As filed with the Securities and Exchange Commission on November 23, 1999
Registration No. _________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM F-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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A.C.L.N. Limited
(Exact name of Registrant as specified in its charter)
Cyprus 4412 Not Applicable
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
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A.C.L.N. Limited
166 Mechelse Steenweg
2018 Antwerp, Belgium
(Address of principal place of business)
Aldo Labiad
President and Chief Executive Officer
A.C.L.N. Limited
166 Mechelse Steenweg
2018 Antwerp, Belgium
011-32-3-233-1647
(Name, address, and telephone number of principal executive offices
and agent for service)
Copies to:
Robert Steven Brown, Esq.
Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, New York 10022-4611
(212) 371-2000 / (212) 371-5500 (Telecopy)
[email protected]
<PAGE>
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. |X|
If this Form is filed to register additional securities pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class of Amount to be Proposed Proposed Amount of
Securities to be registered Registered maximum maximum registration
offering Aggregate fee
price per offering
unit(2) price
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary Shares, par value 0.01 CYP (1) 874,742 shares $18.63 $16,296,443 $4,530
- -----------------------------------------------------------------------------------------------------
Total 874,742 shares $18.63 $16,296,443 $4,530
- -----------------------------------------------------------------------------------------------------
</TABLE>
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(1) Represents the Ordinary Shares that may be sold by the selling
shareholders.
(2) Estimated in accordance with Rule 457(c) under the Securities Act solely
for the purpose of computing the amount of the registration fee, based
upon the average of the bid and the ask price of the ordinary shares
($18.63) as reported on the Nasdaq National Market on November 16, 1999.
-----------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
================================================================================
<PAGE>
Subject to Completion, dated November 23, 1999
PROSPECTUS
A.C.L.N. Limited
874,742 Ordinary Shares
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This is an offering of an aggregate of 874,742 ordinary shares of A.C.L.N.
Limited, a Cyprus corporation, from time to time by the selling shareholders
named herein. Of these ordinary shares,
o 610,254 shares were issued and sold to selling shareholders in
connection with a private placement of securities exempt from the
registration requirements of the Securities Act of 1933, consummated
by us in September 1999,
o 22,438 shares were issued to Kathleen A. Horigan in connection with
a letter agreement, dated June 20, 1998, relating to investor and
public relations services,
o 122,050 shares are issuable upon the exercise of warrants issued to
Spencer Trask Securities Inc., the placement agent, in connection
with the private placement, and
o 120,000 shares are issuable upon the exercise of warrants issued to
Cruttenden Roth Incorporated, the underwriter of our initial public
offering consummated by us in June 1998.
We will not receive any of the proceeds from the sale of the ordinary
shares offered by our selling shareholders.
Our ordinary shares are listed on the Nasdaq National Market under the
symbol "ACLNF". On November 16, 1999, the last reported sales price of our
ordinary shares on the Nasdaq National Market was $18.63 per share.
The securities offered hereby involve risks which are described in the
"Risk Factors" section beginning on page 6 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The selling shareholders may from time to time offer and sell their
ordinary shares directly or indirectly through agents or dealers at market
prices or on other sale terms determined by them. To the extent required, we
will disclose in a prospectus supplement the names of any agent or dealer,
applicable commissions or discounts and any other required information with
respect to any particular offer. See "Plan of Distribution."
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The date of this prospectus is November 23, 1999
<PAGE>
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TABLE OF CONTENTS
Page
----
Prospectus Summary............................................... 3
Our Company........................................ 3
The Offering....................................... 5
Risk Factors..................................................... 6
Use of Proceeds.................................................. 13
Plan of Distribution............................................. 13
Market for Our Ordinary Shares................................... 14
Selling Shareholders............................................. 15
Description of Placement Agent's and Underwriter's Warrants...... 20
Description of Capital Stock..................................... 21
Disclosure of SEC Position on Indemnification for
Securities Act Liabilities....................................... 22
Legal Matters.................................................... 22
Experts.......................................................... 22
Where You Can Find More Information.............................. 22
This prospectus contains and incorporates by reference certain forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to our business, financial condition, and
results of operations, including, without limitation, statements under the
captions "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our annual and quarterly reports. These
forward looking statements reflect our plans, expectations and beliefs and,
accordingly, are subject to certain risks and uncertainties. We cannot guarantee
that any of such forward looking statements will be realized. Factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among others, the factors discussed in the
section of this prospectus entitled "Risk Factors."
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, contained or
incorporated by reference in this prospectus.
OUR COMPANY
We arrange for the shipment of automobiles from several European ports to
North and West Africa and the Middle East. A majority of the automobiles that we
transport are sold by independent used automobile dealers to individuals who
travel from various parts of Africa and the Middle East specifically to purchase
a used automobile. Our customers include people from countries of our ports of
destination and their neighboring countries. The services we provide include
only the shipment of the vehicles, stevedoring and customs clearance. Presently,
the principal ports of destination for vessels we charter are located in Angola,
Egypt, Guinea, Nigeria, Tunisia and Ivory Coast.
The availability of automobiles is limited in North and West Africa and
the Middle East due to the lack of significant automobile manufacturing and
import restrictions, such as tariffs, among other factors. Purchasers of
automobiles in these regions often fly to Europe to purchase used automobiles at
large established used automobile markets located there. These markets have
formed over the past several decades primarily because of a beneficial tax
environment, proximity to shipping lanes and the availability of used
automobiles of the make and model most actively sought by African and Middle
Eastern purchasers, particularly Japanese automobiles.
Once an individual purchases an automobile, the purchaser and the dealer
arrange shipping to a port near the purchaser's country of residence. Purchasers
then have a choice of shipping companies which can arrange shipment to the port
of destination in Africa and the Middle East. To our knowledge, we are currently
the only company in Brussels to offer "freight collect" service. "Freight
collect" refers to our practice of collecting all shipping fees upon delivery in
our port of destination. Other shipping companies which provide similar shipping
services require that fees be prepaid. We offer "freight collect" service at
approximately the same cost as regular prepaid freight.
We believe that demand for our services will continue to increase as, and
if, the following factors occur:
o the economic relationships between European and African and Middle
Eastern nations continue to develop,
o the standard of living continues to improve in Africa and the Middle
East,
o the size of the middle class in Africa and the Middle East
increases,
o the national governments of our served markets continue to make
significant expenditures on their transportation infrastructures,
and
o countries in Africa and the Middle East continue to reduce trade
barriers, such as tariffs on imported automobiles.
Accordingly, we believe that the demand for used automobiles will continue to
increase throughout Africa and the Middle East.
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Our operating strategy is to maximize the flexibility of our operations
and to focus primarily on limiting fixed costs. Accordingly, we are currently
negotiating to purchase two specialized automobile carrying vessels, which we
believe will be used primarily to ship automobiles to our ports of destination.
Our expansion strategy includes the following elements:
Increase Volume of Automobiles Shipped. We intend to capitalize upon the
following factors to increase the volume of automobiles we ship:
o our long-standing relationships in the automotive and shipping
industries,
o favorable trends in demand in Africa and the Middle East for
automobiles from Europe, and
o opportunities to open additional operations in other ports to
increase the volume of automobiles we ship.
In January 1999, we began shipping to a new port in the Ivory Coast, and
we have recently opened operations in two additional ports in Africa.
Acquire Specialized Vessels. We are currently negotiating to purchase two
used specialized automobile carrying vessels which we expect will be used
primarily for delivery of our automobiles to ports of destination in Tunisia and
will be operated by an independent vessel management company. If we are able to
negotiate successfully for the purchase of these vessels, we believe we will
achieve significant savings over current shipping arrangements.
Replicate Model Elsewhere. We believe that there are opportunities
globally to replicate our business model of facilitating the transportation of
automobiles from developed to developing countries. Consumers in developed
nations are replacing automobiles after increasingly shorter ownership periods
while in developing nations demand has increased for certain models and makes
supported by dealer networks and replacement part inventory infrastructures. We
intend to explore potential joint ventures, acquisitions or other business
arrangements aimed at replicating our business model in other markets.
Recent Developments. On November 12, 1999, we entered into a three year
strategic alliance with the Hyundai Motor Company. Under the terms of the
agreements, we will have the exclusive right to ship used cars sold in Hamburg,
Germany, Bremerhaven, Germany, Rotterdam, Netherlands and Amsterdam, Netherlands
to ports we serve in Africa.
Our History and Structure
We began operations in 1978 by shipping automobiles from Antwerp, Belgium
to Tunisia. We were incorporated under the laws of Cyprus on February 16, 1993
under the name "Hemswell Holdings Co. Ltd.," were renamed "C.L.N. Limited" on
March 1, 1996, and were subsequently renamed "A.C.L.N. Limited" on June 7, 1996.
We acquired all of the capital stock of C.L.N., S.A.M., a Monaco corporation, on
January 1, 1995. CLN was incorporated on March 23, 1988 to carry on the
operations of Continent Levant Lines, which began operations in 1978. On June
26, 1998, we undertook an initial public offering in the United States.
4
<PAGE>
THE OFFERING
Securities offered by the
selling shareholders............... 874,742 of our ordinary shares from time
to time by the selling shareholders named
herein. Of these ordinary shares,
610,254 shares were issued and sold to
selling shareholders in connection with a
private placement of securities exempt
from the registration requirements of the
Securities Act consummated by us in
September 1999; 22,438 shares were issued
to Kathleen A. Horigan in connection with
a letter agreement, dated June 20, 1998,
relating to investor and public relations
services; 122,050 shares are issuable
upon the exercise of warrants issued to
Spencer Trask Securities Inc., the
placement agent in connection with that
private placement, and 120,000 shares are
issuable upon the exercise of warrants
issued to Cruttenden Roth in connection
with our initial public offering in June
1998.
Listing or Quotation of
Common Stock ....................... Our ordinary shares currently trade on
the Nasdaq National Market under the
symbol "ACLNF".
Risk Factors........................ An investment in our ordinary shares is
speculative and involves a high degree of
risk. Before making an investment, you
should carefully read this entire
prospectus and consider the information
under the heading "Risk Factors," which
begins on page 6.
Use of Proceeds..................... We will not receive any proceeds from the
sale of the ordinary shares offered by
our selling shareholders. To the extent
that any warrants are exercised, we may
receive the exercise price for the
ordinary shares we issue. See
"Description of the Placement Agent's and
Underwriter's Warrants." The proceeds,
if any, will be used for working capital
purposes.
5
<PAGE>
RISK FACTORS
An investment in our ordinary shares is speculative and involves a high
degree of risk. Before making an investment, you should carefully read this
entire prospectus and consider the following risk factors.
Political Instability
Our ports of destination are located in North and West Africa and the
Middle East. Recently, these and neighboring regions have experienced some
political instability. Our business is affected by the political, economic and
military conditions in these and neighboring countries. As a result of political
instability at any ports of destination or in other regions, we may be
restricted or prohibited from utilizing these ports, which could have a material
adverse effect on our business, prospects, financial condition and results of
operations. Further, in the event of any instability, we may be restricted or
prohibited from transferring revenues from these countries. In this event, our
business, prospects, financial condition and results of operations, including
our working capital, could be materially adversely affected. While we continue
to monitor the political stability of the countries in which our ports of
destination are located, there can be no assurance that these efforts will be
beneficial to us or will prevent us from suffering any of such consequences.
Restrictions on Transferability of Deposited Funds
In accordance with the requirements of generally accepted accounting
principles in the United States, we recognize revenues at the time the
automobiles reach their ports of destination. However, we generally do not
receive the fees collected by our shipping agents until three to four months
following delivery of the automobiles. Fees collected when the automobiles are
delivered are deposited in local banks where an average period of three to four
months is required to process the funds by the local central banking systems in
accordance with local currency exchange regulations. Although we evaluate the
transactional speed and reliability of the central banking systems and the
political stability of the countries of our ports of destination, shifting
political and economic conditions, as well as changes in trade and currency
exchange regulations, may impair our ability to transfer deposited shipping
fees, which could have a material adverse effect on our business, prospects,
financial condition and results of operations.
Development of Local Supply of Used Automobiles
In the event that a sufficient supply of used automobiles develops in any
of the markets we serve or a market which we may serve in the future, demand for
our services in these markets may decrease substantially, which could have a
material adverse effect on our business, prospects, financial condition and
results of operations.
Risk of Increased Prices and Continued Supply of Used Automobiles
We are dependent upon the relatively inexpensive prices of used
automobiles and the continued supply and availability of them in Europe. If the
prices of used automobiles in Europe increase substantially in the future or the
supply of these automobiles in Europe decreases substantially in the
6
<PAGE>
future, our business, prospects, financial condition and results of operations
could be materially adversely affected.
Increased Availability of Affordable New Automobiles
New automobiles are generally too expensive for most consumers in North
and West Africa and the Middle East. This is due, in part, to the lack of
significant automobile manufacturing in these regions and the high cost of
import tariffs. There can be no assurance that new manufacturers will not begin
automobile production in these regions or that tariffs on the import of new
automobiles will not be reduced. Either of these events could result in the
increased availability of affordable new automobiles, reducing the demand for
our services.
Dependence Upon Economies of Ports of Destination
Our industry has historically been affected by general economic downturns
and currency fluctuation in the countries of the ports of destination we serve.
During the years ended December 31, 1997 and 1998, our principal ports of
destination were located in Angola, Egypt, Guinea, Nigeria and Tunisia. In
January 1999, we began making shipments to the Ivory Coast. During the three
months ended March 31, 1999, our percentage of sales by ports of destination
were as set forth below:
As of March 31,
----------------
Port of Destination 1997 1998 1999
------------------- ---- ---- ----
Angola 0 0 0
Egypt 12 15 12
Guinea 31 12 17
Ivory Coast 8 12 10
Nigeria 14 13 12
Tunisia 35 48 49
Availability of Specialized Vessels for Charter
The vessels which we are negotiating to purchase will be capable of
carrying only a small percentage of the number of automobiles we transport on an
annual basis. For the balance of our shipment, we charter vessels on a
voyage-by-voyage basis on the spot market and we do not have any long-term
agreements with respect to its charters. The specialized vessels we charter are
generally utilized to transport new automobiles from southern Europe to northern
Europe prior to when we charter these vessels. We take advantage of the excess
capacity these vessels have on their return trips. In the event that demand in
northern Europe for automobiles manufactured in southern Europe should decrease
or these automobiles are transported by alternative means, the availability of
specialized automobile transport vessels could be reduced, which would require
us to seek alternative sources of cargo space at costs which may be
substantially greater than those we currently pay. In this event, our business,
prospects, financial condition and results of operations could be materially
adversely affected.
7
<PAGE>
Risk Associated with the Purchase of Used Vessels
We are currently negotiating to purchase two used specialized automobile
carrying vessels which are each approximately 15 years old. We estimate that the
useful lives of these vessels will be approximately 25 to 30 years. In general,
expenditures necessary for maintaining a vessel in good operating condition
increase as the age of the vessel increases. Furthermore, second-hand vessels
typically carry very limited warranties with respect to their condition in
comparison to warranties available for a newer vessel. Due to improvements in
engine technology, older vessels are typically less fuel efficient than the more
recently constructed vessels. Changes in governmental regulations, safety or
other equipment standards may require expenditures for alterations or the
addition of new vessels. There can be no assurance that we will be able to
purchase the vessels we are negotiating for.
