolidation or merger. The
constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company
shall subdivide its shares of Common Stock into a greater number of shares
(or pay to any holders of securities of the Company a dividend payable in, or
make any other distribution of, Common Stock), the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares of Common Stock purchasable upon exercise of the
Warrants evidenced by this Warrant Certificate shall be proportionately
increased, as at the effective date of such subdivision, dividend or
distribution or if the Company shall take a record of holders of its Common
Stock for such purpose, as at such record date, whichever is earlier. If the
Company shall combine its shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of shares of Common Stock
purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of
such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date,
whichever is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price
in effect from time to time shall be calculated to four decimal places and
rounded to the nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price
is required to be adjusted as provided in Section 3, the Company shall
forthwith compute the adjusted Exercise Price and shall maintain a record
setting forth such adjusted Exercise Price and showing in reasonable detail
the facts upon which such adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially
all of the assets of the Company, or of any reclassification or change of the
Common Stock or other securities issuable upon exercise of the Warrants
(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), or
a tender offer or exchange offer for all shares of Common Stock (or other
securities issuable upon the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any
other distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or series of capital stock; or
4
<PAGE>
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior
to the applicable record date hereinafter specified, or promptly in the case
of events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares
pursuant to the exercise of the Warrants, Holder (or Holder's estate if
applicable) will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws. Notwithstanding any of the other provisions
hereof, Holder agrees that he will not exercise the Warrants, and that the
Company will not be obligated to issue any shares pursuant to this Warrant
Certificate, if the exercise of the Warrants or the issuance of such shares
of Common Stock would constitute a violation by Holder or by the Company of
any provision of any law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) Until the Expiration Date, the Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants
evidenced by this Warrant Certificate, the number of shares of Common Stock
(and other securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may
be issued upon exercise of the Warrants evidenced by this Warrant Certificate
shall upon issuance be validly issued, fully paid, non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.
5
<PAGE>
8. WITHHOLDING OF TAX. The Company may make such provisions as
it may deem appropriate for the withholding of any taxes which it determines
is required in connection with the Warrants.
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of
holding such Warrants, be entitled to any rights of a stockholder of the
Company either at law or in equity, and the rights of Holder are limited to
those expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of
Holder and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in
writing and may be given by registered or certified mail, return receipt
requested, telex, telegram, telecopier, air courier guaranteeing overnight
delivery of personal delivery, if to Holder at the following address:
George Anderson
_________________________________
_________________________________
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of Delaware.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed this 23rd day of February, 2000 by its Chairman of the
Board and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By: ___________________________________________
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
7
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced
by this Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise _________
Warrants, and herewith makes payment of __________________ ($_________ )
representing the aggregate Exercise Price thereof, and requests that the
certificate representing the securities issuable hereunder be issued in the
name of ___________________ ___________________ and delivered to
__________________, whose address is ___________________________.
Dated: _____________________ ____________________________
__________________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
8
<PAGE>
EXHIBIT 10.32
ADVANCED COMMUNICATIONS GROUP, INC.
FORM OF SERIES P WARRANT
Total Number of Series P Warrants: 75,000 Warrant No. P-4
Number of Series P Warrants represented
by this Warrant Certificate: 20,000
This Warrant Certificate certifies that, for value received,
Maxwell Gotlieb
is the registered holder of the number of Warrants set forth above. Each
Warrant entitles Holder, at any time or from time to time on or before the
Expiration Date, to purchase from the Company one fully paid and
nonassessable share of Common Stock at the Exercise Price, subject to
adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share,
of the Company, or such other class of securities as shall then represent the
common equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 8
hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in
Section 3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth
anniversary of the Grant Date, or, if earlier, the first anniversary of the
Holder's date of death.
"FAIR MARKET VALUE" means, on any given date, the closing price of
the shares of Common Stock, as reported on the New York Stock Exchange for
such date or such national securities exchange as may be designated by the
Board or, if Common Stock was not traded on such date, on the next preceding
day on which Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the employee's household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the employee) control the
management of assets, and any other entity in which these persons (or the
employee) own more than fifty percent of the voting interests.
"GRANT DATE" means June 3, 1999.
