As filed with the Securities and Exchange Commission on July 29, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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INTELECT COMMUNICATIONS SYSTEMS LIMITED
(Exact name of registrant as specified in its charter)
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BERMUDA N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
REID HOUSE
31 CHURCH STREET
HAMILTON, BERMUDA HM12
(441) 295-8639
(Address, including zip code, and
telephone number, including area code,
of registrant's principal
executive offices)
---------------------------
PETER G. LEIGHTON
PRESIDENT
INTELECT COMMUNICATIONS
SYSTEMS LIMITED
REID HOUSE
31 CHURCH STREET
HAMILTON, BERMUDA HM12
(441) 295-8639
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Copy to:
Philip P. Rossetti, Esq.
HALE AND DORR
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
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Approximate date of commencement of proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
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>
====================================================================================================================================
Title of each Class of Amount to Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Securities to be Registered be Registered Price Per Share(1) Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Shares, $0.01 par
value per share 2,057,401 shares $7.875 $16,202,032.88 $5,587
====================================================================================================================================
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) and based upon the average of high
and low prices on the Nasdaq National Market on July 26, 1996.
</TABLE>
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 COMMISSION, ACTING PURSUANT TO SECTION 8(A), SHALL
DETERMINE.
<PAGE>
SUBJECT TO COMPLETION DATED JULY 29, 1996
2,057,401 Shares
INTELECT COMMUNICATIONS SYSTEMS LIMITED
Common Shares
-----------
The common shares, par value US $0.01 per share (the "Common Shares"),
of Intelect Communications Systems Limited ("Intelect Communications Systems
Limited" or the "Company") covered by this Prospectus are issued and outstanding
shares, or shares issuable upon conversion of debentures and warrants, which may
be offered and sold, from time to time, for the account of certain shareholders
of the Company (the "Selling Shareholders"). See "Selling Shareholders." The
Common Shares covered by this Prospectus were issued to the Selling Shareholders
in connection with the acquisition by the Company of Mosaic Information
Technologies Inc. on March 29, 1996 and in connection with certain financings.
All of the shares offered hereunder are to be sold by the Selling Shareholders.
The Company will not receive any of the proceeds from the sale of the shares by
the Selling Shareholders.
The Selling Shareholders may from time to time sell the shares covered
by this Prospectus on the Nasdaq National Market in ordinary brokerage
transactions, in negotiated transactions, or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. See "Plan of
Distribution." The Common Shares are traded on the Nasdaq National Market under
the symbol ICOMF.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is _________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Common Shares of the Company are traded on the Nasdaq
National Market. Reports and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Shares offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, as certain items are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the Common Shares offered hereby, reference is made to such
Registration Statement and the exhibits and schedules thereto, which may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the
Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1995 and the Company's Transition Report on
Form 10-K for the transition period from November 1, 1995 to
December 31, 1995;
(2) The proxy statement for the Company's Annual Meeting of
Shareholders held on June 26, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996; and
(4) The Company's Current Reports on Form 8-K dated November 10,
1995, February 20, 1996 and April 12, 1996 and Amendments to
such Current Reports on Form 8-K/A dated December 4, 1995,
April 12, 1996 and June 3, 1996, respectively.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Common Shares
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the Secretary of the Company, Reid House, 31 Church Street,
Hamilton, Bermuda HM12, telephone (441) 295-8639. Statements in documents
incorporated by reference shall be deemed modified by statements herein.
Statements so modified shall constitute part of this Prospectus only as so
modified.
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<PAGE>
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES LAW
The Company conducts its business operations through direct and
indirect subsidiaries. The parent company is a Bermuda company and holds its
assets, including the assets of such subsidiaries, outside the United States. A
majority of the Company's directors and officers are not residents of the United
States. Certain of the Company's assets and most of the assets of its directors
and officers are located outside the United States. As a result, it may be
difficult for investors in the Common Shares to (i) effect service of process
within the United States upon the Company or such persons, or (ii) realize in
the United States upon the judgments of courts of the United States against the
Company or such persons predicated upon the civil liability provisions of the
United States federal securities laws. The Company has been advised by its
Bermuda counsel, Appleby, Spurling & Kempe, that there is doubt (i) whether a
judgment of a United States court predicated solely upon the civil liability
provisions of the United States federal securities laws would be enforceable in
Bermuda against the Company or such persons, and (ii) whether an action could be
brought in Bermuda against the Company or such persons in the first instance on
the basis of a liability predicated solely upon the provisions of the United
States federal securities laws.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
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<PAGE>
THE COMPANY
Intelect Communications Systems Limited ("Intelect Communications
Systems Limited" or the "Company") was incorporated under the laws of Bermuda in
April 1980 and operated under the name of Coastal International, Ltd. until
September 1985 and as Challenger International, Ltd. until December 1995. The
Company has several operating subsidiaries (including Intelect, Inc.
("Intelect") based in Richardson, Texas and Intelect Europe Limited ("Intelect
Europe") based in Derbyshire, England). Unless the context otherwise indicates,
the Company refers to Intelect Communications Systems Limited and its
subsidiaries.
During the year ended October 31, 1995 the Company acquired Intelect
and Intelect Europe and disposed of its previous principal operating subsidiary,
Savage Corporation ("Savage"). During the quarter ended March 31, 1996, the
Company acquired DNA Enterprises, Inc. ("DNA") and Mosaic Information
Technologies Inc. ("Mosaic"). The Company's operations are now focused in the
field of providing multimedia voice, data and video products and systems for
communications-critical applications.
The Company's executive offices are located at Reid House, 31 Church
Street, Hamilton, Bermuda HM12 (telephone: (441) 295-8639).
-4-
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Shares by the Selling Shareholders although the Company will receive a total of
$1,734,375 for these shares if Alpine Capital Partners, Inc. ("Alpine") and
Stanhope Capital, Inc. ("Stanhope"), who are selling an aggregate of 125,000
Common Shares, exercise their warrants to acquire such shares at an exercise
price of US $13.875 per share.