Possible Catastrophic Loss and Liability; Insurance
The operation of any sea-going vessel carries an inherent risk of
catastrophic marine disasters, mechanical failure, collisions and property
losses to the vessel. If we acquire the two vessels that we are negotiating to
purchase, our business will be affected by the risk of environmental accidents,
cargo loss or damage, business interruption due to political action in foreign
countries, labor strikes and adverse weather conditions, all of which could
result in the loss of revenues or increased costs. We will maintain insurance
consistent with industry standards against these risks. There can be no
assurance, however, that all our risks will be adequately insured against, that
any particular claim will be covered or that we will be able to procure adequate
insurance coverage at commercially reasonable rates in the future. In
particular, more stringent environmental and other regulations may result in
increased costs for, or the lack of availability of, insurance against the risks
of environmental damage, pollution, any other damages asserted against us or the
loss of income resulting from a vessel being removed from operations.
No Liability Insurance on Chartered Vessels
We do not maintain liability insurance to cover shipments by chartered
vessels. Although the owners of chartered vessels maintain insurance on the
shipments and their contents and the purchasers of the transported automobiles
generally insure against the risk of loss of their automobiles during
transportation, there can be no assurance that our failure to maintain any
insurance will not have a material adverse effect on our business, prospects,
financial condition and results of operations.
Competition
We compete with, and will compete with, numerous shipping agents, national
shipping companies, local and regional companies and various land-based
transporters of automobiles. Many of our competitors have significantly larger
operations and greater financial, marketing, human and other resources than we
do. No assurance can be given that we will continue to compete successfully in
any market in which we conduct, or may conduct, operations.
There can be no assurance that additional competitors with expertise
similar or superior to ours will not enter the markets in which we operate.
There are low barriers to entry for potential competitors due to the fact that
our business does not require substantial personnel, the ownership or long-term
charters of vessels or contractual relationships with any of the used automobile
dealerships located in Europe. There can also be no assurance that our current
or future competitors will not offer a "freight collect" service similar to
ours. In any of these events, our business, prospects, financial condition and
results of operations could be materially adversely affected.
8
<PAGE>
Working Capital Risk Associated with Growth
We recognize revenues at the time of delivery of the automobiles to the
ports of destination. Although our agent receives payment of the fee at the time
the purchaser takes possession of the automobile, we not receive collected fees
generally until three to four months following delivery of the automobiles. As a
result, a substantial portion of our working capital consists of cash that is
restricted as to withdrawal at various central banks. In the event of future
rapid growth of our operations, an increased amount of our working capital would
be so restricted, which may limit our ability to further expand our operations
into new markets and could have a material adverse effect on our business,
prospects, financial condition and results of operations.
Risks Associated with Transport of Automobiles to Foreign Countries on a
"Freight Collect" Basis
Our transport of automobiles on a "freight collect" basis exposes us to
the risk of losses resulting from customers defaulting on their obligation to
pay for the transportation of the automobiles upon delivery. To date, we have
not suffered any material losses in this regard since the cost of the maritime
transport of an automobile is low in comparison to the purchase price paid by
the customer for the automobile and we have generally been able to recoup all or
a portion of our losses resulting from customer defaults by reselling the
automobiles. However, there can be no assurance that we will not suffer material
losses as a result of such defaults in the future. In the event that such losses
should increase substantially, we may be required to modify our current business
practice of shipment on a "freight collect" basis, which may make our services
less attractive to potential customers.
Creditworthiness of Customers
Our ability to collect fees at our ports of destination is influenced in
part by the creditworthiness of the purchasers of the used automobiles. Although
we have not suffered any material losses in this regard, as, and if, we expand
and our customer base grows accordingly, there can be no assurance that the
overall creditworthiness of our customers will not decrease, which may increase
the risk that our customers will default on their obligation to pay for the
transport of the automobiles upon delivery. In the event that the overall
creditworthiness of our customers should decrease, we may experience increased
difficulty collecting fees due at our ports of destination, which could
materially affect our business, prospects, financial condition and results of
operations.
Additional Financing Requirements
Based on our operating plan, we believe that the net proceeds of a
recently-completed private offering, together with anticipated revenues from
continuing operations, will be sufficient to satisfy our anticipated capital
requirements for at least the next 12 months. Our belief is based on what we
believe are reasonable assumptions, but there can be no assurance that these
assumptions will be correct. In addition, contingencies may arise which may
require us to obtain additional capital. Accordingly, there can be no assurance
that these resources will be sufficient to satisfy our capital requirements for
this period. If additional capital is required, there can be no assurance that
we will be able to obtain additional capital on a timely basis, on favorable
terms or at all.
Dependence Upon Key Personnel
We are dependent upon the efforts, abilities and relationships of Joseph
J. H. Bisschops, our Chairman of the Board of Directors, and Aldo Labiad, our
President, Chief Executive and Operating Officer and Managing Director. We have
entered into an employment agreement with Mr. Labiad which
9
<PAGE>
terminates on December 3l, 2002. We currently have no employment agreement with
Mr. Bisschops. The loss or unavailability of the services of either of Messrs.
Bisschops or Labiad for any significant period of time could have a material
adverse effect on our business, prospects, financial condition and results of
operations. We have obtained, and are the sole beneficiary of, key-person life
insurance in the amounts of $2,000,000 and $1,000,000 on the lives of Messrs.
Bisschops and Labiad, respectively, and intend to keep such insurance in effect
until at least June 2001. There is no assurance that this insurance will
continue to be available on reasonable terms, or at all, or that the insurance
proceeds will be sufficient to compensate us for the loss or unavailability of
their services or fund our efforts to find a suitable replacement officer.
Limited Management Resources
Our anticipated growth is expected to place a significant strain on our
managerial, operational and financial resources. To manage this growth, we will
be required to significantly expand our operational and financial systems and
increase, train and manage our work force. Our ability to attract and retain
skilled personnel is critical to our operations and expansion. We face
competition for such personnel from many types of businesses, including shipping
lines, freight forwarding companies and other established organizations, many of
which have significantly larger operations and greater financial, marketing,
human and other resources than we do. There can be no assurance that we will be
successful in attracting and retaining qualified personnel on a timely basis, on
competitive terms or at all. In the event that we are not successful in
attracting and retaining such personnel, our business, prospects, financial
condition and results of operations may be materially adversely affected.
Further, we anticipate that it will take time to integrate additional skilled
individuals into our operations and to build a cohesive and efficient workforce.
Control by Management
Joseph J. H. Bisschops, our Chairman of the Board of Directors,
beneficially owns approximately 6,291,301 ordinary shares. Mr. Bisschops has,
therefore, the ability to control the election of our directors and the outcome
of all issues submitted to a vote of our shareholders.
Enforcement of Legal Judgments
We are a Cyprus corporation. Since all of our directly and indirectly
owned assets are located outside of the United States, any judgment obtained in
the United States against us may not be enforceable outside the United States.
We have been informed by our legal counsel in Cyprus, Economides, Patsalides &
Co., that there is doubt as to the enforceability of civil liabilities under the
Securities Act and the Securities Exchange Act of 1934, as amended, in original
actions instituted in Cyprus. Economides, Patsalides & Co. has further advised
us that, subject to certain conditions, exceptions, and time limitations, courts
in Cyprus may enforce foreign judgments (including those obtained in the United
States) for liquidated amounts in civil matters, including (although there is no
express authority relating thereto) judgments for such amounts rendered in civil
actions under the United States federal securities laws, obtained after due
trial before a court of competent jurisdiction (i.e., a court which has
jurisdiction on grounds recognized under Cypriot conflicts of law rules for the
purposes of enforcement of judgments) provided certain conditions are met.
Economides, Patsalides & Co. has further advised us that we might be allowed to
raise any counterclaim which it might have raised had the action originally been
brought before the courts of Cyprus, unless this counterclaim was in issue
before and had previously been decided by a United States court.
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We have expressly submitted to the jurisdiction of the State of New York
and United States Federal courts sitting in the City of New York for the purpose
of any suit, action or proceeding arising out of a recently-completed private
offering and have appointed Brock Silverstein LLC, 800 Third Avenue, 21st Floor,
New York, New York 10022, as agent to accept service of process in any action of
this kind.
No Cash Dividends; Dividends Generally Denominated in Cyprus Pounds
We have never paid cash dividends on our ordinary shares. We do not
anticipate paying cash dividends in the foreseeable future, but intend to retain
future earnings, if any, for reinvestment in our business. Any future
determination to pay cash dividends will be at the discretion of our Board of
Directors and will be dependent upon our financial condition, results of
operations, capital requirements and any other factors as our Board of Directors
deems relevant. In addition, the declaration of dividends by our Board of
Directors requires shareholder approval, which may reduce, but not increase, the
amount recommended by the Board. In the event cash dividends are declared in the
future, they will generally be paid in Cyprus pounds, and as such there can be
no assurance that the dividends will be exchangeable for U.S. dollars at market
rates of exchange, or at all, unless such dividends are paid in respect of
securities owned by non-Cyprus residents and paid for with certain non-Cyprus
currencies.
Restrictions on Transfer; Shares Eligible for Future Sale
There can be no assurance that we will be able to maintain the
registration statement, of which this prospectus is a part, continuously
effective for the sale of the ordinary shares under the Securities Act. If we
are able to do so, there will be substantial restrictions on the transferability
of our ordinary shares and each investor in this offering will only be able to
sell our ordinary shares under an exemption from such registration requirements.
In the event that the registration statement, of which this prospectus is
a part, does not stay effective, the sale, or availability for sale, of a
substantial number of our ordinary shares in the public market after this
offering in accordance with Rule 144, or otherwise, could materially adversely
affect the market price of the ordinary shares and could impair our ability to
raise additional capital through the sale of our equity securities or debt
financing. The availability of Rule 144 to the holders of our restricted
securities would be conditioned on, among other factors, the availability of
certain public information concerning us. Of the 8,832,692 ordinary shares
currently outstanding, 7,610,254 are "restricted securities" as that term is
defined in Rule 144 and may, under certain circumstances, be sold without
registration under the Securities Act.
Ordinarily, our ordinary shares issuable upon exercise of options granted
under our stock option plan pursuant to Rule 701 under the Securities Act prior
to our initial public offering, could be sold publicly as long as we remain a
reporting company under the Exchange Act. The 6,391,301 shares currently held by
officers or directors of the Company are subject to an agreement not to publicly
sell, or otherwise dispose of any of our securities until June 26, 2000 without
the prior written consent of Spencer Trask Securities Inc., the representative
of the underwriters of our initial public offering, or privately sell or
otherwise dispose of any of our securities during this period unless the
proposed transferee agrees to be bound by the restrictions on their transfer.
The holders of an additional 608,699 ordinary shares have agreed to such
restrictions until December 26, 1999. In addition, these shareholders, including
our executive officers and directors have agreed not to privately sell or
otherwise
11
<PAGE>
dispose of our securities during this period unless the proposed transferee
agrees to be bound by such restrictions on transfer.
Substantial Options and Warrants Reserved; Contingent Issuances of Ordinary
Shares
We have reserved 700,000 ordinary shares from the authorized but unissued
shares, for issuance to key employees, officers, directors and consultants
pursuant to our stock option plan. Since June 30, 1999, options exercisable for
an aggregate of 280,000 ordinary shares and warrants exercisable for up to an
aggregate of 168,000 ordinary shares were issued and outstanding. The existence
of any outstanding options issued under our stock option plan and any other
options or warrants may prove to be a hindrance to future financing, since the
holders of such warrants and options may be expected to exercise them at a time
when we would otherwise be able to obtain additional equity capital on terms
more favorable to us. The exercise of any option under our stock option plan and
other options or warrants may cause further dilution to the holders of our
ordinary shares.
Share Prices May Be Highly Volatile
The market price of our ordinary shares following this offering may be
highly volatile, particularly in light of the low volume in the trading of the
ordinary shares. Factors such as announcements by us or our competitors
concerning acquisitions or dispositions, new procedures, proposed governmental
regulations and general market conditions may have a significant impact on the
market price of our Ordinary Shares. In addition, the stock market has
experienced significant price and volume fluctuations that have particularly
affected the trading prices of equity securities of many companies. These price
and volume fluctuations often have been unrelated to the operating performance
of the affected companies. In the past, following periods of volatility in the
market price of a company's securities, securities class action litigation has
often been instituted. This type of litigation, regardless of the outcome, could
result in substantial costs and a diversion of management's attention and
resources, which could materially adversely affect our business, prospects,
financial condition and results of operations.
Risks Associated with Forward-Looking Statements Included in this Prospectus
This prospectus contains forward-looking statements regarding the plans
and objectives of management for future operations. The forward-looking
statements included in this prospectus are based on current expectations that
involve numerous risks and uncertainties. Our plans and objectives are based on
a successful execution of our expansion strategy and upon a number of
assumptions, including assumptions relating to the political stability of the
countries in which the we have ports of destination and assumptions that there
will be no unanticipated material adverse change in the our operations or
business. Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, political, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Although we believe that our assumptions underlying the forward-looking
statements are reasonable, any of our assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this prospectus will prove to be accurate.
Year 2000 Compliance
Many currently installed computer systems and software products are unable
to distinguish between twentieth century dates and twenty-first century dates.
As a result, many companies' software and computer systems may need to be
upgraded or replaced to comply with such "Year 2000"
12
<PAGE>
requirements. Our business is dependent on the operations of numerous systems
that could potentially be impacted by Year 2000 related problems. Those systems
include, among others:
o our internal systems and the entities managing the vessels which we
charter;
o our hardware and software systems we use in managing of our
business; and
o our information technology systems and services that we use, such as
telephone systems and building systems.
We do not utilize extensive computer hardware or software in the operation
of our business. We have internally reviewed the software systems used in the
management of our business. Although we believe that our systems are designed to
be Year 2000 compliant, we use third-party equipment and software that may not
be Year 2000 compliant. Failure of these third-party or currently owned
equipment or software to operate properly with regard to the Year 2000 could
require us to incur unanticipated expenses to remedy any problems. We do not
believe that these expenses will have a material adverse impact on our business,
prospects, financial condition and results of operations. We do not believe that
our expenditures to upgrade our internal systems and applications have been
material to our business, prospects, financial condition and results of
operations to date.
We do not presently have a contingency plan for handling Year 2000
problems that are not detected and corrected prior to their occurrence. Our
failure to address any unforeseen Year 2000 issues could adversely impact our
business, prospects, financial condition and results of operations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our ordinary shares by
the selling shareholders. To the extent that Spencer Trask exercises the
warrants issued pursuant to the placement agency agreement and the consulting
agreement, we will receive the exercise price of $13.38 and $20.07 per ordinary
share, respectively. To the extent that Cruttenden Roth exercises its warrants,
we will receive the exercise price of $16.50 per ordinary share we issue. If
either Spencer Trask or Cruttenden Roth elects to exercise their warrants by
cashless exercise in accordance with the applicable warrant agreements, we will
not receive any cash proceeds as a result thereof. In the event that no warrants
are exercised, we will not receive any proceeds from this offering. We will use
the proceeds, if any, for general working capital purposes.
PLAN OF DISTRIBUTION
The selling shareholders have advised us that they intend to offer their
ordinary shares for sale from time to time in the over-the-counter market at
prices prevailing at the time of sale or in private transactions at negotiated
prices, and without payment of any underwriting discounts or commissions except
that the selling shareholders may pay usual and customary selling commissions
paid to brokers or dealers.
We will apply to list the ordinary shares offered in this prospectus on
the Nasdaq National Market where they are currently listed. We have undertaken
to pay expenses associated with the listing
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<PAGE>
of our ordinary shares, including, but not limited to, Securities and Exchange
Commission filing fees. We have agreed to indemnify the holders of our ordinary
shares.