<PAGE>
"HOLDER" means the registered holder identified above of the number
of Warrants represented by this Warrant Certificate or any Permitted
Transferee, to the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift
or a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series P Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants evidenced
by this Warrant Certificate may be exercised in whole or in part at any time
on or after the Shareholder Approval Date and before the Expiration Date by
presentation and surrender at the office of the Company specified herein of
(i) this Warrant Certificate with the Election to Exercise duly completed and
executed, and (ii) payment of the Exercise Price as then in effect, by bank
draft or cashier's check, for the number of Warrants being exercised. If
Holder at any time exercises less than all the Warrants evidenced by this
Warrant Certificate, the number of Warrants represented by this Warrant
Certificate shall be reduced to the number of Warrants equal to the number of
Warrants originally represented by this Warrant Certificate less the
cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this
Warrant Certificate have not been exercised at or prior to the Expiration
Date, such Warrants shall expire and the rights of Holder shall become void
and of no effect.
(c) In its discretion, the Company may permit the Holder to
exercise an Warrant through a "cashless exercise" procedure involving a
broker or dealer approved by the Company, provided that the Holder has
delivered an irrevocable notice of exercise (the "NOTICE") to the broker or
dealer and such broker or dealer agrees: (i) to sell immediately the number
of shares of Common Stock specified in the Notice to be acquired upon
exercise of the Warrant in the ordinary course of its business, (ii) to pay
promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act shall
have the unfettered right (but not the obligation) to pay the Exercise
Price in full in shares of
2
<PAGE>
Common Stock with a Fair Market Value (determined as of the date of
exercise of such Warrant and, where such shares are withheld (as
described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be shares
that are already owned by the Holder who is subject to Section 16 of
the Exchange Act, or such Holder shall have the right but not the
obligation to direct the Company to withhold shares of Common Stock
that would otherwise have been received by such Holder upon exercise of
the Warrant. It is the intent of this Section 1(d) that the
transactions described in this Section 1(d) qualify for the exemption
from short-swing profit liability under Section 16 of the Exchange Act
pursuant to the "disposition to the issuer" exemption set forth at Rule
16b-3(e) promulgated under Section 16 of the Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this Warrant
Certificate shall not be assignable or otherwise transferable by Holder
otherwise than (i) to a Permitted Transferee; (ii) by Holder's will; or (iii)
by the laws of descent and distribution. During the lifetime of Holder, the
Warrants shall be exercisable only by Holder; after Holder's death, the
Warrants shall be exercisable only by the personal representative of Holder's
estate. Compliance with this provision is the responsibility of the Holder.
No transfer to heirs or legatees of Holder shall be effective to bind the
Company unless the Company shall have been furnished with written notice
thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common Stock
purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case
of any reclassification or change of outstanding securities issuable upon
exercise of the Warrants evidenced by this Warrant Certificate at any time
(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 to
which paragraph (b) of this Section 3 applies), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change 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 to which paragraph (b) of this Section 3 applies in the
securities issuable upon exercise of this Warrant), Holder shall have, and
the Company, or such successor corporation or other entity, shall covenant in
the constituent documents effecting any of the foregoing transactions that
Holder does have, the right to obtain upon the exercise of the Warrants
evidenced by this Warrant Certificate, in lieu of each share of Common Stock,
other securities, money or other property theretofore issuable upon exercise
of a Warrant, the kind and amount of shares of stock, other securities, money
or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if
the Warrants evidenced by this Warrant Certificate had been exercised
immediately
3
<PAGE>
prior to such reclassification, change, consolidation or merger. The
constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company shall
subdivide its shares of Common Stock into a greater number of shares (or pay
to any holders of securities of the Company a dividend payable in, or make
any other distribution of, Common Stock), the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares of Common Stock purchasable upon exercise of the
Warrants evidenced by this Warrant Certificate shall be proportionately
increased, as at the effective date of such subdivision, dividend or
distribution or if the Company shall take a record of holders of its Common
Stock for such purpose, as at such record date, whichever is earlier. If the
Company shall combine its shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of shares of Common Stock
purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of
such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date,
whichever is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price in
effect from time to time shall be calculated to four decimal places and
rounded to the nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price is
required to be adjusted as provided in Section 3, the Company shall forthwith
compute the adjusted Exercise Price and shall maintain a record setting forth
such adjusted Exercise Price and showing in reasonable detail the facts upon
which such adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially all
of the assets of the Company, or of any reclassification or change of the
Common Stock or other securities issuable upon exercise of the Warrants
(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), or
a tender offer or exchange offer for all shares of Common Stock (or other
securities issuable upon the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the holders
of Common Stock of rights or warrants to subscribe for or purchase any shares
of any class or series of capital stock; or
4
<PAGE>
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior
to the applicable record date hereinafter specified, or promptly in the case
of events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares pursuant
to the exercise of the Warrants, Holder (or Holder's estate if applicable)
will enter into such written representations, warranties and agreements as
the Company may reasonably request in order to comply with applicable
securities laws. Notwithstanding any of the other provisions hereof, Holder
agrees that he will not exercise the Warrants, and that the Company will not
be obligated to issue any shares pursuant to this Warrant Certificate, if the
exercise of the Warrants or the issuance of such shares of Common Stock would
constitute a violation by Holder or by the Company of any provision of any
law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that:
(a) Until the Expiration Date, the Company shall at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants
evidenced by this Warrant Certificate, the number of shares of Common Stock
(and other securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may be
issued upon exercise of the Warrants evidenced by this Warrant Certificate
shall upon issuance be validly issued, fully paid, non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.