SELLING SHAREHOLDERS
The Selling Shareholders were issued the Common Shares covered by this
Prospectus in a series of private placements as summarized below:
Of the 2,057,401 Common Shares being registered: (i) 520,991 Common
Shares were issued by the Company in a private placement to Cerrito Investments
Limited Partnership ("Cerrito") during May, 1996; (ii) 235,258 Common Shares
were issued by the Company in a private placement in connection with its
acquisition of Mosaic Information Technologies Inc. ("Mosaic"); (iii) 66,050
Common Shares were issued to Commonwealth Associates and its employees and
affiliates in April, 1996 as a investment banking fee paid in connection with
the Company's acquisition of Mosaic; (iv) an estimated 808,081 Common Shares
will be issuable to Infinity Investors, Ltd. ("Infinity") and an estimated
202,020 Common Shares will be issuable to Seacrest Capital Limited ("Seacrest"),
each, subject to certain limitations, upon the conversion of certain convertible
debentures issued to Infinity and Seacrest in a private placement; (v) 112,500
Common Shares will be issuable to Alpine and 12,500 Common Shares will be
issuable to Stanhope, each upon the exercise of certain warrants to acquire
Common Shares issued to Alpine and Stanhope in a private placement; and (vi)
100,000 Common Shares were issued to Mr. Anthony Brebner upon his sale to the
Company of certain subordinated debentures of Lakefield Arms Limited, a former
subsidiary of the Company.
In each case, the issuance of Common Shares to the Selling Shareholders
was undertaken pursuant to Section 4(2) of the Securities Act and, in the case
of the issuances to Infinity and Seacrest, under Regulation D promulgated
thereunder.
In connection with the Company's acquisition of Mosaic, the Company
entered into registration rights agreement (the "Mosaic Registration Rights
Agreement") providing, among other things, for the registration by the Company
under the Securities Act of the Company's Common Shares issued to former Mosaic
shareholders in the acquisition. In addition, in connection with the private
placement of convertible debentures to Infinity and Seacrest, the Company
entered into a registration rights agreement (the "Infinity Registration Rights
Agreement") providing, among other things, for the registration of the Common
Shares issuable upon conversion of such debentures.
The following table sets forth the number of Common Shares beneficially
owned by each of the Selling Shareholders as of June 30, 1996, the number of
shares to be offered by each of the Selling Shareholders pursuant to this
Prospectus and the number of shares to be beneficially owned by each of the
Selling Shareholders if all of the shares offered hereby are sold as described
herein. Except as provided below, the Selling Shareholders have not held any
positions or offices with, been employed by, or otherwise had a material
relationship with, the Company or any of its predecessors or affiliates since
July 1, 1993 (other than as shareholders of Mosaic prior to the acquisition of
Mosaic by Intelect Communications Systems Limited on March 29, 1996).
Of the Selling Shareholders, the following were and are employees of
Mosaic: Eric Bolder, Robert Bolder, Robert W. Davis, Matthew Feldman and Nigel
Kilpatrick. Robert Bolder and Matthew Feldman are officers of Mosaic. Of the
Selling Shareholders, the following were employees of Mosaic: Wellner Anderson,
Gerald Brangman, Raymond Carbone and George Eagan. Of the Selling Shareholders,
the following extended credit to Mosaic prior to Mosaic's acquisition by the
Company and certain of the following received Common Shares of the Company in
partial satisfaction of such obligations of Mosaic: Robert Davis, Richard Kalin
and Chaim Sieger.
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<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Common Shares Common Shares
Beneficially Number of Beneficially
Name of Owned Common Shares Owned After
Selling Shareholder as of June 30, 1996 Offered Hereby Offering
------------------- ------------------- -------------- --------
<S> <C> <C> <C>
Alpine Capital Partners, Inc. 112,500 112,500 0
Wellner Anderson 11,185 5,592 5,593
Kimberly Arcoro 3,835 1,918 1,917
Robert Arcoro, Jr. 3,835 1,918 1,917
Maurice Bazin 6,392 2,500 3,892
Andres Bello 1,000(2) 1,000 0
Robert Beuret 2,000(2) 2,000 0
Eric Bolder 15,979 7,990 7,989
Gwendolyn Bolder 6,392 3,196 3,196
Robert Bolder 138,204 44,102 94,102
Gerald Brangman 1,598 799 799
Anthony Brebner 160,000 100,000 60,000
Raymond Carbone 1,598 750 848
Cerrito Investments Limited
Partnership 520,991 520,991 0
James and Mary Clay 2,557 1,000 1,557
Commonwealth Associates 29,200 29,200 0
Chris Cutsogeorge 1,917 959 958
Robert Davis 31,958 15,979 15,979
George and Lisa Eagan 22,571 8,500 14,071
Arnold and Elaine Feldman 6,392 3,196 3,196
Matthew J. Feldman 147,791 48,896 98,895
Spencer G. Feldman 1,598 799 799
Edward H. Gomez 10,546 5,273 5,273
-6-
<PAGE>
Brian Greenstein 5,200(2) 5,200 0
Jane Hong 250(2) 250 0
Infinity Investors, Ltd. (1) 808,081(1) 808,081 0
Maxwell Kahn 1,750(2) 1,750 0
Joseph Kaidanow 11,185 5,592 5,593
Richard S. Kalin 54,967 27,450 27,517
Nigel Kilpatrick 6,392 3,150 3,242
Emanuel Kramer 59,442 29,721 29,721
Michael Lyall 16,000(2) 16,000 0
Andrew Minkow 2,650(2) 2,650 0
Lissette Rosa 500(2) 500 0
Cathy Ross 7,500(2) 7,500 0
Seacrest Capital Limited (1) 202,020(1) 202,020 0
Chaim Sieger 31,958 15,979 15,979
Stanhope Capital, Inc. 12,500 12,500 0
</TABLE>
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(1) The convertible debenture in the principal amount of US $4,000,000 issued
to Infinity and the convertible debenture in the principal amount of US
$1,000,000 issued to Seacrest each provide for conversion of the debentures
into Common Shares on the basis of a floating conversion ratio tied to a
percentage of the market price of the Company's Common Shares. For the
90-day period following the date of each debenture, the two debentures are
convertible into an aggregate of up to 1,010,101 Common Shares. Thereafter,
the number of shares issuable upon conversion of the debentures is
determined by a formula based on the current market price of the Common
Shares, with no maximum number of Common Shares into which the debentures
are convertible. The convertible debentures issued to Infinity and Seacrest
each limit the conversion right of the holder such that in no instance
shall the maximum number of Common Shares into which the holder may convert
their debenture exceed, at any one time, an amount equal to the remainder
of (i) 4.99% of the then issued and outstanding Common Shares of the
Company following such conversion, minus (ii) the number of Common Shares
of the Company held by such holder.
(2) Issued as part of an investment banking fee paid in connection with the
Company's acquisition of Mosaic.