MARKET FOR OUR ORDINARY SHARES
Our ordinary shares are quoted on the Nasdaq National Market under the
symbol "ACLNF." The following are the low and high closing sales prices by
fiscal quarter for the quarterly periods in which our ordinary shares have been
traded on the Nasdaq National Market.
<TABLE>
<CAPTION>
Period High Low
- ------ ------- ------
Year Ending December 31, 1998
<S> <C> <C>
Period from June 26, 1998 (date of initial trading) to June 30, $10.313 $9.875
1998 ...................................................................
Three months ended September 30, 1998 ............................. 10.938 6.000
Three months ended December 31, 1998 .............................. 9.750 6.000
Year Ending December 31, 1999
Three months ended March 31, 1999 ................................. 8.125 5.875
Three months ended June 30, 1999 .................................. 17.000 7.500
Three months ended September 30, 1999 ............................. 18.000 14.000
Period from October 1, 1999 to November 16, 1999 .................. 18.500 14.250
</TABLE>
As of November 16, 1999, 2,354,007 of our ordinary shares were held of
record in the United States by 117 record holders and represented 26.65 % of the
total ordinary shares then outstanding. On November 16, 1999, 6,478,685 of our
ordinary shares were held of record outside of the United States by 17 record
holders and represented 73.34 % of the total ordinary shares outstanding. Since
certain of these ordinary shares were held by brokers or other nominees, the
number of record holders in the United States are not representative of the
number of beneficial holders or where the beneficial holders are resident
14
<PAGE>
SELLING SHAREHOLDERS
The following chart sets forth, as of November 16, 1999, certain
information with regard to the selling shareholders and their beneficial
ownership of our ordinary shares. Other than as set forth elsewhere in this
prospectus, the selling shareholders have had no material relationship with us,
other than as shareholders, during the last three years.
Shares
Beneficially
Name Owned
- ---- -----
Ann Clemente 938
Anthony Polak `S' 1,875
Barry & Barbara Goldin JTWROS 938
Bruce Gomberg 938
Carin S. Netter 1,875
Carol Fatoullah 938
Chaya & Sherri Harari JTWROS 938
Clare & Gary Stadtmauer JTWROS
Cooperative Holding Corporation 1,875
David S. Tarica 938
Davis & Barbara Gaynes JTWROS 938
Devora Chasanoff 938
Domaco Venture Capital Fund 1,875
Elaine N. Kelly 938
Elisabeth Genzer Revocable Trust 938
Ellice Fatoullah 938
Elliot L. Fatoullah 938
Frederick B. Polak `S' 1,875
Joan Grillo 1,875
15
<PAGE>
Jonathan Rothschild 1,875
Joseph Werner 938
Marc Engelbert 1,875
Maura M. Kelly 1,875
Murray & Clare Stadtmauer
JTWROS 1,875
Norton F. Hight 1,875
Paul Millman 938
Prudential Bank & Trust T/F
Andrew Grossman Profit Sharing
Plan 1,875
Prudential Bank Trust T/F Charles
G. Re' Defined Contrib Prof. Shrg. Plan
938
Prudential Bank Trust T/F Roger R.
Marks PS Plan 1,875
Prudential Securities c/f Anthony G.
Polak IRA #LHQ-800798-41 1,875
Prudential Securities c/f David
Swerdloff IRA #LHQ-803606-41 938
Prudential Securities c/f Jack Polak
IRA #LHQ-800941-41 1,875
Prudential Securities c/f John S
. Gross IRA #LHQ-800828-41 1,875
Prudential Securities c/f Kevin
Clarke IRA #LHQ-800721-41 938
Prudential Securities c/f Ronald M.
Lazar IRA #LHQ-800739-41 938
Prudential Securities c/f Susan
Zverin IRA #-802600-41 938
16
<PAGE>
Ralph A. Darieno 1,875
Randall W. Hight 1,875
RL Capital Partners 3,750
Robert & Sandra Shapiro JTWROS 938
S. Edmond Farber `S' 938
Shulamit Reinharz 938
Steve Roman 938
William H. Peterson - William H.
Peterson Living Trust 1,875
Wolfe F. Model 1,875
C B Wilber Investments LLC 3,750
DCG&T c/f Donald F. Farley IRA R/O 1,875
Donald F. Farley 1,875
Garfield Associates LLC 9,995
Katherine L. Meehan 3,750
Clarex Limited 22,500
Elmwood Capital LLC 7,500
Laird Norton Trust Co. 37,500
Sreekanth Rao 13,125
Wachovia Diversified Special Values Fund 97,500
Wachovia Special Values Fund
(A Portfolio of the Wachovia Funds) 52,500
Donald Gross 3,750
Frank Grobman 1,875
Anthony R. & Lynn M. Klein JTWROS 1,875
Charles J. & Aileen R. Sirey JTWROS 1,875
17
<PAGE>
Robert Harrigan 1,875
Walter G. Gans 1,875
Cohanzick Partners, LP 7,500
David & Sandra Pearce TIC 3,750
Donald R. Kendall, Jr. 3,750
Mel Okeon M.D. Med. Corp
Profit Sharing Trust 3,750
Solomon Smith Barney as IRA Custodian
for Harold S. Gault IRA 7,500
Professional Edge Fund L.P. 3,750
Fletcher, Tilton & Whipple P.C.
Profit Sharing Plan & Trust
FBO Henry C. Horner 999
Lee O. Hill 999
Sweetland LLC 999
R&S Limited Partnership 1,875
Richard S. Incandela
Trust DTD 9/15/91 3,750
Joseph A. Richman 938
Larry & Rebecca Warner JTWROS 938
Sheffield C. Richey Jr. 1,875
David & Ida Stollwerk JTWROS 1,875
Howard Haboush Sr. 1,875
Lamont Asset Management SA 3,750
Maerki Baumann & Co AG 3,750
Robert Hammer 1,875
18
<PAGE>
Roland Hartmann 1,875
Ronald & Howard J. Haboush JTWROS 1,875
Royal Crest Home Products 3,750
Victoria & Mansour Khayyam JTWROS 3,750
William G. Meyer 3,750
DCG&T c/f Steven Sura IRA 3,750
Henry Kolpan 999
Chicago Investments Inc. 30,000
Drax Holdings L.P. 118,125
O.T. Finance, SA 15,000
Louis R.M. DelGuercio 1,875
Mark Lebwohl 1,875
Robert Rice 1,875
Robert T. Burkhardt MD 1,875
CGE Associated 3,750
Donald B. Shackelford 7,500
GSB Holdings, Inc. 3,750
Haskell, Slaughter & Young
Profit Sharing Plan, f/b/o J.
Brooke Johnston, Jr. 1,875
M.Manning & Co., Inc. 1,875
19
<PAGE>
DESCRIPTION OF THE PLACEMENT AGENT'S AND UNDERWRITER'S WARRANTS
In connection with a private placement of securities, we issued 122,050
warrants to Spencer Trask, 61,025 of which were issued pursuant to a placement
agency agreement and 61,025 of which were issued pursuant to a consulting
agreement. In connection with our initial public offering, we issued 120,000
warrants to Cruttenden Roth.
The following summary of certain provisions of the Spencer Trask warrant
agreement and the Cruttenden Roth warrant agreement does not purport to be
complete and is qualified in its entirety by reference to each of the warrant
agreements and the warrants, including the definitions of certain terms in each
of them.
Exercise Price
o Spencer Trask Warrants. Each warrant issued in accordance with the
placement agency agreement and the consulting agreement, when
exercised by its holder, will entitle Spencer Trask to receive one
fully paid and non-assessable ordinary share at an exercise price of
$13.38 and $20.07 per share, respectively.
o Cruttenden Roth Warrants. Each warrant, when exercised by its
holder, will entitle Cruttenden Roth to receive one fully paid and
non-assessable ordinary share at an exercise price of $16.50 per
share.
The exercise price and the number of shares of our ordinary shares issuable upon
exercise of the Spencer Trask and Cruttenden Roth warrants are subject to
adjustment in accordance with their respective warrant agreements.
Expiration Date
o Spencer Trask Warrants. The warrants issued to Spencer Trask in
accordance with the placement agency agreement and the consulting
agreement became exercisable on September 24, 1999 and are
exercisable through (in the case of the consulting agreement
warrants) September 24, 2004 and (in the case of the placement
agency agreement warrants) September 24, 2000. The warrants entitle
Spencer Trask to purchase, in the aggregate, 122,050 ordinary shares
on a fully-diluted basis.
o Cruttenden Roth Warrants. The warrants became exercisable on June
26, 1998 and are exercisable through June 26, 2003. The warrants
entitle Cruttenden Roth to purchase, in the aggregate, 120,000
shares of our outstanding ordinary shares on a fully-diluted basis.
Exercise and payment procedures
Cruttenden Roth and Spencer Trask may exercise their respective warrants
by surrendering the warrant certificates to Continental Stock Transfer & Trust
Company, evidencing the warrants to be exercised, along with the accompanying
form of election to purchase, properly completed and executed, and the payment
of exercise price. Spencer Trask and Cruttenden Roth may choose to pay the
exercise
20
<PAGE>
price in the form of cash, by a certified or official bank check payable to the
order of A.C.L.N. Limited, or by cashless exercise as described in each of the
warrant agreements. Upon surrender of the warrants, Continental Stock Transfer
will deliver stock certificates representing the number of whole shares of our
ordinary shares to which Spencer Trask is entitled under the warrants and the
warrant agreement. If less than all of the warrants evidenced by a warrant
certificate are exercised, Continental Stock Transfer will issue a new warrant
certificate.
Warrant holders do not have common stockholder rights
As holder of the warrants, neither Spencer Trask nor Cruttenden Roth has
the right to vote on matters we submit to our shareholders and right to receive
dividends. In addition, neither Cruttenden Roth nor Spencer Trask will be
entitled to share in our assets in the event of a liquidation, dissolution or
winding up. In the event a bankruptcy or reorganization is commenced by or
against us, a bankruptcy court may hold that unexercised warrants are executory
contracts, subject to rejection by us with approval of the bankruptcy court.
Spencer Trask or Cruttenden Roth may, even if sufficient funds are available,
receive nothing or a lesser amount as a result of any such bankruptcy case than
they would be entitled to if they had exercised their warrants prior to the
commencement of any such case.
We must keep the registration statement effective
We have undertaken to keep the registration statement, of which this
prospectus is a part, continuously effective until the warrants expire or, if
earlier, all of the ordinary shares we issue upon exercise of warrants cease to
be restricted securities. A warrant or our ordinary shares cease to be
restricted securities when such warrant or share, as applicable:
o has been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering
it,
o is distributed to the public pursuant to Rule 144, or
o may be sold or transferred pursuant to Rule 144(k) (or any similar
provision then in force) under the Securities Act or otherwise.
There can be no assurance that we will be able to keep this registration
statement effective.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 20,000,000 ordinary shares, par
value CYP 0.01 per share. On November 16, 1999, there were 8,832,692 ordinary
shares outstanding.
Ordinary Shares
Each holder of an ordinary share is entitled to one vote, either in person
or by proxy, on all matters that may be voted upon by the owners of our ordinary
shares at a meeting of the shareholders, including the election of directors.
The holders of ordinary shares:
o have equal, ratable rights to dividends from funds legally
available, when, as and if declared by our Board of Directors,
21
<PAGE>
o are entitled to share ratably in all of our assets available for
distribution to holders of ordinary shares upon liquidation,
dissolution or winding up of our affairs, and
o do not have pre-emptive rights, and are entitled to one
non-cumulative vote per share on all matters on which shareholders
may vote at all meetings of shareholders.
All issued and outstanding shares of our ordinary shares are fully-paid
and non-assessable.
DISCLOSURE OF SEC POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our memorandum of association and articles of association provide that we
shall indemnify our directors and officers to the fullest extend permitted under
the laws of Cyprus, including in circumstances in which indemnification is
otherwise discretionary under laws of Cyprus.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, our officers or controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933, and is,
therefore, unenforceable.
LEGAL MATTERS
Certain legal matters with respect our ordinary shares offered hereby will
be passed upon for us by Economides, Patsalides & Co., our Cyprus counsel.
EXPERTS
Our financial statements as of December 31, 1996, 1997, and 1998,
incorporated by referenced in this registration statement, have been audited by
BDO International, independent public accountants, as indicated in their report
with respect thereto, and are incorporated by reference in reliance upon the
authority of BDO International as experts in giving their report.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800- SEC-0330 for further
information on the public reference rooms.
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
a. our annual reports on Form 20-F for the years ended December 31,
1997 and December 31, 1998;
22
<PAGE>
b. our report on Form 6-K for the quarter ended March 31, 1999; and
c. the description of our capital stock contained in our registration
statement on Form 8-G, dated June 4, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Christian L. Payne
Vice President, Finance
A.C.L.N. Limited
1299 Ocean Avenue, Suite 900
Santa Monica, California 90401
(310) 393-3790
www.aclnltd.com
No person has been authorized to give any information or to make any
representation other than those contained in this prospectus in connection with
the offering of ordinary shares by the selling shareholders. If information or
representations are given or made you must not rely on it as if we authorized
it. Neither the delivery of this prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that the information contained or
incorporated by reference herein is correct as of any time subsequent to its
date or that there has been no change in our affairs since such date. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities offered hereby in any jurisdiction in which such offer or
solicitation is not permitted, or to anyone whom it is unlawful to make such
offer or solicitation. The information in this prospectus is not complete and
may be changed.
23
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby (items
marked with an asterisk (*) will be provided by amendment):
SEC Registration Fee........................................ $ 4,530
Legal Fees and Expenses..................................... $45,000
Blue Sky Fees (including counsel fees)...................... $ 5,000
Accounting Fees and Expenses................................ $ 5,000
Printing and Engraving Expenses............................. $ 5,000
Miscellaneous............................................... $15,470
Total....................................................... $80,000
Item 14. Indemnification of Officers and Directors
Prior to the consummation of its initial public offering, the Company
entered into an indemnification agreement with each of its then-existing offices
and directors of the Company. Such agreements contain provision which endeavor
to limit the personal liability of the officers and directors, both to the
Company and to its shareholders, for monetary damages, including those resulting
from breaches of certain of their fiduciary duties as directors and officers of
the Company. In particular, such agreements provide that the Company will
indemnify such individuals to the fullest extent permitted by the Commercial
Laws of Cyprus, as such rights shall from time to time be expanded, against all
expense, liability, and loss (including attorneys' fees, judgments, fines,
excise taxes or penalties, and amounts paid in settlement) reasonably incurred
or suffered by the indemnitee as a result of serving as an officer, director,
employee of the Company any affiliate thereof, or any other entity at the
request of the Company. In addition, the indemnitee shall be entitled to the
advancement of expenses of defending any such action in advance of the final
disposition thereof, provided, however, that if the Commercial Laws of Cyprus
require, such indemnitee will deliver to the Company an undertaking to repay the
amounts so advanced if it is ultimately determined by a final non-appealable
judicial decision that such indemnitee is not entitled to be indemnified.
Notwithstanding any provision of such agreement to the contrary, unless
and until the Commercial Laws of Cyprus are amended to broaden the scope of
permitted indemnification, the indemnitee will continue to be subject to
liability for breach of such indemnitee's duty of loyalty to the Company, acts
or omission not in good faith or involving intentional misconduct, knowing
violations of the law, and actions leading to improper personal benefit to such
indemnitee.
In addition, the Company maintains directors' and officers' liability
insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
II-1
<PAGE>
Item 15. Exhibits
(a) The following exhibits are filed herewith, or incorporated by
reference herein:
No. Exhibit
--- -------
4.1** Form of Specimen certificate for shares of Ordinary Shares.
4.2** Specimen certificate for the Underwriter's Warrants.