5
<PAGE>
8. WITHHOLDING OF TAX. The Company may make such provisions as it
may deem appropriate for the withholding of any taxes which it determines is
required in connection with the Warrants.
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of holding
such Warrants, be entitled to any rights of a stockholder of the Company
either at law or in equity, and the rights of Holder are limited to those
expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of
Holder and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in writing
and may be given by registered or certified mail, return receipt requested,
telex, telegram, telecopier, air courier guaranteeing overnight delivery of
personal delivery, if to Holder at the following address:
Maxwell Gotlieb
------------------------
------------------------
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed this 23rd day of February, 2000 by its Chairman of the
Board and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By: ____________________________________
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
7
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants
evidenced by this Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise _________
Warrants, and herewith makes payment of ___________________ ($ ____________)
representing the aggregate Exercise Price thereof, and requests that the
certificate representing the securities issuable hereunder be issued in the
name of ______________________________________ and delivered to
______________________ __________________ , whose address is
___________________________________.
Dated: ______________ ______________________________
___________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
8
<PAGE>
EXHIBIT 10.33
ADVANCED COMMUNICATIONS GROUP, INC.
FORM OF SERIES P WARRANT
Total Number of Series P Warrants: 75,000 Warrant No. P-5
Number of Series P Warrants represented
by this Warrant Certificate: 5,000
This Warrant Certificate certifies that, for value received,
Robert Flynn
is the registered holder of the number of Warrants set forth above. Each Warrant
entitles Holder, at any time or from time to time on or before the Expiration
Date, to purchase from the Company one fully paid and nonassessable share of
Common Stock at the Exercise Price, subject to adjustment as provided herein.
"COMMON STOCK" means the Common Stock, $.0001 par value per share, of
the Company, or such other class of securities as shall then represent the
common equity of the Company.
"COMPANY" means Advanced Communications Group, Inc., a Delaware
corporation.
"ELECTION TO EXERCISE" means the Election to Exercise on page 8
hereof.
"EXERCISE PRICE" means $6.96, subject to adjustment as provided in
Section 3 hereof.
"EXPIRATION DATE" means 5:00 p.m. (St. Louis time) on the tenth
anniversary of the Grant Date, or, if earlier, the first anniversary of the
Holder's date of death.
"FAIR MARKET VALUE" means, on any given date, the closing price of the
shares of Common Stock, as reported on the New York Stock Exchange for such date
or such national securities exchange as may be designated by the Board or, if
Common Stock was not traded on such date, on the next preceding day on which
Common Stock was traded.
"FAMILY MEMBER" has the meaning ascribed to it in the General
Instructions to Form S-8 under the Securities Act of 1933, as the same may be
amended from time to time. For the sake of clarity, as of the date of this
Warrant Certificate, "Family Member" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interests, a foundation
in which these persons (or the employee) control the management of assets, and
any other entity in which these persons (or the employee) own more than fifty
percent of the voting interests.
"GRANT DATE" means June 3, 1999.
1
<PAGE>
"HOLDER" means the registered holder identified above of the number of
Warrants represented by this Warrant Certificate or any Permitted Transferee, to
the extent applicable.
"PERMITTED TRANSFEREE" means a Family Member who has acquired these
Warrants directly from the registered holder identified above through a gift or
a domestic relations order.
"SHAREHOLDER APPROVAL DATE" means February 16, 2000.
"WARRANTS" means the Series P Warrants represented by this Warrant
Certificate.