PLAN OF DISTRIBUTION
Common Shares covered hereby may be offered and sold from time to time
by the Selling Shareholders. The Selling Shareholders will act independently of
the Company in making decisions with respect to the timing, manner and size of
each sale. Such sales may be made in the over-the-counter market or otherwise,
at prices related to the then current market price or in negotiated
transactions, including pursuant to an underwritten offering or one or more of
the following methods: (a) purchases by the broker-dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (b)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (c) block trades in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction. The Company has been advised
by the Selling Shareholders that they have not made any arrangements relating to
the distribution of the shares covered by
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<PAGE>
this Prospectus. In effecting sales, broker-dealers engaged by the Selling
Shareholders may arrange for other broker-dealers to participate. Broker-dealers
will receive commissions or discounts from the Selling Shareholders in amounts
to be negotiated immediately prior to the sale. The Mosaic Registration
Agreement provides that the Company will indemnify the Selling Shareholders who
are former Mosaic shareholders against certain liabilities, including
liabilities under the Securities Act. In addition, the Infinity Registration
Rights Agreement provides for similar indemnity obligations of the Company
toward Infinity and Seacrest.
In offering the Common Shares covered hereby, the Selling Shareholders
and any broker-dealers and any other participating broker-dealers who execute
sales for the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Shareholders and the compensation of such broker-dealer
may be deemed to be underwriting discounts and commissions. In addition, any
shares covered by this Prospectus which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this Prospectus. None of the
shares covered by this Prospectus presently qualifies for sale pursuant to Rule
144.
The Company has advised the Selling Shareholders that during such time
as they may be engaged in a distribution of Common Shares included herein they
are required to comply with Rules 10b-6 and 10b-7 under the Exchange Act (as
those Rules are described in more detail below) and, in connection therewith,
that they may not engage in any stabilization activity in connection with
Intelect securities, are required to furnish to each broker-dealer through which
Common Shares included herein may be offered copies of this Prospectus, and may
not bid for or purchase any securities of the Company or attempt to induce any
person to purchase any Intelect securities except as permitted under the
Exchange Act. The Selling Shareholders have agreed to inform the Company when
the distribution of the shares is completed.
Rule 10b-6 under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
This offering will terminate on the earlier of (a) the date on which
the shares are eligible for resale pursuant to Rule 144 under the Securities Act
or (b) the date on which all shares offered hereby have been sold by the Selling
Shareholders.
DESCRIPTION OF CAPITAL STOCK
The authorized share capital of the Company is US $950,000, divided
into 80,000,000 Common Shares of US $0.01 par value each (the "Common Shares")
and 15,000,000 Serial Preferred Shares of US $0.01 par value each (the
"Preferred Shares"). As of June 30, 1996, there were 12,885,537 Common Shares
and no Preferred Shares issued and outstanding.
COMMON SHARES
The holders of Common Shares shall be entitled to rank pari passu in
all respects with each other holder of Common Shares. Any shareholder who is a
holder of Common Shares shall be entitled to one vote for each Common Share held
by such holder. Subject to the payment of preferential amounts to which the
holders of any Preferred Shares which may be issued from time to time may be
entitled, holders of the Common Shares shall be entitled, pro rata to their
holding of Common Shares, to participate in any assets or surplus of the Company
distributable in any liquidation, dissolution or winding-up of the Company.
PREFERRED SHARES
The Preferred Shares may be issued from time to time in one or more
series and in such amount as may be established or designated from time to time
by the Board of Directors in accordance of the Bye-Laws of the Company.
-8-
<PAGE>
The Board of Directors has the authority to establish and designate any unissued
Preferred Shares as a series of such of shares.
VARIATION OF RIGHTS
If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the Company is being
wound up, be varied with the consent in writing of the holders of three-fourths
of the issued and outstanding shares of that class or with the sanction of a
resolution passed by a majority of the votes cast at a separate general meeting
of the holders of the shares of the class in accordance with the relevant
provisions of the Companies Act 1981 of Bermuda. The rights conferred upon the
holders of the shares of any class issued with preferred or other rights shall
not, unless otherwise expressly provided by the terms of issue of the shares of
that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
LIMITATIONS ON OWNERSHIP OF SHARES BY RESIDENTS OF BERMUDA
Under the Exchange Control Act of 1972 of Bermuda, the issue and
transfer of shares of Bermuda companies such as the Company is subject to the
prior general approval of the Bermuda Monetary Authority (the "Authority"). The
Authority has approved the issue and subsequent unrestricted transfer of the
Shares offered by this Prospectus to and between persons and corporations
considered by the Authority to be nonresidents of Bermuda for foreign exchange
purposes. The issue or transfer of Shares of the Company to persons or
corporations considered by the Authority to be residents of Bermuda for foreign
exchange purposes will require the specific approval of the Authority.
LEGAL MATTERS
The validity of the Common Shares offered by the Selling Shareholders
hereby will be passed upon by Appleby, Spurling & Kempe, Hamilton, Bermuda.