4.3 Warrant Agreement between the Company and Spencer Trask
Incorporated.
4.4 Placement Agency Agreement.
4.5 Placement Agent's Warrants.
5.1* Opinion of Economides, Patsalides & Co.
23.1 Consent of BDO International, independent public accountants.
23.2* Consent of Economides, Patsalides & Co.
* To be file by amendment.
Item 16. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) of the Securities
Act if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement; Provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in
a post-effective amendment
II-2
<PAGE>
by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-3 and has duly caused this Registration
Statements to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on November 18, 1999.
A.C.L.N. LIMITED
By: /s/Aldo Labiad
-------------------------------------
Name: Aldo Labiad
Title: President, Chief Executive Officer
Operating Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Joseph J.H. Bisschops and Aldo Labiad, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and his name, place and stead, and in
any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments and registration statements filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended and
otherwise), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
to said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform such and every act and thing requisite and necessary to be
done, 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 his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Aldo Labiad President, Chief Executive Officer, November 18, 1999
- --------------- Operating Officer and Director
Aldo Labiad (Principal Executive Officer)
Chairman of the Board of Directors
/s/ Joseph J.H. Bisschops November 18, 1999
- -------------------------
Joseph J.H. Bisschops
/s/ Alex de Ridder Vice President, Chief Financial November 18, 1999
- ------------------ Officer and Director (Principal
Alex de Ridder Financial and Accounting Officer)
/s/ Christian L. Payne Vice President of Finance and November 18, 1999
- ---------------------- Investor Relations
Christian L. Payne
/s/ Michael S. Doherty Director November 18, 1999
- ----------------------
Michael S. Doherty
II-4
<PAGE>
/s/ Earl Gould Director November 18, 1999
- --------------
Earl Gould
/s/Charles L. Brock Director November 18, 1999
- -------------------
Charles L. Brock
/s/ Marina Savva Director November 18, 1999
- ----------------
Marina Savva
II-5
Exhibit 4.3
WARRANT AGREEMENT, dated as of September 24, 1999 between A.C.L.N.
LIMITED, a Cyprus corporation (the "Company"), and SPENCER TRASK SECURITIES,
INCORPORATED ("Spencer Trask"). Any defined terms used and not otherwise defined
herein shall have the meanings ascribed to them in the Placement Agency
Agreement (as defined below).
W I T N E S S E T H
WHEREAS, Spencer Trask and the Company are entering into that certain
Placement Agency Agreement of even date herewith (the "Placement Agency
Agreement") whereby Spencer Trask shall act as the exclusive placement agent for
the offering for sale by the Company of a minimum of 60, and a maximum of 120,
units (each a "Unit" and collectively, the "Units"), each Unit consisting of
7,500 of the Company's Ordinary Shares, par value CYP 0.01 per share (the
"Ordinary Shares"); and
WHEREAS, in connection the Offering, the Company has agreed to sell to
Spencer Trask, or its designees, for an aggregate purchase price of $1.00,
warrants to purchase, at the offering price per Share, such number of Ordinary
Shares (the "Warrants") equal to ten percent (10%) of the Ordinary Shares
contained in the Units sold in the Offering.
NOW, THEREFORE, in consideration of the payment by Spencer Trask to the
Company of ONE DOLLAR, the agreements herein set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant. Spencer Trask is hereby granted the right to purchase a number
of Ordinary Shares equal to ten percent (10%) of the number of Ordinary Shares
contained in the Units sold in the Offering (the "Warrant Shares"), as such
number may be adjusted pursuant hereto, at any time from the date of the Final
Closing until 5:30 p.m., New York time, on such date that is five (5) years
after the Final Closing (the "Warrant Exercise Term"), at purchase price equal
to the offering price per Share in the Offering (the "Exercise Price") as such
price may be, from time to time, adjusted pursuant to Section 8 hereof.
2. Warrant Certificates. Simultaneous with the delivery of this Warrant
Agreement, and at each Closing hereafter, the Company shall deliver to Spencer
Trask, or Spencer Trask's designee, warrant certificates evidencing Warrants to
purchase the appropriate number of Warrant Shares (the "Warrant Certificates").
Each Warrant Certificate delivered pursuant to this Agreement shall be in the
form set forth in Exhibit 1 attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement and shall be delivered without issuance
tax, cost or other expense of any kind to Spencer Trask. The Warrant
Certificates, and the certificates representing the Warrant Shares and/or other
securities, property or rights issuable upon exercise of the Warrants, shall be
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executed on behalf of the Company by the manual or facsimile signature of the
then present Chairman or Vice Chairman of the Board of Directors or President or
Vice President of the Company attested to be the manual or facsimile signature
of the then present Secretary or Assistant Secretary or Treasurer or Assistant
Treasurer of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance notwithstanding any subsequent
division, exchange, substitution or transfer.
3. Exercise of Warrant.
3.1 Method of Exercise. A Warrant Certificate may be exercised by Spencer
Trask and/or other registered holders thereof (collectively, the "Holders") by
surrender of such Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price by certified
or official bank check in New York Clearing House funds for the Warrant Shares
purchased, at the Company's principal offices at Reyndersstraat 30, 2000
Antwerp, Belgium. The Warrant Certificate may be exercised to purchase all or
part of the Warrant Shares covered thereby. In the event that any Warrant
Certificate is exercised to purchase less than all the Warrant Shares covered
thereby, the Company shall cancel said Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate of like tenor
for the balance of the Warrant Shares.
3.2 Exercise by Surrender of Warrant. Warrants may also be exercised, in
full or in part, without cash payment, by surrendering the Warrant Certificate
with the annexed Form of Election to Purchase duly executed in exchange for the
number of Ordinary Shares equal to the product of (i) the number of shares as to
which the Warrants are being exercised multiplied by (ii) a fraction, the
numerator of which is the Market Price (as hereinafter defined) of the Ordinary
Shares minus the Exercise Price and the denominator of which is the Market
Price. For the purposes of this Agreement, the phrase "Market Price" at any date
shall be deemed to be the last reported sale price, or, in case no such reported
sale takes place on such day, the average of the last reported sale prices for
the last five (5) trading days, in either case as officially reported by the
principal securities exchange on which the Ordinary Shares are listed or
admitted to trading, or, if the Ordinary Shares are not listed or admitted to
trading on any national securities exchange, the average closing bid price as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through The NASDAQ Stock Market ("Nasdaq"), the OTC Bulletin Board, or a similar
organization if Nasdaq is no longer reporting such information, or if the
Ordinary Shares are not quoted on Nasdaq or such a similar organization, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for the Warrant Shares shall be made within five (5)
business days thereafter without charge to the Holder thereof, including,
without limitation, any tax which may be payable in respect of the issuance
thereof. Such certificates shall be issued in the name of the Holder thereof.
The Warrant Certificates and the certificates representing the Warrant Shares
shall be
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duly executed on behalf of the Company. Warrant Certificates shall be dated the
date of issuance, division, exchange, substitution or transfer.
5. Transfer of Securities. Spencer Trask covenants and agrees that it is
acquiring the Warrants and the Warrant Shares (collectively, the "Warrant
Securities") for its own account, for investment, and not with a view to
distribution thereof. Holders of the Warrants or Warrant Shares may transfer
such Warrants or Warrant Shares only in compliance with applicable federal and
state securities laws. In order for any transferee of any Warrant Securities to
receive any of the benefits of this Agreement, the Company must have received
notice of such transfer, at the address in Section 3.1 above, in the Form of
Assignment annexed hereto, accompanied by an opinion of counsel, which opinion
of counsel and counsel shall be reasonably acceptable to the Company, that an
exemption from registration of such Warrant Securities under the Securities Act
of 1933, as amended (the "Securities Act"), and under any applicable state
securities laws is available. Any transferee must also covenant and agree that
it is acquiring such Warrant Securities, as the case may be, as an investment
and not with a view to distribution thereof.
6. No Registration Under the Securities Act. The Warrant Securities have
not been registered under the Securities Act or any state securities or "blue
sky" laws and may not be resold except pursuant to an effective registration
statement thereunder or exemption therefrom. The Warrant Certificates and
certificates representing the Warrant Shares shall bear the legend set forth
below:
"The securities represented by this certificate have been issued without
registration under the Securities Act of 1933, as amended, or under any
state securities laws, and may not be sold, transferred or pledged in the
absence of an effective registration statement under applicable federal
and state securities laws or an opinion of counsel that the transfer is
exempt from registration under applicable federal and state securities
laws."
7. Registration Rights.
7.1 Agreement to Register. The Company shall prepare and file, within 60
days after the Final Closing Date, a registration statement under the Securities
Act with the SEC, which registration statement shall cover the resale of the
Warrant Shares (the "Registrable Shares"). The 60-day period may be extended for
a reasonable period by the Company in the case of extraordinary and mitigating
circumstances, such as a sale or merger of the Company, with Spencer Trask's
consent, which consent may not be unreasonably withheld (the "Filing Date").
7.2 Demand Registrations; Registration Procedures. In the event the
Company is unable to register the Registrable Shares pursuant to Section 7.1,
then the Company shall register the Registrable Shares under the Securities Act
on two separate occasions during the Warrant Exercise Term, at the request of
the holders of a majority of the Registrable Shares made at any time 180 days
after the Final Closing. On each such occasion, the Company shall use its best
reasonable efforts to effect the registration of any of the Registrable Shares
under the Securities
- 3 -
<PAGE>
Act; provided that, in connection with the registration hereunder and with the
registration procedures set forth below, the sellers of the Registrable Shares
shall furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws. The Company will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with respect
the Registrable Shares and use its best efforts to cause such registration
statement to become effective under the Securities Act as soon as reasonably
practicable thereafter and to remain effective for 120 days following the
effectiveness of such registration statement (the "Requisite Period");
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the Requisite Period
and comply with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Shares covered by such registration
statement in accordance with the intended method of disposition set forth in
such registration statement for such period;
(c) furnish to each seller of the Registrable Shares and to each
underwriter, if any, such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the intended disposition
of the Registrable Shares covered by such registration statement;
(d) use its reasonable best efforts (i) if required, to register or
qualify the Registrable Shares covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of the
Registrable Shares, or in the case of an underwritten public offering, the
managing underwriter reasonably shall request, (ii) to prepare and file in those
jurisdictions such amendments (including post effective amendments) and
supplements, and take such other actions, as may be necessary to maintain such
registration and qualification in effect at all times for the period of
distribution contemplated thereby, and (iii) to take such further action as may
be necessary or advisable to enable the disposition of the Registrable Shares in
such jurisdictions, provided, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
(e) list the Registrable Shares covered by such registration statement on
the Nasdaq National Market;
(f) immediately notify each seller of Registrable Shares and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing and promptly amend or
supplement such registration statement to correct any such untrue statement or
omission;
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<PAGE>
(g) notify each seller of Registrable Shares of the issuance by the SEC of
any stop order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose and make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible time;
(h) permit a single firm of counsel designated as selling stockholders'
counsel by the holders of a majority in interest of the Registrable Shares being
registered to review the registration statement and all amendments and
supplements thereto for a reasonable period of time prior to their filing;
(i) make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions of Rule
158 under the Securities Act) covering a 12-month period beginning not later
than the first day of the Company's next fiscal quarter following the effective
date of the registration statement;
(j) if the offering is an underwritten offering, enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are usual and customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature, including, without
limitation, customary indemnification and contribution provisions;
(k) furnish to the sellers of the Registrable Shares or the underwriter,
if any, participating in any distribution pursuant to such registration
statement on the date that the registration statement becomes effective: (i) a
copy of an opinion of counsel representing the Company for the purposes of such
registration, dated such date and addressed to the sellers and the underwriters,
if any, to the effect that such registration statement has become effective
under the Securities Act and that (A) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act, (B) the registration statement, the related prospectus
and each amendment or supplement thereof comply as to form in all material
respects with the requirements of the Securities Act (except that such counsel
need not express any opinion as to financial statements or other financial or
statistical information contained therein) and (C) to such other effects as
reasonably may be requested by counsel for the sellers of the Registrable Shares
and (ii) a copy of a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters, if any,
stating that they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five (5) business
days prior to the date of such letter) with respect to such registration as such
sellers or underwriters reasonably may request;
(l) make available for inspection by each seller of the Registrable
Shares, any underwriter participating in any distribution pursuant to such
registration statement, and any
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<PAGE>
attorney, accountant or other agent retained by such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(m) provide a transfer agent and registrar, which may be a single entity,
for the Registrable Shares not later than the effective date of the Registration
Statement;
(n) take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any legend restricting the
sale or transfer of such securities) representing the Registrable Shares to be
sold pursuant to the registration statement and to enable such certificates to
be in such denominations and registered in such names as the sellers or any
underwriters may reasonably request without restrictive legend; and
(o) take all other reasonable actions necessary to expedite and facilitate
the registration of the Registrable Shares pursuant to the registration
statement.
7.3 Piggyback Registration. If the Company at any time (other than
pursuant to Sections 7.1 or 7.2) from the date of this Agreement through the
date of the seventh anniversary from (i) the date hereof or (ii) the Warrant
Exercise Term, whichever is longer, proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account, or
for the account of other security holders, or both, (except with respect to
registration statements on Forms S-4, F-4 or S-8 and any successor forms thereto
and except when, in the opinion of any underwriter of an underwritten public
offering of securities by the Company, inclusion of the Registrable Shares would
cause the marketing of such offering to be materially more difficult than would
be the case in the absence of the inclusion of such Registrable Shares), then
each such time the Company will give written notice to such effect to all
holders of the Registrable Shares at least 30 days prior to such filing. Each
holder of the Registrable Shares shall then have 30 days after the giving of any
such notice by the Company to request that the Company register any of such
holder's Eligible Shares (as defined below) as part of such registration. The
Company shall cause the Eligible Shares as to which such registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder of such Eligible
Shares so registered. Notwithstanding the foregoing, in the event that any
registration pursuant to this Section 7.3 shall be, in whole or in part, an
underwritten public offering of the Ordinary Shares, the number of Eligible
Shares to be included in such an underwriting may be reduced pro rata among all
of the requesting holders based upon the number of Eligible Shares requested to
be registered by such holders if and to the extent that the managing underwriter
shall be of the good faith opinion that such inclusion would reduce the number
of shares to be offered by the Company or would materially adversely affect the
marketing of such offering by the Company; provided, that such number of
Eligible Shares shall not be reduced if any Ordinary Shares are to be included
in such underwriting for the account of any person other than the Company,
Spencer Trask and its assigns or any other requesting holders of Eligible
Securities (as defined in the Registration Rights Agreement entered into between
the Company and each investor). Notwithstanding the foregoing provisions, the
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Company may withdraw any registration statement referred to in this Section 7.3
without thereby incurring any liability to the holders of Eligible Shares. For
purposes hereof, "Eligible Shares" shall mean all of the Registrable Shares
other than such Registrable Shares that are actually free of restriction on
resale under the Securities Act pursuant to Rule 144(k) or otherwise.
8. Adjustments to Number of Securities.
8.1 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding Ordinary Shares, the Exercise Price shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination.