1. EXERCISE OF WARRANTS.
(a) Subject to Section 1(c) hereof, the Warrants
evidenced by this Warrant Certificate may be exercised in whole or in part at
any time on or after the Shareholder Approval Date and before the Expiration
Date by presentation and surrender at the office of the Company specified
herein of (i) this Warrant Certificate with the Election to Exercise duly
completed and executed, and (ii) payment of the Exercise Price as then in
effect, by bank draft or cashier's check, for the number of Warrants being
exercised. If Holder at any time exercises less than all the Warrants
evidenced by this Warrant Certificate, number of Warrants represented by this
Warrant Certificate shall be reduced to the number of Warrants equal to the
number of Warrants originally represented by this Warrant Certificate less
the cumulative number of Warrants previously exercised.
(b) To the extent that the Warrants evidenced by this
Warrant Certificate have not been exercised at or prior to the Expiration
Date, such Warrants shall expire and the rights of Holder shall become void
and of no effect.
(c) In its discretion, the Company may permit the
Holder to exercise an Warrant through a "cashless exercise" procedure
involving a broker or dealer approved by the Company, provided that the
Holder has delivered an irrevocable notice of exercise (the "NOTICE") to the
broker or dealer and such broker or dealer agrees: (i) to sell immediately
the number of shares of Common Stock specified in the Notice to be acquired
upon exercise of the Warrant in the ordinary course of its business, (ii) to
pay promptly to the Company the aggregate exercise price (plus the amount
necessary to satisfy any applicable tax liability), and (iii) to pay to the
Holder the balance of the proceeds of the sale of such shares over the amount
determined under clause (ii) of this sentence, less applicable commissions
and fees; PROVIDED, HOWEVER, that the Company may modify the provisions of
this sentence to the extent necessary to conform the exercise of the Warrant
to Regulation T under the Exchange Act. The manner in which the Exercise
Price may be paid may be subject to certain conditions specified by the
Company. No fractional shares (or cash in lieu thereof) shall be issued upon
exercise of a Warrant and the number of shares that may be purchased upon
exercise shall be rounded to the nearest number of whole shares.
(d) PAYMENT ALTERNATIVES FOR SECTION 16 PERSONS.
(i) Persons subject to Section 16 of the Exchange Act shall
have the unfettered right (but not the obligation) to pay the Exercise
Price in full in shares of
2
<PAGE>
Common Stock with a Fair Market Value (determined as of the date of
exercise of such Warrant and, where such shares are withheld (as
described in Section 1(d)(ii) below), net of the applicable Exercise
Price) at least equal to such full payment.
(ii) Common Stock used to pay the Exercise Price may be shares
that are already owned by the Holder who is subject to Section 16 of
the Exchange Act, or such Holder shall have the right but not the
obligation to direct the Company to withhold shares of Common Stock
that would otherwise have been received by such Holder upon exercise of
the Warrant. It is the intent of this Section 1(d) that the
transactions described in this Section 1(d) qualify for the exemption
from short-swing profit liability under Section 16 of the Exchange Act
pursuant to the "disposition to the issuer" exemption set forth at Rule
16b-3(e) promulgated under Section 16 of the Exchange Act.
2. RESTRICTIONS ON TRANSFER. The Warrants evidenced by this
Warrant Certificate shall not be assignable or otherwise transferable by
Holder otherwise than (i) to a Permitted Transferee; (ii) by Holder's will;
or (iii) by the laws of descent and distribution. During the lifetime of
Holder, the Warrants shall be exercisable only by Holder; after Holder's
death, the Warrants shall be exercisable only by the personal representative
of Holder's estate. Compliance with this provision is the responsibility of
the Holder. No transfer to heirs or legatees of Holder shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of such evidence as the Board may deem necessary to
establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions hereof.
3. ANTIDILUTION ADJUSTMENTS. The number of shares of Common
Stock purchasable on the exercise of the Warrants evidenced by this Warrant
Certificate, and the Exercise Price, shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
(a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In
case of any reclassification or change of outstanding securities issuable
upon exercise of the Warrants evidenced by this Warrant Certificate at any
time (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
to which paragraph (b) of this Section 3 applies), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change 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 to which paragraph (b) of this Section 3 applies in the
securities issuable upon exercise of this Warrant), Holder shall have, and
the Company, or such successor corporation or other entity, shall covenant in
the constituent documents effecting any of the foregoing transactions that
Holder does have, the right to obtain upon the exercise of the Warrants
evidenced by this Warrant Certificate, in lieu of each share of Common Stock,
other securities, money or other property theretofore issuable upon exercise
of a Warrant, the kind and amount of shares of stock, other securities, money
or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if
the Warrants evidenced by this Warrant Certificate had been exercised
immediately
3
<PAGE>
prior to such reclassification, change, consolidation or merger. The
constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in
paragraph (a) of this Section 3. The provisions of paragraph (a) of this
Section 3 shall similarly apply to successive reclassifications, changes,
consolidations or mergers.