EXPERTS
The consolidated financial statements and financial statement schedules
of Intelect Communications Systems Limited as of December 31, 1995 and October
31, 1995 and 1994 and for the two month period ended December 31, 1995 and each
of the years in the three-year period ended October 31, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick, Hamilton, Bermuda, independent chartered
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Intelect, Inc. as of April 24,
1995 and December 31, 1994 and 1993 and for the years ended December 31, 1994
and 1993 and the period from January 1, 1995 to April 24, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, Dallas, Texas, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The financial statements of DNA Enterprises, Inc. as of December 31,
1995 and 1994 and for each of the years in the three-year period ended December
31, 1995, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, Dallas, Texas,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The financial statements of Mosaic Information Technologies Inc. (a
development stage company) as of December 31, 1995, 1994 and 1993 and for each
of the years in the three-year period ended December 31, 1995 and for the period
from January 24, 1992 (date of inception) through December 31, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, New York, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP covering Mosaic Information
Technologies Inc. (a development stage company) financial statements as of
December 31, 1995, 1994 and 1993 and for each of the years in the three-year
period ended December 31, 1995 and for the period from January 24, 1992 (date of
inception) through to December 31, 1995, contains an explanatory paragraph which
states that the Company's recurring losses from operations since inception,
working capital deficiency and net capital deficiency raise substantial doubt
about the entity's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
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<PAGE>
PROSPECTUS
TABLE OF CONTENTS
Page
----
Available Information................................. 2
Incorporation of Certain Documents by Reference....... 2
Enforceability of Civil Liabilities Under
United States Federal Securities Laws............... 3
The Company........................................... 4
Use of Proceeds....................................... 5
Selling Shareholders.................................. 5
Plan of Distribution.................................. 7
Description of Capital Stock.......................... 8
Legal Matters......................................... 9
Experts............................................... 9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Nature of Expense
-----------------
SEC Registration Fee.............................. $ 5,587
Legal (including Blue Sky) and
Accounting Fees and Expenses.................... 15,000*
Miscellaneous..................................... 5,000*
TOTAL $25,587*
--------------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bye-Law 7.2 of the Registrant's Bye-Laws provides for indemnification
by the Registrant of directors and officers, or a person who acts or acted at
the Registrant's request as a director or officer of a body corporate of which
the Registrant is or was a Member or creditor, and his heirs and legal
representatives, against all costs, judgements, fines, taxes, penalties, charges
and expenses (including attorney's fees), including an amount paid to settle an
action or satisfy a judgement, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a director or officer of the Registrant
or such body corporate; provided that the obligation of the Registrant to so
indemnify shall not extend to any liability in respect of any wilful negligence,
wilful default, fraud or dishonesty which may attach to any such person. The
Registrant shall also indemnify any such person in such other circumstances to
the fullest extent as the Companies Act of 1981 of Bermuda as amended from time
(the Act) or applicable law permits or requires. Further, nothing in said
Bye-Law shall limit the right of any person entitled to indemnity to claim
indemnity apart from the provisions of said Bye-Law.
Subject to the Act, the Registrant may purchase and maintain insurance
for the benefit of directors and officers covered by the indemnity provision of
the Bye-Laws.
The Companies Act of 1981 of Bermuda provides that (i) subject to
sub-paragraph (ii) below, a Company may in its bye-laws or in any contract or
arrangement between the Company and any officer, or any person employed by the
Company as auditor, exempt such officer or person from, or indemnify him in
respect of, any loss arising or liability attaching to him by virtue of any rule
of law in respect of any negligence, default, breach of duty or breach of trust
of which the officer or person may be guilty in relation to the Company or any
subsidiary thereof, and (ii) any provision, whether contained in the bye-laws of
a company or in a contract or arrangement between a company and any director or
officer, which purports to indemnify against liability in respect of wilful
negligence, wilful default, fraud or dishonesty of which he may be guilty, shall
be void. Accordingly, if a director or officer should be found guilty of wilful
negligence, wilful default, fraud or dishonesty in relation to the affairs of
the Registrant, he would not be indemnified by the Registrant in such
circumstances.
The Company has a directors and officers liability policy that insures
the Company's directors and officers against certain liabilities.
ITEM 16. EXHIBITS.
See Exhibit Index included immediately preceding the Exhibits to this
Registration Statement, which is incorporated herein by reference.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The Company 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, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (1)(i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the 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.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of any employer benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
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 indemnification provisions described herein, 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. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceedings is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company 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 Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hamilton, Bermuda on the 26th day of July, 1996.
INTELECT COMMUNICATIONS SYSTEMS
LIMITED
By: /s/ Peter G. Leighton
---------------------------------
Peter G. Leighton
President
SIGNATURES AND POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Peter G. Leighton, Rhianon M. Pedro and Philip P. Rossetti and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution in each of them, for him or her and in his or
her name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3 of Intelect Communications Systems Limited, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their or his substitutes or substitute, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 26th day of July, 1996.
SIGNATURE TITLE
--------- -----
/s/ Herman M. Frietsch
- --------------------------------- Director and Executive Chairman
Herman M. Frietsch
/s/ Peter G. Leighton
- --------------------------------- Director and President
Peter G. Leighton (Principal Executive Officer)
/s/ Jeremy T.G. Posner
- --------------------------------- Director
Jeremy T.G. Posner
/s/ Anton von und zu Liechtenstein
- --------------------------------- Director
Anton von und zu Liechtenstein
II-3
<PAGE>
/s/ Wendell M. Hollis
- --------------------------------- Director
Wendell M. Hollis
/s/ Rhianon M. Pedro
- --------------------------------- Chief Financial Officer,
Rhianon M. Pedro Treasurer and Secretary
(Principal Accounting and
Financial Officer)
II-4
<PAGE>
Exhibit Index
-------------
EXHIBIT DESCRIPTION OF EXHIBIT
------- ----------------------
4.1 -- Memorandum of Association
of the Company, as amended
4.2 -- Certificate of Incorporation of the Company,
as amended
4.3 -- Bye-laws of the Company
5.1 -- Opinion of Appleby, Spurling & Kempe
23.1 -- Consent of Appleby, Spurling & Kempe (included
in Exhibit 5.1)
23.2 -- Consent of KPMG Peat Marwick (Hamilton, Bermuda)
23.3 -- Consent of KPMG Peat Marwick LLP (New York, New York)
23.4 -- Consent of KPMG Peat Marwick LLP (Dallas, Texas)
24.1 -- Power of Attorney (appears on Pages II-3 and II-4)
FORM C2
THE COMPANIES (INCORPORATION BY REGISTRATION) ACT,
1970 AMENDED MEMORANDUM OF ASSOCIATION -- SECOND
AMENDMENT 20/9/83
OF
COASTAL INTERNATIONAL, LTD.
(hereinafter referred to as "the Company").
1. The liability of the members of the Company is limited to the amount
(if any) for the time being unpaid on the shares respectively held by
them.
2. We, the undersigned, namely.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
BERMUDIAN NUMBER OF
STATUS SHARES
NAME ADDRESS (Yes/No) NATIONALITY SUBSCRIBED
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nicholas B. Dill Jr. Pembroke Yes British 1
Bermuda
- -------------------------------------------------------------------------------------------------------------------
F. Alexander Cooper Southampton Yes British 1
Bermuda
- -------------------------------------------------------------------------------------------------------------------
Charles T. Collis Devonshire Yes British 1
Bermuda
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
do hereby respectively agree to take such number of shares of the Company as may
be allotted to us respectively by the provisional directors of the Company, not
exceeding the number of shares for which we have respectively subscribed, and to
satisfy such calls as may be made by the provisional directors of the Company in
pursuance of Section 5 of The Companies Act, 1948, in respect of the shares
allotted to us respectively.
3. The Company is to be an exempted Company as defined by the Companies
(Incorporation of Registration) Act, 1970.