8.2 Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 8, the number of Warrant Shares
issuable upon exercise of the Warrants shall be adjusted to the nearest full
amount by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.3 Definition of Ordinary Shares. For the purpose of this Agreement, the
term "Ordinary Shares" shall mean (i) the class of stock designated as Ordinary
Shares in the Memorandum and Articles of Association of the Company as such
Memorandum and Articles of Association may be amended as of the date hereof, or
(ii) any other class of stock resulting from successive changes or
reclassifications of such Ordinary Shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
8.4 Merger or Consolidation. In case of any consolidation of the Company
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Ordinary Shares), the corporation
formed by such consolidation or merger shall execute and deliver to each Holder
a supplemental warrant agreement providing that the Holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, the kind
and amount of Ordinary Shares and other securities and property receivable upon
such consolidation or merger, by a Holder of the number of Ordinary Shares for
which such Warrant might have been exercised immediately prior to such
consolidation or merger. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in this Section
8. The above provision of this subsection 8.4 shall similarly apply to
successive consolidations or mergers.
8.5 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made:
(a) upon the issuance of Ordinary Shares issuable upon exercise of the
Warrants contained in Units sold in the Offering;
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(b) upon the issuance of Ordinary Shares issuable upon exercise or
conversion of securities outstanding as of the date of this Warrant Agreement;
(c) upon the issuance of Ordinary Shares issued in respect of the
anti-dilution provisions of any securities of the Company; or
(d) If the amount of said adjustment shall be less than CYP 0.01 per
Warrant Share; provided, however, that in such ease any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of, and together with, the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least CYP
0.01 per Warrant Share.
9. Exchange and Replacement of Warrant Certificates. (a) Notwithstanding
anything herein to the contrary, each Warrant Certificate shall be exchangeable,
upon the surrender thereof by the registered Holder at the principal office of
the Company and reimbursement to the Company of all reasonable expenses
incidental thereto, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Warrant
Shares in such denominations as shall be designated by the Holder thereof at the
time of such surrender.
(b) Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant
Certificate, if mutilated, the Company shall make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Ordinary Shares upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction to the
nearest whole number of Ordinary Shares or other securities, properties or
rights.
11. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized Ordinary Shares, solely for the purpose of
issuance upon the exercise of the Warrants, such number of Ordinary Shares or
other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that: upon exercise of the Warrants
and payment of the Exercise Price therefor, all Ordinary Shares and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
stockholder.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders the right to vote for, consent to or
receive notice as a stockholder in respect of, any meetings of stockholders for
the election of directors or any other
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matter, or to confer upon the Holders any rights whatsoever as a stockholder of
the Company. If, however, at any time prior to the expiration of the Warrants
and their exercise, any of the following events shall occur:
(a) The Company intends to declare a dividend (other than a dividend
consisting solely of Ordinary Shares) or otherwise distribute to its
stockholders any assets (other than Ordinary Shares), whether issued by the
Company or by another, or any other thing of value; or
(b) The Company shall take a record of the holders of its Ordinary Shares
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company; or
(c) The Company shall offer to all the holders of its Ordinary Shares any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option right
or warrant to subscribe therefor; or
(d) A dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business as an entirety shall be proposed,
then, in any one or more of said events, the Company shall give written notice
of such event at least twenty (20) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of Warrants, to the address of such Holder
as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3.1 hereof or
to such other address as the Company may designate by notice to the Holders.
14. Supplements and Amendments, Amendments to this Agreement may be made
only with the written consent of the Holders of a majority of the Warrants.
15. Successors. All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, and the Holders and
their respective successors and assigns hereunder.
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<PAGE>
16. Termination. This Agreement shall terminate at the close of business
on the last date of the Warrant Exercise Term.
17. Governing Law; Submission to Jurisdiction. (a) This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
(b) The Company and the Holders, by accepting Warrants issued pursuant to
this Agreement, hereby agree that any action, proceeding or claim against it or
them arising out of, or relating in any way to, this Agreement shall be brought
and enforced in the courts of the United States and the State of New York,
located in the City of New York, and shall be irrevocably submitted to such
jurisdiction, which jurisdiction shall be exclusive. The Company and the Holders
hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any process or summons to be served upon any of the Company
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
as set forth in Section 13 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor. THE COMPANY AND THE HOLDERS AGREE TO WAIVE THEIR RIGHTS TO
A JURY TRIAL ON ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
18. Entire Agreement; Modification. This Agreement contains the entire
understanding among the parties hereto with respect to the subject matter hereof
and may not be modified or amended except as provided in Section 14 hereof or by
a writing duly signed by the party against whom enforcement of the modification
or amendment is sought.
19. Severability. If any provision of this Agreement shall be held to be
invalid and unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and
Spencer Trask and any other registered Holder(s) of the Warrants or Warrant
Shares any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of the Company
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<PAGE>
and Spencer Trask and any other Holder(s) of the Warrants or Warrant Shares.
This Agreement shall not be assignable, except as expressly permitted herein.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
(Signature Page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed, as of the day and year first above written.
A.C.L.N. LIMITED
By /s/ Christian L. Payne
--------------------------------------
Name CHRISTIAN L. PAYNE
Title: VP-FINANCE
SPENCER TRASK SECURITIES, INCORPORATED
By /s/ [ILLEGIBLE]
--------------------------------------
Name
Title:
SIGNATURE PAGE TO WARRANT AGREEMENT, DATED SEPTEMBER __, 1999
BETWEEN A.C.L.N. LIMITED, AND SPENCER TRASK SECURITIES INCORPORATED
- 14 -
<PAGE>
EXHIBIT 1
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
THAT THE TRANSFER IS EXEMPT FROM REGISTRATION UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
No. W-
___________Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________ is registered holder
of ___________ Warrants to purchase at any time after the Final Closing until
5:30 p.m. New York time on such date five (5) years after the Final Closing (the
"Expiration Date"), one fully paid and non-assessable Ordinary Share of the
Company, par value CYP 0.01 per share (the "Ordinary Shares"), of the Company at
an exercise price equal to 150% of the offering price of the Ordinary Shares in
the Offering, subject to adjustment in certain events (the "Exercise Price"),
upon surrender of this Warrant Certificate and payment of the Exercise Price at
an office or agency of the Company, or by surrender of this Warrant Certificate
in lieu of cash payment, but subject to the conditions set forth herein and in
the Warrant Agreement, dated as of September __, 1999 between the Company and
Spencer Trask Securities, Incorporated ("Spencer Trask") (the "Warrant
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Warrant Agreement. Payment of the Exercise
Price shall be made by certified or official bank check in New York Clearing
House finds payable to the order of the Company or by any other method
permitted by the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in, and made a part of,
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
<PAGE>
Company, Spencer Trask and the holders (the words "holders" or "holder" meaning
the registered holder or registered holders) of the Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate in accordance with the Warrant Agreement at an office or agency of
the Company, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer or as provided in the Warrant Agreement.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1999
A.C.L.N. LIMITED
By:__________________________________
Name:
Title:
Attest:
_______________________________
Name:
Title:
A-2
<PAGE>
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ___________ Ordinary
Shares.
In accordance with the terms of Section 3.1 of the Warrant Agreement,
dated as of September __, 1999 between A.C.L.N. Limited and Spencer Trask
Securities, Incorporated (the "Warrant Agreement"), the undersigned requests
that a certificate for such securities be registered in the name of
_____________________ whose address is
______________________________________________________________ and that such
certificate be delivered to ________________ whose address is
_____________________________________________. The undersigned hereby makes the
representations and warranties stated in the Warrant Agreement to the Company.
Dated: __________
Signature ___________________________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.)
______________________________________________________________
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers
unto ___________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________,
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: __________
Signature ___________________________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.)
______________________________________________________________
(Insert Social Security or Other Identifying Number of Holder)
PLACEMENT AGENCY AGREEMENT
As of August 3, 1999
Spencer Trask Securities, Incorporated
535 Madison Avenue
18th Floor
New York, New York 10022
Gentlemen:
A.C.L.N. Limited, a Cyprus corporation (the "Company"), hereby confirms its
agreement with Spencer Trask Securities Incorporated, a Delaware corporation
(the "Placement Agent"), as follows:
1. Offering. (a) The Company shall offer (the "Offering") for sale through the
Placement Agent and its selected dealers, as exclusive agent for the Company, a
minimum of 60, and a maximum of 120, units (each a "Unit" and collectively, the
"Units"). Each Unit will consist of 7,500 shares (the "Shares") of the Company's
Ordinary Shares, par value CYP 0.01 per share (the "Ordinary Shares").
(b) Placement of the Units shall be made on a "best efforts - all or none"
basis with respect to the first 60 Units (the "Minimum Amount") and a "best
efforts" basis as to the remaining 60 Units. The minimum subscription for Units
shall be one Unit, except that the Placement Agent may, in its discretion, offer
fractional Units. The Units will be offered commencing on the date of the
Memorandum (as defined below) and ending at 12:00 p.m., New York City time, on
October 27, 1999, except that the offering period may be extended by the
Placement Agent for an additional 90 days with the prior written consent of the
Company without notice to the subscriber (the "Offering Period"). The date on
which the Offering shall terminate shall be referred to as the "Termination
Date."
(c) Subscriptions for the Units will be accepted by the Company at a price
of $100,400 per Unit (the "Offering Price"); provided, however, that the Company
shall not accept subscriptions for, or sell Units to, any persons or entities
who do not qualify as "accredited investors," as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933, as amended
(the "Act").
<PAGE>
(d) The offering of the Units will be made by the Company solely pursuant
to the Memorandum, the current form of which is reasonably acceptable to the
Placement Agent, and which at all times will continue to be in form and
substance reasonably acceptable to the Placement Agent and its counsel and
contain such legends and other information as the Placement Agent and its
counsel may, from time to time, deem reasonably necessary and desirable to be
set forth therein. "Memorandum" as used in this Agreement means the Company's
Confidential Private Placement Memorandum, dated August 3, 1999, inclusive of
all exhibits, and all amendments, supplements and appendices thereto. Unless
otherwise defined, each term used in this Agreement will have the same meaning
as set forth in the Memorandum.
(e) As more particularly described in the Registration Rights Agreement, a
form of which is annexed to the Memorandum, the Company shall prepare and file,
within 60 days after the Final Closing Date (as defined below), a registration
statement under the Act, which registration statement shall cover the resale of
the Shares. The 60-day period may be extended for a reasonable period by the
Company in the case of extraordinary and mitigating circumstances, such as a
sale or merger of the Company, with the Placement Agent's consent, which consent
may not be unreasonably withheld (the "Filing Date"). The Company shall use its
best efforts to cause the registration statement to become effective under the
Act in accordance with the Registration Rights Agreement; provided that, in
connection with the registration and the registration procedures set forth in
the Registration Rights Agreement, the sellers of the Registrable Securities (as
defined in the Registration Rights Agreement) shall furnish to the Company in
writing such information with respect to the sellers and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
2. Representations and Warranties. The Company (which for purposes of this
Section 2 includes its subsidiaries, as applicable) hereby represents and
warrants to the Placement Agent that:
(a) The Memorandum has been prepared by the Company in conformity with all
applicable laws, and is in compliance with Regulation D as promulgated under
Section 4(2) of the Act ("Regulation D"), the Act and the requirements of all
other rules and regulations (the "Regulations") of the SEC relating to offerings
of the type contemplated by the Offering, and the applicable securities laws and
the rules and regulations of those jurisdictions wherein the Units are to be
offered and sold. The Units will be offered and sold pursuant to the exemption
from registration provided by Rule 506 of Regulation D and Section 4(2) of the
Act as a transaction not involving a public offering and the requirements of any
other applicable state securities laws and the respective rules and regulations
thereunder in those jurisdictions in which the Placement Agent notifies the
Company that the Units are being offered for sale and to which the Company
consents. The Memorandum, including the exhibits thereto, describe all material
aspects, including attendant risks, of an investment in the Company. The Company
has not taken nor will it take any action which conflicts with the conditions
and requirements of, or which would make unavailable with respect to the
Offering, the exemption(s) from registration available pursuant to
-2-
<PAGE>
Rule 506 of Regulation D or Section 4(2) and knows of no reason why any such
exemption would be otherwise unavailable to it. None of the Company, its
predecessors or affiliates has been subject to any order, judgment or decree of
any court of competent jurisdiction temporarily, preliminarily or permanently
enjoining such person for failing to comply with Rule 503 of Regulation D.
(b) The Memorandum does not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) The Company has furnished the Placement Agent with true and complete
copies of its report on Form 6-K for the three month period ended March 1999 and
its Annual Report on Form 20-F for the fiscal year ended December 31, 1998 (the
"Current Reports"), which Current Reports constitute the only documents that the
Company was required to file with the SEC since December 31, 1998. The Company
has also filed all other reports required to be filed with the SEC prior to
December 31, 1998 (such reports, together with the Current Reports are
collectively referred to as the "SEC Reports"). As of their respective filing
dates, the Current Reports and all other filings made by the Company under the
Act or the Securities and Exchange Act of 1934, as amended (the "1934 Act")
complied in all material respects with the requirements of the Act or the 1934
Act, as the case may be, and none of such filings contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company meets the
requirements for the use of Form F-3 in connection with the resale of the
Shares.
(d) The Company is a corporation duly organized, validly existing and in
good standing under the laws of Cyprus. Except as described in the Memorandum or
the Current Reports, the Company does not have an equity interest in any other
firm, partnership, association or other entity. The Company is duly qualified to
transact business as a foreign corporation and is in good standing under the
laws of each jurisdiction where the location of its properties or the conduct of
its business makes such qualification necessary, except those that would not
materially and adversely affect the Company.
(e) The Company has all requisite power and authority (corporate and
other) to conduct its business as presently conducted and as proposed to be
conducted (as described in the Memorandum or the Current Reports) and to enter
into and perform its obligations under this Agreement and the other agreements
contemplated hereby and by the Memorandum (collectively, the "Transaction
Documents"). Each of the Transaction Documents has been duly authorized. This
Agreement has been duly executed and delivered and constitutes, and each of the
other Transaction Documents, upon due execution and delivery, will have been
duly executed and delivered and will constitute, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms.
-3-
<PAGE>
(f) None of the execution and delivery of, or performance by, the Company
under, any of the Transaction Documents or the consummation of the transactions
contemplated herein or therein conflicts with or violates, or will result in the
creation or imposition of, any lien, charge or other encumbrance upon any of the
assets of the Company under any agreement or other instrument to which the
Company is a party or by which the Company or its assets may be bound, or any
term of the charter or by-laws of the Company, or any license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its assets.
(g) The Company has authorized the outstanding capital stock as set forth
under the "Capitalization" and "Description of Securities" headings in the
Memorandum. All outstanding shares of capital stock of the Company are duly
authorized, validly issued and outstanding, fully paid and nonassessable. Except
as set forth in the Memorandum: (i) there are no outstanding options, stock
subscription agreements, warrants or other rights permitting or requiring the
Company or others to purchase or acquire any shares of capital stock or other
equity securities of the Company; (ii) there are no securities issued or
outstanding which are convertible into or exchangeable for any of the foregoing
and there are no contracts, commitments or understandings, whether or not in
writing, to issue or grant any such option, warrant, right or convertible or
exchangeable security; (iii) other than those Shares that the Company will
reserve for any issuance of Shares upon the exercise of the Agent's Warrants (as
defined below), no shares of stock or other securities of the Company are
reserved for issuance for any purpose; (iv) the Company has not granted, and to
the Company's knowledge, no other party has granted any voting trusts or other
contracts, commitments, understandings, arrangements or restrictions of any kind
with respect to the ownership, voting or transfer of shares of stock or other
securities of the Company, including without limitation, any preemptive rights,
rights of first refusal, proxies or similar rights; and (v) no person holds a
right to require the Company to register any securities of the Company under the
Act or to participate in any such registration. The issued and outstanding
shares of capital stock of the Company conform to all statements in relation
thereto contained in the Memorandum and describes all material terms and
conditions thereof. All issuances by the Company of its securities were exempt
from registration under the Act and any applicable state securities laws or were
issued pursuant to a registration statement declared effective by the SEC under
the Act, which registration statement was available for the sale of the type of
securities sold thereunder.