(b) SUBDIVISIONS AND COMBINATIONS. If the Company
shall subdivide its shares of Common Stock into a greater number of shares
(or pay to any holders of securities of the Company a dividend payable in, or
make any other distribution of, Common Stock), the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares of Common Stock purchasable upon exercise of the
Warrants evidenced by this Warrant Certificate shall be proportionately
increased, as at the effective date of such subdivision, dividend or
distribution or if the Company shall take a record of holders of its Common
Stock for such purpose, as at such record date, whichever is earlier. If the
Company shall combine its shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of shares of Common Stock
purchasable upon exercise of the Warrants evidenced by this Warrant
Certificate shall be proportionately reduced, as at the effective date of
such combination, or if the Company shall take a record of holders of its
Common Stock for purposes of such combination, as at such record date,
whichever is earlier.
(c) CALCULATION OF EXERCISE PRICE. The Exercise Price
in effect from time to time shall be calculated to four decimal places and
rounded to the nearest thousandth.
4. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price
is required to be adjusted as provided in Section 3, the Company shall
forthwith compute the adjusted Exercise Price and shall maintain a record
setting forth such adjusted Exercise Price and showing in reasonable detail
the facts upon which such adjustment is based.
5. NOTICES TO HOLDER. In the event:
(a) of the conveyance or sale of all or substantially
all of the assets of the Company, or of any reclassification or change of the
Common Stock or other securities issuable upon exercise of the Warrants
(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), or
a tender offer or exchange offer for all shares of Common Stock (or other
securities issuable upon the exercise of the Warrants); or
(b) the Company shall declare any dividend (or any
other distribution) on the Common Stock, other than regular cash dividends; or
(c) the Company shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or series of capital stock; or
4
<PAGE>
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
the Company shall cause to be sent to Holder, at least 30 days prior
to the applicable record date hereinafter specified, or promptly in the case
of events for which there is no record date, a written notice stating (x) the
date for the determination of the holders of record of shares of Common Stock
(or other securities issuable upon the exercise of the Warrants) entitled to
receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common
Stock (or other securities issuable upon the exercise of the Warrants), or
(z) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record
of shares of Common Stock (or other securities issuable upon the exercise of
the Warrants) shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. Failure to give such notice or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
issuance, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
6. COMPLIANCE WITH LAWS. Upon the acquisition of any shares
pursuant to the exercise of the Warrants, Holder (or Holder's estate if
applicable) will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws. Notwithstanding any of the other provisions
hereof, Holder agrees that he will not exercise the Warrants, and that the
Company will not be obligated to issue any shares pursuant to this Warrant
Certificate, if the exercise of the Warrants or the issuance of such shares
of Common Stock would constitute a violation by Holder or by the Company of
any provision of any law or regulation of any governmental authority.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) Until the Expiration Date, the Company shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock (and other securities),
for the purpose of enabling it to satisfy any obligation to issue shares of
Common Stock (and other securities) upon the exercise of the Warrants
evidenced by this Warrant Certificate, the number of shares of Common Stock
(and other securities) issuable upon the exercise of such Warrants.
(b) All Common Stock (and other securities) which may
be issued upon exercise of the Warrants evidenced by this Warrant Certificate
shall upon issuance be validly issued, fully paid, non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.
8. WITHHOLDING OF TAX. The Company may make such provisions as
it may deem appropriate for the withholding of any taxes which it determines
is required in connection with the Warrants.
5
<PAGE>
9. NO RIGHTS AS STOCKHOLDER. Holder shall not, by virtue of
holding such Warrants, be entitled to any rights of a stockholder of the
Company either at law or in equity, and the rights of Holder are limited to
those expressed herein.
10. RESOLUTION OF DISPUTES. Holder agrees, for and on behalf of
Holder and Holder's heirs, personal representatives and successors, that the
resolution of any dispute or disagreement which may arise hereunder shall be
determined by the Board in its sole discretion and judgment, and that any
such determination and any interpretation by the Board of the terms of this
Warrant Certificate shall be final and shall be binding and conclusive, for
all purposes, upon the Company, Holder and Holder's heirs, personal
representatives and successors.