4. The Company has power to hold land situate in these Islands not
exceeding in all, including the following parcels: -- Nil
- --------
1 Delete as applicable.
<PAGE>
5. The minimum share capital of the Company shall be US$12,000 divided
into shares of a par value of not less than one cent each, and having a
proposed par value of US$0.01(cent) per share.
6. The objects for which the Company is formed and incorporated are: --
all those objects set out in paragraphs (a) to (za) inclusive of the
First Schedule to the Companies (Incorporation by Registration) Act,
1970
(zb) To purchase from time to time, only after the appointed date
on which The Companies Act, 1981 as amended comes into force
and effect, the Company's shares in accordance with and
subject to The Companies Act, 1981 as amended.
Signed by each subscriber in the presence of at last one witness
attesting the signature thereof:--
/s/ Nicholas B. Dill, Jr. /s/ Debra Smith
- ----------------------------- ----------------------------
/s/ F. Alexander Cooper /s/ Debra Smith
- ----------------------------- ----------------------------
/s/ Charles T. Collis /s/ Debra Smith
- ----------------------------- ----------------------------
- ----------------------------- ----------------------------
- ----------------------------- ----------------------------
(Subscribers) (Witnesses)
SUBSCRIBED this 28th day of April, 1980.
<PAGE>
PERMIT (To be endorsed)
PERMIT NO. 5316
PERMISSION IS HEREBY GIVEN FOR THE FORMATION AND INCORPORATION OF AN
EXEMPTED COMPANY WITH THE MEMORANDUM OF ASSOCIATION ON WHICH THIS
PERMIT IS ENDORSED, AND BY THE NAME THEREIN SPECIFIED.
/s/
---------------------
ADMINISTER OF FINANCE
DATED THIS 1st day of May, 1982.
STAMP DUTY (to be affixed)
Duly stamped in the amount of BD$30.00 being stamp duty on the minimum capital
of the Company of US$12,000 and further duly stamped in the amount of BD$189.00
being stamp duty on the additional authorised capital of the Company of
US$76,000 making a total authorised capital of US$88,000
<PAGE>
FIRST SCHEDULE
TO
THE COMPANIES (INCORPORATION BY
REGISTRATION) ACT 1970
----------------
Powers of an Exempted Company which may be Incorporated
Referentially in its Memorandum
Where so specified in its memorandum, by reference to all or any of the
following paragraphs, an exempted company shall, subject to any provision of
law, have such of the following objects so specified, that is to say:--
(a) to carry on outside these Islands from a principal place of
business in these Islands all or any of the business of ship
owners, ship managers, ship builders and repairers, ship
brokers, ship agents, agents for the sale and purchase of
ships or other craft, aircraft owners, aircraft builders and
repairers, aircraft brokers, chartering agents, freight
contractors, travel agents, lightermen, stevedores,
warehousemen, wharfingers, storekeepers, dock owners,
forwarding agents, ship chandlers and dealers in rope, canvas,
oil and ship stores of all kinds, civil, electrical,
mechanical and sanitary engineers, motor engineers, designers,
constructors and repairers, bill discounters, colliery
proprietors, coal merchants, contractors and exporters, grain
merchants, ice merchants, timber merchants, merchandise
brokers, barterers, importers and exporters of all kinds of
articles, goods, products, metals, minerals, materials,
machinery and merchandise, purveyors, general merchants and
dealers in articles, goods, products, metals, materials,
machinery and merchandise of every kind;
(b) to purchase, charter, sub-charter, hire, build, take in
exchange or otherwise acquire and hold and to operate,
maintain, repair, improve, alter, mortgage, pledge, sell,
exchange, charter, sub-charter, or let
-1-
<PAGE>
out for hire or otherwise dispose of and deal in ships,
submarines, vessels, aircraft, motor and other vehicles and
craft and conveyances of all kinds whether registered or
intended to be registered within or outside these Islands, and
any shares or interest therein, and all materials, articles,
tools, machinery, equipment and appliances connected
therewith;
(c) to carry on outside these Islands from a principal place of
business in these Islands all kinds of promotion business, and
in particular to form, constitute, float, lend money to,
assist and control any companies, associations, businesses or
undertakings whatsoever;
(d) to develop, operate and manage any other undertakings,
manufacturing enterprises or businesses, falling within the
scope of the objects set out in this Schedule, situated
outside these Islands as the company may from time to time
determine;
(e) to carry on outside these Islands from a principal place of
business in these Islands all or any of the businesses of
farmers, livestock keepers, livestock breeders, graziers,
slaughtermen, butchers, tanners and processors of and dealers
in all kinds of live and dead stock, wool, hides, tallow,
grain, vegetables and other produce;
(f) in these Islands and elsewhere to engage in and carry on the
business of scientific research in all its branches including
the acquisition, improvement, discovery and development of
processes, inventions, formulae, patents, trademarks, designs
and the like, and to acquire by purchase or otherwise and own,
sell, lease or otherwise dispose of or deal in the same, and
for the purposes aforesaid or any of them to acquire,
construct, maintain, supervise and operate laboratories and
research centres;
(g) in these Islands and elsewhere to engage in and carry on all
or any of the businesses of designers, manufacturers,
processors and packages of and dealers in goods, chattels,
products, metals, minerals, machinery and merchandise of all
kinds;
Provided that nothing herein contained shall be construed
to authorize the company to engage in
-2-
<PAGE>
retail trade in these Islands, or in any other trade in these
Islands except with another exempted company or exempted
partnership or resident corporation incorporated abroad;
(h) subject as hereinafter provided throughout the world to engage
in inland, overland, coastwise, undersea, ocean, air and land
commerce and generally in the business of shipping, air
carriage and land carriage, including the carriage of animals,
goods, mails and passengers by air and land and by and under
sea:
Provided that no part of any such business shall be
carried on entirely within these Islands;
And provided further that nothing herein contained shall
prevent the principal place of business of the company from
being in these Islands or preclude the registration of any
ships or aircraft in these Islands;
(i) to carry on outside these Islands from a principal place of
business in these Islands all kinds of exploration business,
and in particular to search for, prospect, examine and explore
mines and grounds supposed to contain metals, minerals, ores,
oil or precious stones, and to search for and obtain
information in regard to mines, mining claims, mining
districts and localities;
(j) to purchase, take on lease or otherwise acquire, and to sell,
dispose of and deal with mines, oil wells, mining rights, oil
rights and mineral rights and property situated outside these