(h) The Shares, the Agent's Warrants and the Agent's Shares issuable upon
exercise of the Agent's Warrants have been duly authorized and, when issued and
delivered against payment therefor as provided in the Transaction Documents,
will be validly issued, fully paid and nonassessable. No holder of any of the
Shares will be subject to personal liability solely by reason of being such a
holder, and none of the Shares are subject to preemptive or similar rights of
any stockholder or securityholder of the Company. A sufficient number of
authorized, but unissued, Shares have been reserved for issuance, and will
continue to be reserved for issuance, upon the exercise of the Agent's Option
and the Agent's Warrants.
-4-
<PAGE>
(i) No consent, authorization or filing of or with any court or
governmental authority is required in connection with the issuance of the Units
or the consummation of the transactions contemplated herein or in the other
Transaction Documents, except for required filings with the SEC and applicable
"Blue Sky" or state securities commissions or filings and applications under the
Exchange Control Law Cap. 199 and the Companies Law Cap. 113.
(j) The financial statements, together with the related notes, of the
Company included in the Memorandum or the Current Reports present fairly the
financial position of the Company as of the respective dates specified and the
results of its operations and changes in financial position for the respective
periods covered thereby. Such financial statements and related notes were
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods indicated and
with the published rules and regulations of the SEC with respect thereto. Except
as set forth in such financial statements or in the Memorandum, the Company has
incurred no material liabilities of any kind, whether accrued, absolute,
contingent or otherwise or entered into any material transactions. The other
financial and statistical information with respect to the Company and any pro
forma information and related notes included in the Memorandum or the Current
Reports present fairly the information shown therein on a basis consistent with
the audited and unaudited financial statements of the Company included in the
Memorandum or the Current Reports. The Company does not know of any facts,
circumstances or conditions adversely affecting its operations, earnings or
prospects which have not been fully disclosed in the Memorandum.
(k) The conduct of business by the Company as presently conducted and as
proposed to be conducted is not subject to continuing oversight, supervision,
regulation or examination by any governmental official or body of the United
States or any other jurisdiction wherein the Company conducts or proposes to
conduct such business, except as described in the Memorandum or the Current
Reports and except such regulation as is applicable to commercial enterprises
generally. The Company has obtained all requisite licenses, permits and other
governmental authorization to conduct its business as presently, and as proposed
to be, conducted.
(l) No default by the Company or, to the knowledge of the Company, any
other party exists in the due performance under any of the agreements referred
to in the Memorandum or in the Current Reports to which the Company is a party
or to which any of its assets is subject (collectively, the "Company
Agreements"). The Company Agreements are the only material agreements to which
the Company is bound, or by which its assets are subject, and are accurately and
fairly described in the Memorandum or in the Current Reports and are in full
force and effect and enforceable in accordance with their respective terms.
(m) Except as set forth in the Memorandum or in the Current Reports, there
are no actions, proceedings, claims or investigations before or by any court or
governmental authority (or any state of facts which management of the Company
has concluded could give rise thereto) pending or, to the knowledge of the
Company, threatened against the Company, or involving its
-5-
<PAGE>
assets or any of its officers or directors which, if determined adversely to the
Company or such officers or directors, could result in any material adverse
change in the condition (financial or otherwise) or prospects of the Company or
adversely affect the transactions contemplated by this Agreement or the other
Transaction Documents or the enforceability hereof or thereof.
(n) The Company is not in violation of nor does this Agreement conflict
with: (i) its Memorandum of Association or Articles of Association; (ii) any
indenture, mortgage, deed of trust, note or other agreement or instrument to
which the Company is a party or by which it is or may be bound or to which any
of its assets may be subject; (iii) to the Company's knowledge, any statute,
rule or regulation; or (iv) any judgment, decree, or order applicable to the
Company, which violation or violations individually, or in the aggregate, might
result in any material adverse change in the condition (financial or otherwise)
or prospects of the Company.
(o) The Company does not own any real property in fee simple, and the
Company has good and marketable title to all personal property (tangible and
intangible) owned by it, free and clear of all security interests, liens and
encumbrances, except as described in the Memorandum or in the Current Reports.
(p) The Company owns or possesses adequate rights to use all patents,
patent applications, trademarks, service marks, copyrights, rights, trade
secrets, confidential information, processes and formulations necessary for the
conduct of its business, except as otherwise described in the Memorandum or the
Current Reports (collectively, the "Intangibles"). Except as set forth in the
Memorandum or the Current Reports, the Company has not infringed upon the rights
of others with respect to the Intangibles which the Company directly owns or
possesses and, to the Company's knowledge, the Company has not infringed upon
the rights of others with respect to Intangibles which it licenses from third
parties, and the Company has not received notice that it has or may have
infringed or is infringing upon the rights of others with respect to the
Intangibles, or any notice of conflict with the asserted rights of others with
respect to the Intangibles which could, individually or in the aggregate,
materially and adversely affect, the condition (financial or otherwise) or
prospects of the Company. Except as set forth in the Memorandum or the Current
Reports, to the best knowledge of the Company, no others have infringed upon the
Intangibles.
(q) Subsequent to the respective dates as of which information is given in
the Memorandum and except as provided therein, the Company has operated its
business in the ordinary course as theretofore conducted and, except as may
otherwise be set forth in or contemplated by the Memorandum, there has been no,
and the Company does not know of any facts which could result in any: (i)
material adverse change in the condition (financial or otherwise) of the
Company; (ii) transaction otherwise than in the ordinary course of business;
(iii) issuance of any securities (debt or equity) or any rights to acquire any
such securities; (iv) damage, loss or destruction, whether or not covered by
insurance, with respect to any asset or property of the Company; or (v)
agreement to permit any of the foregoing.
-6-
<PAGE>
(r) The Company has filed, on a timely basis, each Federal, state, local
and foreign tax return which is required to be filed by it, or has requested an
extension therefor, and has paid all taxes and all related assessments,
penalties and interest to the extent that the same have become due, except for
any tax that currently is, or may be, contested in good faith by the Company and
for which adequate reserves have been provided.
(s) Other than as agreed to between the Company and the Placement Agent in
this Agreement, there are no claims for services against the Company in the
nature of a finder's or broker's fee or commission in connection with the
Offering or the consummation of the transactions contemplated hereby. The
Company agrees to indemnify the Placement Agent from any such claim made by any
other person. The Company has not offered for sale or solicited offers to
purchase the Units, with the exception of the Company's negotiations with the
Placement Agent.
(t) Neither the Company nor any of its directors, officers or affiliates
has taken, nor will he, she or it take, directly or indirectly, any action
designed, or which might reasonably be expected in the future, to cause or
result in, under the Act, the 1934 Act or otherwise, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Company's Shares or otherwise.
(u) Assuming (i) the accuracy and completeness of the information provided
by the respective subscribers in the Subscription Agreements (as defined below)
and (ii) that the Placement Agent has complied in all material respects with the
provisions of Regulation D, the offer and sale of the Units pursuant to the
terms of this Agreement are exempt from the registration requirements of the Act
and the rules and regulations promulgated thereunder. The Company is not
disqualified from the exemption under Regulation D by virtue of the
disqualifications contained in Rule 505(b)(2)(iii) or Rule 507 under the Act.
3. Placement Agent Appointment and Compensation. (a) The Company hereby appoints
the Placement Agent as the Company's exclusive agent in connection with the
Offering, and the Placement Agent agrees to act on a "best efforts-all or none"
basis with respect to the first 60 Units and on a "best effort" basis with
respect to the remaining 60 Units. The Company has not and will not make, or
permit to be made, any offers or sales of the Units other than through the
Placement Agent without the Placement Agent's prior written consent. The
Placement Agent has no obligation to purchase any of the Units. The agency of
the Placement Agent hereunder shall continue until the earlier of the
Termination Date and the Final Closing (as defined below).
(b) The Company has caused to be delivered to the Placement Agent copies
of the Memorandum and the Current Reports and has consented, and hereby
consents, to the use of such copies for the purposes permitted by the Act and
applicable securities laws, and hereby authorizes the Placement Agent to use the
Memorandum and the Current Reports in connection with the sale of the Units
until the Termination Date, and no person other than the Placement Agent is or
will be authorized to give any information or make any representations other
than
-7-
<PAGE>
those contained in the Memorandum or the Current Reports or to use any offering
materials other than those contained in the Memorandum or the Current Reports in
connection with the sale of the Units.
(c) The Company will cooperate with the Placement Agent by making
available to its representatives such information as may be requested in making
a reasonable investigation of the Company and its affairs and shall provide
access to such employees as shall be reasonably requested.
(d) At each Closing (as defined below), the Company shall pay to the
Placement Agent a placement fee (the "Placement Agent's Fee") equal to nine
percent (9%) of the Offering Price of all the Units sold in such Closing (as
defined below) and for which finds are disbursed to the Company; provided,
however, if a subscriber purchases Units for a purchase price of $500,000 or
more, but less than $1,000,000, then the Placement Agent's Fee shall be equal to
eight percent (8%) of the purchase price paid by such subscriber; if a
subscriber purchases Units for a purchase price of $1,000,000 or more, then the
Placement Agent's Fee shall be equal to seven percent (7%) of the purchase price
paid by such subscriber; and, in the event that any of the Units are sold to the
Placement Agent or an affiliate of the Placement Agent, the Company shall pay a
Placement Agent's Fee equal to six percent (6%) of the purchase price paid by
the Placement Agent or an affiliate of the Placement Agent.
(e) The Company shall pay the expenses incurred with the preparation and
printing of all necessary offering and closing documents and instruments related
to the Offering and the issuance of Shares and the Agent's Warrants or the
Agent's Shares upon exercise of the Agent's Warrants, including, but not limited
to, expenses with respect to four bound volumes of closing documents, accounting
fees and legal fees of the Company's counsel. The Company shall pay to the
Placement Agent a non-accountable expense allowance in an amount equal to three
percent (3%) of the aggregate Offering Price of all the Units sold in the
Offering (the "Expense Allowance"), which Expense Allowance shall be deducted
from the gross proceeds of the Units sold in the Offering; provided, however,
that the Expense Allowance shall in no event exceed $200,000. Such Expense
Allowance shall cover the Placement Agent's expenses, including, but not limited
to, legal fees, mailings, telephone, travel and due diligence. A non-refundable
advance of $35,000 has been paid to the Placement Agent, which non-refundable
advance shall be credited toward the Expense Allowance at the Minimum Amount
Closing (as defined below). Payment of the proportional amounts of the Placement
Agent's Fee and the Expense Allowance will be made out of the proceeds of
subscriptions for the Units sold at each Closing. In addition, the Company shall
pay for all Blue Sky filing fees and counsel fees and disbursements with respect
to Blue Sky qualification. If the Offering is not completed for any reason, the
Company will reimburse the Placement Agent for any and all reasonable,
accountable out-of-pocket expenses incurred by the Placement Agent with respect
to the Offering.
(f) As additional compensation hereunder, at each Closing, the Company
shall sell to the Placement Agent or its designees, for an aggregate purchase
price of $1.00, warrants (the
-8-
<PAGE>
"Agent's Warrants") to purchase a number of Shares (the "Agent's Shares") and
together with the Agent's Warrants, the "Agent's Securities") at the offering
price per Share in an amount equal to ten percent (10%) of the Shares contained
in the Units sold in the Offering, provided that the Minimum Amount is sold. The
Agent's Warrants shall be exercisable, commencing with the Final Closing, until
the date five (5) years after the date of the Final Closing (the "Warrant
Exercise Term"). The Company shall include the Agent's Shares in the
registration statement to be filed by the Company as per Section 1(e) hereof;
provided, however, if the Company is unable to register the Agent's Shares in
connection with the foregoing registration statement, then the Company shall
register the Agent's Shares under the Act, on two separate occasions during the
Warrant Exercise Term, at the request of the holders of a majority of the
Agent's Securities made at any time after 180 days after the Final Closing, the
Agent's Shares issuable upon the exercise of the Agent's Warrants (the "Agent's
Registrable Shares"). On each such occasion, the Company will file, as soon as
practicable, with the SEC a registration statement under the Act with respect
to the Agent's Registrable Shares and keep such registration statement effective
for 120 days. The Company shall pay all expenses, other than underwriters'
discounts and commissions, relating to registering the Agent's Registrable
Shares covered by the first request, and the holder(s) of the Agent's
Registrable Shares shall pay all reasonable registration expenses arising from
the second registration. Nothing herein contained shall require the Company to
undergo an audit, other than in the ordinary course of business. In addition,
the holders of the Agent's Registrable Shares shall have "piggyback"
registration rights with respect to the Agent's Registrable Shares for a period
of seven (7) years from the Minimum Amount Closing Date or for the period of
exercisability, whichever is longer; provided, however, that such registration
rights shall be subject to exceptions, including: (i) exclusion if, in the
opinion of any underwriter of an underwritten public offering of securities of
the Company, inclusion of the Agent's Registrable Shares would cause the
marketing of such offering to be materially more difficult than would be the
case in the absence of the inclusions of such Shares, (ii) registration
statements on Forms S-4, F-4, or any successor forms, and (iii) registration
statements on Form S-8, or any successor form. At the Minimum Amount Closing,
the Company and Placement Agent shall enter into a warrant agreement in form and
substance reasonably satisfactory to the Placement Agent and the Company (the
"Agent's Warrant Agreement"), which shall contain such terms and other customary
provisions and anti-dilution provisions relating to any stock splits, reverse
stock splits, stock dividends, recapitalization or reclassifications authorized
by the Company.
(g) The Company shall also pay to the Placement Agent the Placement
Agent's Fee and Expense Allowance with respect to, and based on, any investment
by any investor or party whose name is included in a comprehensive notarized
list, which list shall be delivered to the Company by the Placement Agent's
counsel within 30 days after the Final Closing (a "Post Closing Investor") which
invests in the Company subsequent to the Final Closing (other than through a
public offering or open market purchases or purchases of Shares from other
Company shareholders) at any time within 60 days from the later of the
Termination Date or the Final Closing.
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<PAGE>
(h) Pursuant to a consulting agreement, the Placement Agent will provide
such investment banking advisory services as the Company may from time to time
request, for a one year period, commencing on the date of the Minimum Amount
Closing, for a one-time fee of either (i) $100,000 in cash or (ii) warrants at
150% of the offering price per Share in an amount equal to ten percent (10%) of
the Shares sold in the Offering, at the option of the Placement Agent, payable
at the Minimum Amount Closing, which number of warrants shall be increased at
each subsequent Closing. These warrants will have the same rights and privileges
as the Agent's Warrants described in Section 3(f) hereof. Such services will
include advice relating to corporate management, strategic planning, financial
planning and relationships with banks, securities firms and financial
institutions.
4. Subscription and Closing Procedures. (a) Each prospective purchaser will be
required to complete and execute one original of the Subscription Agreement and
one original Registration Rights Agreement in the forms annexed to the
Memorandum (collectively the "Subscription Agreements"), which will be forwarded
or delivered to the Placement Agent at the Placement Agent's offices at the
address set forth in Section 11 hereof, together with the subscriber's check or
good funds in the full amount of the purchase price for the number of Units
desired to be purchased.
(b) All funds for subscriptions received from the Offering will be
promptly forwarded by the Placement Agent or the Company, if received by it, to
and deposited into the escrow account (the "Escrow Account") established for
such purpose with United Stares Trust Company of New York (the "Escrow Agent").