11. NOTICES. All notices provided for hereunder shall be in
writing and may be given by registered or certified mail, return receipt
requested, telex, telegram, telecopier, air courier guaranteeing overnight
delivery of personal delivery, if to Holder at the following address:
Robert Flynn
________________________________________________
________________________________________________
and, if to the Company:
Advanced Communications Group, Inc.
390 South Woods Mill Road, Suite 260
St. Louis, Missouri 63017
Attention: Secretary
Telecopier: (314) 469-3539
12. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of Delaware.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be executed this 23rd day of February, 2000 by its Chairman of the Board
and Chief Executive Officer, thereunto duly authorized.
ADVANCED COMMUNICATIONS GROUP, INC.
By:___________________________________________
Richard O'Neal, Chairman of the Board and
Chief Executive Officer
7
<PAGE>
ELECTION TO EXERCISE
[To be executed on exercise of the Warrants evidenced
by this Warrant Certificate]
TO: Advanced Communications Group, Inc.
The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise _________ Warrants,
and herewith makes payment of _______ ($____________) representing the
aggregate Exercise Price thereof, and requests that the certificate
representing the securities issuable hereunder be issued in the name
of _____________________ and delivered to_____________________, whose address
is _____________________________.
Dated:_____________ ____________________________________
____________________________________
Signature(s) of Registered Holder(s)
NOTE: THE ABOVE SIGNATURE(S) MUST CORRESPOND WITH THE NAME AS WRITTEN ON THE
FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
8
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) -------- -------- --------
<S> <C> <C> <C>
Average number of common shares outstanding for basic and
diluted computation (see Note)............................ 19,956 18,594 8,230
Net loss.................................................... $(62,545) $(11,279) $(3,200)
Basic earnings per share.................................... $ (3.14) $ (.61) $ (.39)
Diluted earnings per share.................................. $ (3.14) $ (.61) $ (.39)
</TABLE>
Note: The effect of the assumed exercise of stock options and the assumed
conversion of the note payable and preferred stock have not been included in the
computation of diluted earnings per share for the period after issuance because
to do so would have been anti-dilutive for the periods presented.
<PAGE>
EXHIBIT 21
Subsidiaries of WorldPages.com, Inc.
ACG Acquisition II Corp., a Delaware corporation
ACG Acquisition VI Corp, a Delaware corporation (as of February 23, 2000, ACG
Acquisition VI Corp. merged with and into Web YP, Inc., a Texas corporation)
ACG Acquisition VII Corp., a Delaware corporation (as of February 23, 2000,
ACG Acquisition VII Corp. merged with and into Big Stuff, Inc., a Texas
corporation)
ACG Exchange Company, a corporation organized in the Province of Nova Scotia
ACG Holding Company, a corporation organized in the Province of Nova Scotia
Advanced Communications Corp., a Delaware corporation
Great Western Directories, Inc., a Texas corporation
1+ USA V Acquisition Corp., a Delaware corporation
<PAGE>
The Board of Directors
WorldPages.com, Inc.:
We consent to the use of our report included herein. The audits referred to in
our report dated February 4, 2000, included the related financial statement
schedule as of December 31, 1999, and for each of the years in the three-year
period ended December 31, 1999, included in the registration statement. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
KPMG LLP
St. Louis, Missouri
March 24, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-K WHICH INCLUDES FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,315
<SECURITIES> 0
<RECEIVABLES> 18,469
<ALLOWANCES> 4,246
<INVENTORY> 0
<CURRENT-ASSETS> 20,194
<PP&E> 2,814
<DEPRECIATION> 1,437
<TOTAL-ASSETS> 109,059
<CURRENT-LIABILITIES> 37,387
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 71,670
<TOTAL-LIABILITY-AND-EQUITY> 109,059
<SALES> 49,987
<TOTAL-REVENUES> 49,987
<CGS> 50,128
<TOTAL-COSTS> 50,128
<OTHER-EXPENSES> (75)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,766
<INCOME-PRETAX> (4,832)
<INCOME-TAX> (1,465)
<INCOME-CONTINUING> (3,367)
<DISCONTINUED> (7,378)
<EXTRAORDINARY> (51,800)
<CHANGES> 0
<NET-INCOME> (62,545)
<EPS-BASIC> (3.14)
<EPS-DILUTED> (3.14)
</TABLE>