Islands containing or supposed to contain metals, minerals,
ores, oil or precious stones of all kinds, and undertakings
situated outside these Islands connected therewith, and
outside these Islands to work, exercise, develop and turn to
account mines, oil wells, mining rights, oil rights, and
mineral rights, and any undertakings connected therewith, and
to win, get, quarry, smelt, calcine, refine, manipulate and
prepare for market and deal in all kinds of metals, minerals,
ores, oil and precious stones;
(k) to purchase articles, goods, chattels, products, metals,
minerals, materials, machinery and merchandise of all kinds,
situated at the time of purchase outside
-3-
<PAGE>
these Islands, and to sell or barter the same to or with any
person, institution or government authority;
Provided that nothing herein contained shall be construed
to authorize the company to enter into the retail trade in
these Islands, or in any other trade in these Islands except
with another exempted company or exempted partnership or
resident corporation incorporated abroad;
(l) to acquire any personal property including commercial
commodities, options and rights of any description whatsoever
situated outside these Islands and to hold as investments, and
to sell, dispose of, mortgage, lease, let and develop the same
as the company may from time to time determine;
(m) to acquire by purchase or otherwise and hold any stocks,
shares, bonds, debenture stock obligations, mortgages or
securities created or issued outside these Islands or of any
other company within these Islands which shall be an exempted
company and any bonds or debenture issued by the Government or
any public authority, and to sell, exchange or vary the same
as the company may from time to time determine;
(n) to lend or advance money --
(i) to persons outside these Islands;
(ii) within these Islands to any other exempted company,
to an exempted partnership or to any resident
corporation incorporated aborad;
(iii) to the Government or any public authority;
and to place money on deposit with any bank licensed under the
Banks Act 1969 or any person for the time being licensed to
solicit and accept deposits from the public under any
provision of law;
(o) to acquire by purchase or otherwise and hold as investment,
any inventions, improvements, processes, patents,
applications, trademarks, trade names, trade secrets, labels,
designs, licenses, brands, formulae and the like and to sell,
exchange, grant licences or vary the same as the company may
from time to time determine;
-4-
<PAGE>
(p) to acquire by purchase or otherwise the goodwill, rights,
property and assets of any person, firm or company engaged in
any business outside these Islands and to hold as an
investment and to sell or otherwise dispose of the same as the
company may from time to time determine;
(q) outside these Islands to acquire, own, lease, hire, use,
build, construct, maintain, alter, enlarge, pull down and
remove or replace any buildings, offices, factories,
laboratories, research centres, warehouses, mills, works,
wharfs, roads, railways, tramways, docks, dry-docks, piers,
jetties, aerodromes, hangars, workshops, sheds, bridges,
sidings, machinery, engines, walls, fences, banks, dams,
sluices, reservoirs or water courses and to clear sites for
the same or to join with any person in doing any of the things
aforesaid or to contribute to or subsidise the same and to
work, manage and control the same or to join with others in so
doing;
(r) to acquire by purchase, lease, bargain, exchange or otherwise
any real property situated outside these Islands to hold as an
investment and to sell, dispose of, mortgage, lease, let the
same as the company may from time to time determine;
(s) to develop and improve any land or other property acquired by
the company;
(t) to manufacture, process, or purchase or otherwise acquire and
use all parts, appliances, raw materials, furniture,
machinery, equipment, fixtures and goods used or intended to
be used for or in connection with any of the businesses of the
company;
(u) to borrow or raise or secure the payment of money in such
manner as the company may think fit;
(v) to give guarantees with respect to the liabilities of third
parties, the fidelity of individuals filling or about to fill
situations of trust or confidence and such other business
guarantees as the company may from time to time determine;
(w) to vest any real or personal property, rights or interests
acquired by or belonging to the company in any person, firm or
company on behalf of or for the
-5-
<PAGE>
benefit of the company, and with or without any declared trust
in favour of the company;
(x) to engage, provide, employ, hire out or act as agent for, the
services of artists, actors, singers, entertainers, authors,
composers, producers, directors, engineers, experts or
specialists of any sort;
(y) to act as trustees for any pension, provident, benevolent or
similar fund established for the benefit of employees (which
expression shall throughout this paragraph include directors,
managing directors and other officers) and ex-employees of the
company and any affiliated or subsidiary company or body
(whether incorporated or not) and the dependants of such
employees and ex-employees and to do all such acts and things
as are requisite or proper for such purposes;
(z) to amalgamate or merger with any other exempted company or any
company incorporated outside of these Islands whether by sale
or purchase (for fully or partly paid up shares or otherwise)
of the undertakings subject to the liabilities of the company
or any such other company as aforesaid, with or without
winding up, or by sale or purchase (for fully or partly paid
up shares or otherwise) of all the shares or stock of the
company or any such other company as aforesaid, or by
partnership, or in any other manner;
(za) to carry out all or any of the objects of the company as
principals or agents or in partnership or conjunction with any
other person, firm, association or company, or by means of any
subsidiary or auxiliary company and in any part of the world;
In this Schedule --
(a) references to a company include a company incorporated
otherwise than under this Act; and
(b) references to an exempted company include an exempted company
incorporated by an Act.
-6-
FORM NO. 3a
BERMUDA
CERTIFICATE OF INCORPORATION
ON CHANGE OF NAME
I hereby certify that
CHALLENGER INTERNATIONAL, LTD.
having by resolution and with the approval of the Registrar of Companies changed
its name, is now registered under the name of
INTELECT COMMUNICATIONS SYSTEMS LIMITED
Given under my hand this 15th day of December 1995.
/s/
for REGISTER OF COMPANIES
<PAGE>
FORM NO. 3a
BERMUDA
CERTIFICATE OF INCORPORATION
ON CHANGE OF NAME
I hereby certify that
COASTAL INTERNATIONAL, LTD.
having by resolution and with the approval of the Registrar of Companies changed
its name, is now registered under the name of
CHALLENGER INTERNATIONAL, LTD.
Given under my hand the 26th day of September 1985.
/s/
for Registrar of Companies
<PAGE>
CERTIFICATE OF INCORPORATION
IN RESPECT OF
COASTAL INTERNATIONAL, LTD.