All such funds for subscriptions will be held in the Escrow Account pursuant to
the terms of the Escrow Agreement among the Company, the Placement Agent and the
Escrow Agent. The Company will pay all fees related to the establishment and
maintenance of the Escrow Account. Any interest accruing on funds in the Escrow
Account shall be first applied against the cost of maintaining the Escrow
Account and the balance shall be distributed to the Placement Agent. Subject to
the receipt of such subscriptions for the Minimum Amount, the Company will
either accept or reject the Subscription Agreement in a timely fashion and at
each Closing will countersign the Subscription Agreements and provide duplicate
copies of such Subscription Agreements to the Placement Agent for distribution
to the subscribers. The Company will give notice to the Placement Agent of its
acceptance of each subscription. The Company will promptly return to subscribers
incomplete, improperly completed, improperly executed and rejected subscriptions
and give written notice thereof to the Placement Agent upon such return.
(c) If subscriptions for at least the Minimum Amount have been accepted
prior to the Termination Date, the funds therefor have been collected by the
Escrow Agent and all of the conditions set forth elsewhere in this Agreement are
fulfilled, the first closing (the "Minimum Amount Closing") shall be held within
10 business days thereafter (the "Minimum Amount Closing Date"). Thereafter, the
remaining Units will continue to be offered and sold until the Termination Date.
Additional closings (together with the Minimum Amount Closing and the Final
Closing, the "Closings") may from time to time be conducted at times mutually
agreeable
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<PAGE>
with respect to additional Units sold with the final Closing (the "Final
Closing") to occur within 10 business days after the earlier of the Termination
Date or the sale of all Units offered. Delivery of payment for the accepted
subscriptions for Units from the funds held in the Escrow Account will be made
at each Closing at the Placement Agent's offices against delivery of the Units
by the Company at the address set forth in Section 11 hereof (or at such other
place as may be mutually agreed upon between the Company and the Placement
Agent). Other than the Minimum Amount Closing and the Final Closing, no Closing
shall be held for less than two (2) Units, except with the consent of the
Company. Executed certificates for the Shares constituting the Units and the
Agent's Warrants will be in such authorized denominations and registered in such
names as the Placement Agent may request on or before the second full business
day prior to the date of each Closing (each, a "Closing Date"), and will be made
available to the Placement Agent for checking and packaging at the Placement
Agent's office at least one full business day prior thereto.
(d) If Subscription Agreements for the Minimum Amount have not been
received and accepted by the Company by the Termination Date or if such
Subscription Agreements have been received and accepted by the Company by the
Minimum Amount Closing Date but all funds for the Minimum Amount have not been
collected by the Escrow Agent by such date, the Offering will be terminated, no
Units or additional Units will be sold, and the Escrow Agent will, at the
request of the Placement Agent, cause all monies received from subscribers for
the Units to be promptly returned to such subscribers without interest, penalty,
expense or deduction.
5. Further Covenants. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the
Company shall not, at any time prior to the Final Closing, take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be complete and correct on and as of each Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of each such date.
(b) If, at any time prior to the Final Closing, any event shall occur
which does or may materially affect the Company or as a result of which it might
become necessary to amend or supplement the Memorandum so that the
representations and warranties herein remain true in all material respects, or
in case it shall, in the opinion of counsel to the Placement Agent, be necessary
to amend or supplement the Memorandum to comply with Regulation D or any other
applicable securities laws or regulations, the Company will promptly notify the
Placement Agent and shall, at its sole cost, prepare and furnish to the
Placement Agent copies of appropriate amendments and/or supplements in such
quantities as the Placement Agent may reasonably request. The Company will not
at any time, whether before or after the Final Closing, prepare or use any
amendment or supplement to the Memorandum of which the Placement Agent will not
previously have been advised and furnished with a copy, or to which the
Placement Agent or its counsel will have reasonably objected in writing or
orally (confirmed in writing within 24 hours), or which is not in compliance in
all material respects with the Act, the regulations and other
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<PAGE>
applicable securities laws. As soon as the Company is advised thereof, the
Company will advise the Placement Agent and its counsel, and confirm the advice
in writing, of any order preventing or suspending the use of the Memorandum, or
the suspension of the qualification or registration of the Shares for offering
or the suspension of any exemption for such qualification or registration of the
Shares for offering in any jurisdiction, or of the institution or threatened
institution of any proceedings for any of such purposes, and the Company will
use its reasonable best efforts to prevent the issuance of any such order and,
if issued, to obtain as soon as reasonably possible the lifting thereof.
(c) The Company shall comply in all material respects with the Act, the
regulations, the 1934 Act and the rules and regulations thereunder, all
applicable state securities laws and the rules and regulations thereunder in the
states in which the Placement Agent's Blue Sky counsel has advised the Placement
Agent that the Units are qualified or registered for sale or exempt from such
qualification or registration, so as to permit the continuance of the sales of
the Units, and will file with the SEC, and shall promptly thereafter forward to
the Placement Agent, any and all reports on Form D as are required.
(d) The Company shall use its reasonable best efforts to qualify the Units
for sale under the securities laws of such jurisdictions as may be mutually
agreed to by the Company and the Placement Agent, and the Company will make such
applications and furnish information as may be required for such purposes,
provided that the Company will not be required to qualify as a foreign
corporation in any jurisdiction or to subject itself to general service of
process in any jurisdiction (with the exception of the State of New York and
United States Federal courts sitting in the City of New York). The Company will,
from time to time, prepare and file such statements and reports as are or may be
required to continue such qualifications in effect for so long a period as the
Placement Agent may reasonably request.
(e) The Company shall place a legend on the certificates representing the
Shares, and the Agent's Warrants and the Agent's Shares stating that the
securities evidenced thereby have not been registered under the Act or
applicable state securities laws, setting forth or referring to the applicable
restrictions on transferability and sale of such securities under the Act and
applicable state laws.
(f) The Company shall apply the net proceeds from the sale of the Units in
the manner described under "Risk Factors - Discretionary Use of Proceeds" and
"Use of Proceeds" headings in the Memorandum. Except as specifically set forth
in the Memorandum, the net proceeds of the Offering shall not be used to repay
indebtedness to officers, directors or stockholders of the Company without the
prior written consent of the Placement Agent, except for the reimbursement for
reasonable and necessary expenses which are related to Company business or which
are incurred in connection with attendance at board, committee or shareholder
meetings.
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<PAGE>
(g) During the Offering Period, the Company shall make available for
review by prospective purchasers of the Units during normal business hours at
the Company's offices, upon their request, copies of the Company Agreements to
the extent that such disclosure shall not violate any obligation on the part of
the Company to maintain the confidentiality thereof and shall afford each
prospective purchaser of Units the opportunity to ask questions of and receive
answers from, an officer of the Company concerning the terms and conditions of,
the Offering and the opportunity to obtain such other additional information
necessary to verify the accuracy of the Memorandum and the Current Reports to
the extent it possesses such information or can acquire it without unreasonable
expense.
(h) In connection with the Placement Agent's due diligence investigation,
the Company shall cooperate with the Placement Agent and the Placement Agent's
counsel by making available to the Placement Agent's representatives such
information as may be appropriate in making a reasonable investigation of the
Company and its affairs. The Company shall provide, at its expense, background
checks, credit or similar reports on such key management persons as the
Placement Agent shall reasonably request. These expenses will not exceed $5,000.
Prior to the First Closing, the Company shall make available to such credit
reporting firm such materials relating to the Company, and shall provide such
firm with access to such employees, as shall be reasonably requested by the
Placement Agent.
(i) [Intentionally Omitted].
(j) The Company shall pay all reasonable expenses incurred in connection
with the preparation and printing of all necessary offering documents and
instruments related to the Offering and the issuance of the Units, the Agent's
Warrants, the Agent's Shares and any warrants issued by the Company to the
Placement Agent pursuant to the consulting agreement referred to in Section 3(h)
and will also pay the Company's own expenses for accounting fees, legal fees,
and other costs involved with the Offering. The Company will provide at its own
expense such quantities of the Memorandum and other documents and instruments
relating to the Offering as the Placement Agent may reasonably request. In
addition, the Company will pay all reasonable filing fees, costs and reasonable
legal fees for Blue Sky services and related filings and expenses of counsel
with respect to Blue Sky qualifications. The Blue Sky filings shall be prepared
by the Placement Agent's Blue Sky counsel and all Blue Sky filing fees shall be
paid by the Company prior to any filing. All other fees and expenses of Blue Sky
counsel shall be payable at each Closing.
(k) Until the earlier of the Termination Date and the Final Closing,
neither the Company nor any person or entity acting on its behalf will negotiate
with any other placement agent or underwriter with respect to a private or
public offering of the Company's or any subsidiary's debt or equity securities.
Neither the Company nor anyone acting on its behalf will, until the earlier of
the Termination Date and the Final Closing, without the prior written consent of
the Placement Agent, offer for sale to, or solicit offers to, subscribe for
Units or other
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<PAGE>
securities of the Company from, or otherwise approach or negotiate in respect
thereof with, any other person.
(l) Current Company management, as described in the Memorandum, will
retain their positions through the Final Closing and the Company will not modify
the employment agreements between each member of management and the Company
prior the earlier of the Termination Date and the Final Closing.
(m) At all times from and after the date of the Memorandum and until the
earlier of the Termination Date and the Final Closing, the Company shall own all
right, title and interest in all Intangibles, as described in the Memorandum or
Current Reports. Prior to earlier of the Termination Date and the Final Closing
and except as otherwise described in the Memorandum of the Current Reports, the
Company will not incur any material indebtedness or dispose of any material
assets or make any material acquisition or change in its business or operations,
except with the Placement Agent's knowledge or consent.
(n) For a period of three (3) years after the Final Closing, the Company
shall file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act, and reports on Form 6-K
for each of the first three quarters of its fiscal year, and promptly shall
furnish copies of the same to the Placement Agent within five (5) days of the
filing thereof.
(o) The Company shall file five (5) copies of a Notice of Sales of
Securities on Form D with the SEC no later than 15 days after the first sale of
the Units. The Company shall file promptly such amendments to such Notices on
Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any state of jurisdiction in which offers and
sales are made. The Company shall furnish the Placement Agent with copies of all
filings.
(p) The Company shall not, during the period commencing on the date hereof
and ending on the earlier of the Termination Date and the Final Closing, issue
any press release or other public communication, or hold any press conference
with respect to the Company, its financial condition, results of operations,
business, properties, assets or liabilities, or the Offering, without the prior
consent of the Placement Agent, which consent shall not be unreasonably withheld
or delayed, subject to the Company's obligation to comply with applicable
securities laws.
(q) The Company shall continue to maintain "key man" life insurance on
Joseph J.H. Bisschops in an amount of $2,000,000 and on Aldo Labiad in an amount
of $1,000,000 as set forth under the caption "Risk Factors" in the Memorandum.
(r) The Placement Agent shall have the right to have one board observer
for a two-year period following the Final Closing. The Placement Agent's board
observer shall initially be
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<PAGE>
Michael Doherty. The Company will reimburse the Placement Agent for the
reasonable expenses related to the attendance of that observer at board
meetings.
6. Conditions to Placement Agent's Obligations. The obligations of the Placement
Agent hereunder are subject to the fulfillment, at or before each Closing, of
the following additional conditions:
(a) Each of the representations and warranties of the Company shall be
true and correct in all material respects when made on the date hereof and on
and as of each Closing Date as though made on and as of each Closing Date and
there shall have been no material adverse changes in the financial condition,
business or prospects of the Company.
(b) The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions required to be performed, and
complied with by it under the Transaction Documents at or before each Closing.
(c) No order suspending the use of the Memorandum or enjoining the
offering or sale of the Units shall have been issued, and no proceedings for
that purpose or a similar purpose shall have been initiated or pending, or, to
the best of the Company's knowledge, are contemplated or threatened nor has any
order been issued halting the trading of the Shares on the Nasdaq National
Market.
(d) Immediately prior to the consummation of the Minimum Amount Closing,
the Company will have the capitalization set forth in the Memorandum.
(e) The Placement Agent shall have received certificates of the Chief
Executive Officer and Chief Financial Officer of the Company, dated as of each
Closing Date, certifying in their capacity as officers of the Company, in such
detail as the Placement Agent may reasonably request, as to the fulfillment of
the conditions set forth in subparagraphs (a), (b), (c) and (d) above.
(f) The Company shall have delivered to the Placement Agent certified
resolutions of the Company's Board of Directors approving this Agreement and the
other Transaction Documents, and the transactions and agreements contemplated by
this Agreement and the other Transaction Documents.
(g) At each Closing, (i) the independent auditors for the Company shall
have provided a letter confirming such matters as the Placement Agent may
reasonably request; and (ii) the Chief Executive Officer and the Chief Financial
Officer of the Company shall have provided a certificate to the Placement Agent
confirming the net worth of the Company and confirming that there have been no
material and adverse changes in the condition (financial or otherwise) or
prospects of the Company from the date of the financial statements included in
the
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<PAGE>
Memorandum or the Current Reports other than as set forth or contemplated in the
Memorandum.
(h) At each Closing, the Company shall have (i) delivered to the Placement
Agent the Placement Agent's Fee and the Expense Allowance as set forth in
Sections 3(d) and 3(e) hereof, (ii) reimbursed the Placement Agent for the fees
and disbursements of the Placement Agent's counsel and Blue Sky counsel, (iii)
executed and delivered to the Placement Agent the Agent's Warrant Agreement
covering the Agent's Warrants and certificates representing the Agent's Warrants
in an amount proportional to the Units sold and (iii) if applicable, executed
and delivered to the Placement Agent the warrants contemplated by Section 3(h).
(i) On or prior to the Minimum Amount Closing, each of the Company's
officers and directors and Joseph J.H. Bisschops and Aldo Labiad shall have
agreed in writing not to sell, transfer or otherwise dispose of any of the
Company's securities beneficially owned by them or issuable to them pursuant to
the exercise of options, warrants or conversion of other securities without the
Placement Agent's written consent, which consent shall not be unreasonably
withheld, for a period of 6 months after the Minimum Amount Closing, other than
pursuant to bona fide gifts or other transfers without consideration or by
operation of law. The Placement Agent may require that such permitted transfers
be made subject to a voting agreement pursuant to which the transferring
stockholder retains the right to vote transferred shares for up to two (2) years
from the Minimum Amount Closing.
(j) There shall have been delivered to the Placement Agent a signed
opinion of counsel to the Company (the "Company Counsel"), dated as of each
Closing Date, in form and substance satisfactory to counsel to the Placement
Agent (including a 10b-5 opinion in customary form).
(k) All proceedings taken at or prior to each Closing in connection with
the authorization, issuance and sale of the Units, the Agent's Warrants and
Agent's Shares upon exercise of the Agent's Warrants will be reasonably
satisfactory in form and substance to the Placement Agent and its counsel, and
such counsel shall have been furnished with all such documents and certificates
as they may reasonably request upon reasonable prior notice in connection with
the transactions contemplated hereby.