WHEREAS
1. I, Shelton V. Burgess, Registrar of Companies, have satisfied
myself that the memorandum of association of
COASTAL INTERNATIONAL, LTD.
has been duly endorsed with a permit granted on the 31st day
of March 1980 by the Minister responsible for Finance under
the provisions of section 9 of the Companies (Incorporation by
Registration) Act 1970, and that the said Memorandum has been
duly stamped in accordance with the provisions of the Stamp
Duties Act 1976;
2. The persons who subscribed their names to the said memorandum,
did, on the 1st day of April 1980, (being a day within six
months after the date of the grant of the said permit), duly
file the said Memorandum with me, the said Registrar of
Companies;
3. I, the said Registrar of Companies did, on the 1st day of
April 1980, in accordance with the provisions of section 13 of
the Companies (Incorporation by Registration) Act 1970,
register in the Register maintained by me under provisions of
the said section, the said Memorandum, that is to say"
COASTAL INTERNATIONAL LTD" and did specify in
<PAGE>
the entry in the said Register relating to the said
Company that the status of the said Company was that of an
exempted company;
NOW THEREFORE I, the said Registrar of Companies, do hereby in
accordance with the provisions of section 13 of the Companies
(Incorporation by Registration) Act of 1970, issue this
Certificate of Incorporation and do certify that on the 1st
day of April 1980
COASTAL INTERNATIONAL, LTD. was registered by me in the
Register maintained by me under the provisions of the said
section and that the status of the said Company is that of an
exempted company and I do further certify that the facsimile
copy of the Memorandum of Association attached hereto is a
true copy of the said Memorandum of Association of which it
purports to be a copy.
Given under my hand this 1st day of April, 1980.
/s/
for Registrar of Companies
INTELECT COMMUNICATIONS SYSTEMS LIMITED
---------------------------------------
BYE-LAWS
--------
AS ADOPTED BY THE MEMBERS ON DECEMBER 13, 1995
INTERPRETATION
1.01 DEFINITIONS - In these Bye-Laws unless the context otherwise
requires:
(a) "ACT" means the Companies Act 1981 of Bermuda as
amended from time;
(b) "AUDITOR" means the auditor of the Company appointed
from time to time and holding office in accordance
with the provisions of the ACT and these Bye-Laws and
includes an individual or partnership;
(c) "BOARD" means the board of directors of the Company
and "Director" means a member of the board;
(d) "BYE-LAWS" means these Bye-Laws in their present form
or as from time to time amended;
(e) "COMPANY" means Challenger International, Ltd.,
incorporated as an exempted company pursuant to the
laws of Bermuda under the name Coastal International,
Ltd. on 1 April, 1980, which changed its name to
Challenger International, Ltd. on 2nd September,
1985, the Company for which these Bye-Laws are
approved and confirmed;
(f) "MEETING OF MEMBERS" includes an annual general
meeting of Members and a special general meeting of
Members;
(g) "MEMBER" means the person registered in the Register
of Members as holder of shares of the Company and
when two or more persons are so registered as joint
holders of shares, means the person whose name stands
first in the Register of Members as one of such joint
holders or all of such persons as the context
requires;
(h) "MEMORANDUM OF ASSOCIATION" means the memorandum of
association of the Company as the same may be amended
from time to time in accordance with the requirements
of the ACT;
(i) "NOTICE" means written notice unless otherwise
specifically states and as further defined in these
Bye-Laws; and
(j) "RECORDED ADDRESS" means in the case of a Member his
address as recorded in the Register of Members, and
in the case of joint holders the address
<PAGE>
appearing in the Register of Members in respect of
such joint holding or the first address so appearing
if there are more than one; in the case of an officer
(other than the President, Vice-President and
Secretary) the Auditor or member of a committee of
the Board, his latest address as recorded in the
records of the Company; and in the case of a
Director, the President, Vice-President and
Secretary, his latest address as shown in the
Register of Directors and Officers of the Company.
1.02 INTERPRETATION - In these Bye-Laws, where the context requires
or permits and unless there be something in the subject or
context inconsistent therewith; (a) words importing the plural
number shall be deemed to
include the singular number and vise versa;
(b) words importing the masculine gender also include the
feminine gender and neuter gender;
(c) words importing persons include companies or
associations or bodies of persons whether corporate
or not;
(d) the word:
(i) "appoint" includes "elect" and vice
versa;
(ii) "cheque" includes a draft;
(iii) "Director" includes any Alternate
Director;
(iv) "may" shall be construed as permissive;
and
(v) "shall" shall be construed as
imperative; and
(e) words or expressions contained in these Bye-Laws
shall bear the same meanings as in the ACT.
1.03 WRITTEN DOCUMENTS. - Expressions referring to writing shall,
unless the contrary intention appears, be construed as
including printing, lithography, facsimile, photography and
other modes of representing words in a legible and
non-transitory form.
BUSINESS OF THE COMPANY
2.01 COMMON SEAL. - The common seal of the Company shall be kept in
Bermuda and shall not be affixed to any instrument except over
the signature of a Director and the Secretary or any two
Directors or the signature of some person appointed by the
Directors for the purpose; provided that the Secretary may
affix the seal over no signature only to any authenticated
copies of these Bye-Laws, the incorporating documents of the
Company, the minutes of any meetings or any other documents
required to be authenticated by him and to any
-2-
<PAGE>
instrument which a meeting of a Board has specifically
approved beforehand.
2.02 DUPLICATE COMMON SEAL. - The Directors may authorize the
keeping of one or more duplicate seals for use in any
territory or place, and any deed or other document to which
any such duplicate seal be duly affixed shall bind the Company
as if it had been sealed with the seal.
2.03 FINANCIAL YEAR. - Until changed by the Board, the financial
year of the Company shall end on the last day of October of
each year.
2.04 REGISTERS OF MEMBERS AND DIRECTORS. - In accordance with the
requirements of the ACT, the Company shall keep a Register of
Members, one or more branch Registers of Members, and a
Register of Directors and Officers and shall enter therein the
particulars as required by the ACT. The Register of Members
and the Register of Directors and Officers shall be open to
inspection at the Registered Office of the Company between
10:00 am. and 12:00 Noon on every business day. The Register
of Members may, after notice has been given by advertisement
in an appointed newspaper to that effect, be closed for any
time or times not exceeding in the whole thirty (30) days in
each year.
2.05 REQUIREMENT TO KEEP FINANCIAL STATEMENTS. - In accordance with
the requirement of the ACT the Company shall cause to be kept
proper records of account with respect to all receipts and
expenditures, all sales and purchases and the assets and
liabilities of the Company for the time being and such records
of account shall be kept at the Registered Office of the
Company or, subject to the relevant provisions of the ACT, at
such other place as the Board thinks fit and shall be open to
the inspection of the Directors during normal business hours.