7. Indemnification. (a) The Company will (i) indemnify and hold harmless the
Placement Agent and its respective officers, directors, employees, agents and
each person, if any, who controls the Placement Agent within the meaning of the
Act (each, an "Indemnitee") against any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), joint or several (which will, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees, including appeals), to which
any Indemnitee may become subject, under the Act or otherwise, in connection
with the Offering; and (ii) reimburse each Indemnitee for any reasonable legal
or other expenses incurred in connection with investigating or defending against
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<PAGE>
any such loss, claim, damage, liability, action, proceeding or investigation;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, damage or liability results from (A) an untrue
statement or alleged untrue statement of a material fact made in the Memorandum
or an omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent or any such controlling persons specifically for
use in the preparation thereof, or (B) any violations by the Placement Agent of
the Act or state securities laws which does not result from a violation thereof
by the Company or any of its affiliates. In addition to the foregoing agreement
to indemnify and reimburse, the Company will indemnify and hold harmless each
Indemnitee against any and all losses, claims, damages, liabilities or expenses
whatsoever (or actions or proceedings or investigations in respect thereof),
joint or several (which shall for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees, including appeals) to which any Indemnitee may
become subject insofar as such costs, expenses, losses, claims, damages or
liabilities arise out of or are based upon the claim of any person or entity
that he or it is entitled to broker's or finder's fees from any Indemnitee in
connection with the Offering. The foregoing indemnity agreements will be in
addition to any liability which the Company may otherwise have.
(b) The Placement Agent will (i) indemnify and hold harmless the Company,
its officers, directors, employees, agents and each person, if any, who controls
the Company within the meaning of the Act against any and all losses, claims,
damages or liabilities or expenses whatsoever (or actions, proceedings or
investigations in respect thereof) to which the Company or any such person may
become subject under the Act or otherwise insofar as such losses, claims,
damages or liabilities are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading and (ii) reimburse the Company or any such person for any legal
or other expenses incurred in connection with investigating or defending against
any such loss, claim, damage, liability or action, proceeding or investigation
to which such indemnity obligation applies; provided, however, that the
Placement Agent's foregoing indemnity shall only be applicable in any such case
to the extent that any such claim, damage or liability results from (A) an
untrue statement or alleged untrue statement of a material fact made in the
Memorandum or an omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in reliance upon and in conformity with written information furnished
to the Company by the Placement Agent or any such controlling persons
specifically for use in the preparation thereof, or (B) any violation by the
Placement Agent of the Act or state securities laws which does not result from a
violation thereof by the Company or any of its affiliates. The foregoing
indemnity agreements will be in addition to any liability which the Placement
Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, claim, proceeding or investigation
("Action"), such
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indemnified party, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, will notify the indemnifying party of
the commencement thereof, but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party under this Section 7 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, assume the defense thereof subject to the provisions herein
stated, with counsel reasonably satisfactory to such indemnified party. The
indemnified party will have the right to employ separate counsel in any such
Action and to participate in the defense thereof, but the fees and expenses of
such counsel will not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the Action with counsel reasonably
satisfactory to the indemnified party, provided, however, that if the
indemnified party shall be requested by the indemnifying party to participate in
the defense thereof or shall have concluded in good faith and specifically
notified the indemnifying party either that there may be specific defenses
available to it which are different from or additional to those available to the
indemnifying party or that such Action involves or could have a material adverse
effect upon it with respect to matters beyond the scope of the indemnity
agreements contained in this Agreement, then the counsel representing it, to the
extent made necessary by such defenses, shall have the right to direct such
defenses of such Action on its behalf and in such case the fees and expenses of
such counsel in connection with any such participation or defenses shall be paid
by the indemnifying party (it being acknowledged that in connection with any
such action, the indemnifying party shall not be liable for the expenses of more
than one separate counsel). No settlement of any Action against an indemnified
party will be made without the consent of the indemnifying party and the
indemnified party, which consent shall not be unreasonably withheld or delayed
in light of all factors of importance to such party and no indemnifying party
shall be liable to indemnify any person for any settlement of any such claim
effected without such indemnifying party's consent.
8. Contribution. To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 7 hereof
and it is finally determined, by a judgment, order or decree not subject to
further appeal, that such claims for indemnification may not be enforced, even
though this Agreement expressly provides for indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
1934 Act or otherwise, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, on the one hand, and the Placement Agent, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Placement Agent, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the Offering (before deducting expenses but after deducting total
commissions and fees received by the Placement Agent) received by the Company
bear to the total commissions and fees received by the Placement Agent. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission or alleged omission will be determined by,
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among other things, whether such statement, alleged statement, omission or
alleged omission relates to information supplied by the Company or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Placement Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Placement Agent for contribution were determined by pro rata
allocation of the aggregate losses, liabilities, claims, damages and expenses or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 8. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls the Placement Agent within the meaning of the Act will have the same
rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of the Act will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 8. Anything in this Section 8 to the contrary notwithstanding, no party
will be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 8 is intended to
supersede, to the extent permitted by law, any right to contribution under the
Act, the 1934 Act or otherwise available.
9. Termination. (a) The Offering may be terminated by the Placement Agent at any
time prior to the expiration of the Offering Period as contemplated in Section
1(b) hereof ("Expiration Date") in the event that (i) any of the representations
or warranties of the Company contained herein shall prove to have been false or
misleading in any material respect when made or deemed made, (ii) the Company
shall have failed to perform in any material respect any of its obligations
hereunder, including covenants and conditions to each Closing, or shall in any
material respect violate applicable securities laws, or (iii) there shall occur
any event which could materially and adversely affect the Transactions
contemplated hereby or the other Transaction Documents or the ability of the
parties to perform thereunder. If the Offering is not completed for the reasons
set forth in Section 9(a)(i)-(iii) above, (A) the Company will reimburse the
Placement Agent for any and all reasonable, accountable out-of-pocket expenses
incurred by the Placement Agent with respect to the Offering, (B) the Placement
Agent shall be entitled to retain (1) all Placement Agent's Fees earned with
respect to Units issued at Closings prior to such termination and all amounts
paid in respect of the Expense Allowance, plus any non-refundable amounts paid
to the Placement Agent's counsel for Blue Sky counsel fees and expenses and (2)
the Agent's Warrants issued at any prior Closings. The Company shall owe no
other amounts whatsoever except as may be due under any indemnity or
contribution obligation provided herein or any other Transaction Document, at
law or otherwise.
(b) The Offering may be terminated by the Company at any time prior to the
Expiration Date in the event that (i) the Placement Agent shall have failed to
perform in any material respect any of its obligations hereunder or shall in any
material respect violate applicable securities laws or (ii) there shall occur
any event described in Section 9(a)(iii) above. If the Offering is not completed
for the reasons set forth in Section 9(b)(i)-(ii) above, (A) the
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<PAGE>
Company will reimburse the Placement Agent for any and all reasonable,
accountable out-of-pocket expenses incurred by the Placement Agent with respect
to the Offering, (B) the Placement Agent shall be entitled to retain (1) all
Placement Agent's Fees earned with respect to Units issued at Closings prior to
such termination and all amounts paid in respect of the Expense Allowance, plus
any non-refundable amounts paid to the Placement Agent's counsel for Blue Sky
counsel fees and expenses and (2) the Agent's Warrants issued at any prior
Closings. The Company shall owe no other amounts whatsoever except as may be due
under any indemnity or contribution obligation provided herein or any other
Transaction Document, at law or otherwise. In addition to the foregoing, if the
Offering is not completed because the Company prevents its completion due to a
change in the market stock price of the Ordinary Shares, the Placement Agent
shall have a right of first refusal to act as the placement agent for any
offering proposed by the Company during the 90-day period following the date the
Offering was prevented from completion. The Company will provide the Placement
Agent with written notice of any proposed offering and the Placement Agent will
exercise its right of first refusal within 10 days of such notification.
(c) Upon any such termination, the Placement Agent will request the Escrow
Agent to cause all monies received in respect of subscriptions for Units not
accepted by the Company to be promptly returned to such subscribers without
interest, penalty, expense or deduction.
10. Survival. (a) The obligations of the parties to pay any costs and expenses
hereunder and to provide indemnification and contribution as provided herein
shall survive any termination hereunder.
(b) The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Placement Agent set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of, and regardless of any access to
information by, the Company or the Placement Agent, or any of their officers or
directors or any controlling person thereof, and will survive the offer and sale
of the Units.
11. Notices. All communications hereunder will be in writing and, except as
otherwise expressly provided herein or after notice by one party to the other of
a change of address, if sent to the Placement Agent, will be mailed, delivered
or telefaxed and confirmed to Spencer Trask Securities Incorporated, 535 Madison
Avenue, 18th Floor, New York, New York 10022, Attn: Mr. William P. Diouguardi,
telefax no. (212) 751-3362; with a copy to Piper & Marbury L.L.P., 1251 Avenue
of the Americas, New York, NY 10020, Attn: Paul J, Pollock, Esq., telefax no.
(212) 835-6001; and if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to A.C.L.N. Limited, Reyndersstraat 30, 2000 Antwerp,
Belgium, Attn: Mr. Joseph J.H. Bisschops, telefax no. from the U.S.:
011-323-658-4146/322-542-4585; with a copy to Brock Silverstein LLC, 800 Third
Avenue, 21st Floor, New York, New York 10022, Attn: Robert Steven Brown, Esq.,
telefax no. (212) 371-5500; or at such other address or telefax number as any
party may from time to time specify to the others.
-20-
<PAGE>
12. Parties in Interest. This Agreement is made solely for the benefit of the
Placement Agent, the Company, any person controlling either of them, and their
respective executors, administrators, successors and assigns; and no other
person will acquire or have any rights under or by virtue of this Agreement. The
term "successors and assigns" will not include any purchaser, as such purchaser,
of the Units.
13. APPLICABLE LAW, COSTS, ETC. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW). THE COMPANY AND THE PLACEMENT
AGENT HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE OR
UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT
CONTEMPLATED HEREBY, AND THE COMPANY AND THE PLACEMENT AGENT HEREBY IRREVOCABLY
AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE COMPANY AND THE
PLACEMENT AGENT FURTHER WAIVE ANY OBJECTION TO VENUE IN SUCH STATE AND ANY
OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF INCONVENIENT
FORUM. THE COMPANY AND THE PLACEMENT AGENT FURTHER AGREE THAT ANY ACTION OR
PROCEEDING BROUGHT AGAINST ONE ANOTHER SHALL BE BROUGHT ONLY IN NEW YORK STATE
OR UNITED STATES FEDERAL COURTS SITTING IN NEW YORK COUNTY. SERVICE OF PROCESS
MAY BE MADE UPON THE COMPANY OR THE PLACEMENT AGENT BY MAILING A COPY THEREOF TO
IT, BY CERTIFIED OR REGISTERED MAIL, AT ITS ADDRESS TO BE USED FOR THE GIVING OF
NOTICES UNDER THIS AGREEMENT. THE COMPANY AND THE PLACEMENT AGENT EACH AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY. THE PLACEMENT AGENT OR THE COMPANY, AS THE CASE MAY BE,
SHALL BE ENTITLED TO REASONABLE COSTS AND REASONABLE ATTORNEY'S FEES IN THE
EVENT IT PREVAILS IN ANY CLAIMS, ACTIONS, AWARDS OR JUDGMENT UNDER THIS
AGREEMENT.
14. Miscellaneous. No provision of this Agreement may be changed or terminated
except by a writing signed by the party or parties to be charged therewith.
Unless expressly so provided, no party to this Agreement will be liable for the
performance of any other party's obligations hereunder. Any party hereto may
waive compliance by the other with any of the terms, provisions and conditions
set forth herein; provided, however that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver shall
be deemed to constitute or imply waiver of any other term, provision or
condition of this Agreement This Agreement contains the entire agreement between
the parties hereto and is
-21-
<PAGE>
intended to supersede any and all prior agreements between the parties relating
to the same subject matter. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which shall constitute a single
agreement.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the Company and the Placement Agent in accordance with its
terms.
Very truly yours,
A.C.L.N. LIMITED
By: /s/ Christian L. Payne
----------------------------------
Christian L. Payne
Vice-President Finance
Accepted and agreed to this
24th day of September, 1999.
SPENCER TRASK SECURITIES, INCORPORATED
By: /s/ William P. Dioguardi
--------------------------------
William P. Dioguardi
President
-22-
Exhibit 4.5
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
THAT THE TRANSFER IS EXEMPT FROM REGISTRATION UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
No. W-
61,214 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Spencer Trask Securities, Inc.
("Spencer Trask") is the registered holder of 61,214 Warrants to purchase at any
time after the Final Closing until 5:30 p.m. New York time on such date five (5)
years after the Final Closing (the "Expiration Date"), one fully paid and
non-assessable Ordinary Share of the Company, par value CYP 0.01 per share (the
"Ordinary Shares"), of the Company at an exercise price equal to 150% of the
offering price of the Ordinary Shares in the Offering, subject to adjustment in
certain events (the "Exercise Price"), upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, or by surrender of this Warrant Certificate in lieu of cash payment,
but subject to the conditions set forth herein and in the Warrant Agreement,
dated as of September __, 1999 between the Company and Spencer Trask (the
"Warrant Agreement"). Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Warrant Agreement. Payment of the Exercise
Price shall be made by certified or official bank check in New York Clearing
House finds payable to the order of the Company or by any other method permitted
by the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in, and made a part of,
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company, Spencer Trask and the holders (the words "holders" or "holder" meaning
the registered holder or registered holders) of the Warrants.
<PAGE>
Upon due presentment for registration of transfer of this Warrant
Certificate in accordance with the Warrant Agreement at an office or agency of
the Company, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer or as provided in the Warrant Agreement.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of September 24, 1999
A.C.L.N. LIMITED
By: /s/ [ILLEGIBLE]
-------------------
Name: [ILLEGIBLE]
Title: Chairman
Attest:
/s/ Christian L. Payne [SEAL]
- ------------------------- A.C.L.N. Limited
Name: Christian L. Payne LIMASSOL o CYPRUS
Title: VP - Finance
<PAGE>
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY,
THAT THE TRANSFER IS EXEMPT FROM REGISTRATION UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
No. W-
61,214 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Spencer Trask Securities, Inc.
("Spencer Trask") is the registered holder of 61,214 Warrants to purchase at any
time after the Final Closing until 5:30 p.m. New York time on such date five (5)
years after the Final Closing (the "Expiration Date"), one filly paid and
non-assessable Ordinary Share of the Company, par value GYP 0.01 per share (the
"Ordinary Shares"), of the Company at an exercise price equal the offering price
of the Ordinary Shares in the Offering, subject to adjustment in certain events
(the "Exercise Price"), upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, or by surrender of
this Warrant Certificate in lieu of' cash payment, but subject to the conditions
set forth herein and in the Warrant Agreement, dated as of September __, 1999
between the Company and Spencer Trask (the "Warrant Agreement"). Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Warrant Agreement. Payment of the Exercise Price shall be made by certified
or official bank check in New York Clearing House finds payable to the order of
the Company or by any other method permitted by the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in, and made a part of,
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company, Spencer Trask and the holders (the words "holders" or "holder" meaning
the registered holder or registered holders) of the Warrants.
<PAGE>
Upon due presentment for registration of transfer of this Warrant
Certificate in accordance with the Warrant Agreement at an office or agency of
the Company, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection wit such
transfer or as provided in the Warrant Agreement.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexereised Warrants.
The Company may deem and treat the holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of September 24, 1999
A.C.L.N. LIMITED
By: /s/ [ILLEGIBLE]
-------------------
Name: [ILLEGIBLE]
Title: Chairman
Attest:
/s/ Christian L. Payne [SEAL]
- ------------------------- A.C.L.N. Limited
Name: Christian L. Payne LIMASSOL o CYPRUS
Title: VP - Finance
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form F-3 of A.C.L.N. Limited (the "Company"), dated November 18,
1999, of our reports, dated December 31, 1997 and December 31, 1998 relating to
the consolidated financial statements of the Company, which reports are included
in the Company's Annual Reports on Form 20-F, filed on July 29, 1998 and June
18, 1999, respectively, and to the reference in the Registration Statement to
our firm under the heading "Experts."
/s/ BDO International
----------------------------
BDO International