2.06 FINANCIAL STATEMENTS. - In accordance with the requirements of
the ACT, audited financial statements of the Company for the
immediately preceding completed financial year, shall be laid
before the Members in general meeting.
2.07 AUDIT. - At the annual general meeting or a subsequent special
general meeting in each year, an independent representative of
the Members shall be appointed by them as Auditor of the
Company and such Auditor shall hold office until the Members
appoint another Auditor. Any
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auditor appointed pursuant to this Bye-Law may be a Member,
but no Director or officer or employee of the Company shall,
during his continuance in office, be eligible to act as an
auditor of the Company. The remuneration of the Auditor shall
be fixed by Members in general meeting or in such other manner
as the Members may determine. If the office of the Auditor
become vacant by reason of the resignation or death of the
Auditor or by his becoming incapable of acting by reason of
illness or other disability at a time when his services are
required, the Directors shall as soon as practicable convene a
special general meeting to fill the vacancy. The Auditor shall
at all reasonable times have access to all books kept by the
Company and to all accounts and vouchers related thereto; and
he may call on the Directors or officers of the Company for
any information in their possession relating to the books or
affairs of the Company. The audited financial statements of
the Company which are required to be laid before the Members
in general meeting shall be audited by the Auditor, which
audit shall be made in accordance with generally accepted
auditing standards and the report of the Auditor thereon
together with such audited financial statements shall be
submitted to the Members in general meeting in accordance with
the relevant provisions of the ACT.
2.08 MINUTES. - The Board shall cause minutes to be duly entered
into the books of the Company provided for the purpose:
(a) of all elections and appointments of officers;
(b) of the names of Directors present at each meeting of
the Board or at any meeting of a committee of the
Directors; and
(c) of all resolutions and proceedings of general
meetings of the Members, meetings of the Board and
meetings of committees of the Directors.
BORROWING AND SECURITY
3.01 BORROWING POWER.- The Board may from time to time on behalf of
the Company, without authorization of the Members:
(a) borrow money upon the credit of the Company;
(b) issue, reissue, sell or pledge bonds, debentures,
notes or other evidences of indebtedness or guarantee
of the Company, whether secured or unsecured;
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(c) to the extent permitted by the ACT, give directly or
indirectly financial assistance to any person by
means of a loan, a guarantee or otherwise on behalf
of the Company to secure performance of any present
or future indebtedness, liability or obligation of
any person; and
(d) mortgage, hypothecate, pledge or otherwise create a
security interest in all or any currently owned or
subsequently acquired real or personal, movable or
immovable, property of the Company including book
debts, rights, powers, franchises and undertakings to
secure any such bonds, debentures, notes or other
evidences of indebtedness or guarantee or any other
present or future indebtedness, liability or
obligation of the Company.
Nothing in this Bye-Law limits or restricts the borrowing of
money by the Company on bills of exchange or promissory notes
made, drawn, accepted or endorsed by or on behalf of the
Company.
3.02 DELEGATION. - The Board may from time to time delegate to a
Director, a committee of the Board, or an officer of the
Company any or all of the power conferred on the Board by
Bye-Law 3.01 to such extent and in such manner as the Board
may determine at the time of such delegation.
DIRECTORS
4.01 NUMBER OF DIRECTORS. - The business of the Company shall be
managed and conducted by Board of Directors consisting of not
less than three (3) Directors and not more than nine (9)
Directors. The specific number of Directors constituting the
Board shall be determined from time to time by the Members in
general meeting.
4.02 QUALIFICATION. - No person shall be qualified for election as
a Director if he is less than 18 years of age; if he is of
unsound mind and has been so found by a court; if he is not an
individual; or if he has the status of a bankrupt. A Director
need not be a Member.
4.03 ELECTION AND TERM. - The Directors of the Company shall be
elected at the annual general meeting of the Members. The
Directors shall be elected and shall retire in rotation such
that one-third (1/3rd) of the number of Directors fixed from
time to time shall be elected for a three (3) year term or
until the third annual general
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meeting following their election, one-third of the number of
Directors fixed from time to time shall be elected for a two
(2) year term or until the second annual general meeting
following their election and one-third (1/3rd) of the number
of Directors fixed from time to time shall be elected for a
one (1) year term or until the next annual general meeting
following their election. At each annual general meeting of
shareholders, the successors of such classes of directors
whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual general meeting of
shareholders held in the third of their election.
4.04 REMOVAL OF DIRECTORS. - The Members may at any special general
meeting convened and held in accordance with these Bye-Laws
remove any Director from office, but only for Cause, (as
hereinafter defined) provided that the notice of any such
meeting convened for the purpose of removing a Director shall
contain a statement of the intention so to do and shall be
served upon such Director at least sixty (60) days before the
meeting and at such meeting such Director shall be entitled to
be heard. The term "Cause" is defined for the purpose of this
Bye-Law 4.04 as meaning: (i) conviction of the Director for an
indictable offense or a felon; or (ii) wilful negligence,
wilful default, fraud or dishonesty proven by clear and
convincing evidence.
4.05 VACATION OF OFFICE. - A Director ceases to hold office when:
he become disqualified pursuant to Bye-Law 4.02; he dies; he
is removed from office by the Members; he is prohibited from
being a Director under any provision of law; or his written
resignation is received by the Company, or, if a time is
specified in such resignation, at the time so specified,
whichever is later.
4.06 VACANCY. - Any vacancy on the Board for any reason, including
any vacancy arising by reason of any increase in the number of
Directors, shall if occurring prior to the expiration of the
term of office of any such Director, be filled only by the
Board, acting by the affirmative vote of a majority of the
remaining Directors.
4.07 ACTION BY THE BOARD. - The Board shall manage or supervise the
management of the business and affairs of the Company. The
powers of the Board may be exercised at a meeting at which a
quorum is present or by resolution in writing signed by all of
the Directors entitled to
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vote on that resolution at a meeting of the Board. Where there
is a vacancy on the Board, the remaining Directors may
exercise all the powers of the Board so long as a quorum
remains in office.
4.08 ALTERNATE DIRECTORS. - Any general meeting of the Members may
elect a qualified person or persons to act as Directors in the
alternative to the Directors of the Company or may authorize
the Board to appoint such Alternate Directors. Any persons so
appointed shall have the rights and powers of the Director for
whom he is appointed in the alternative except he shall not be
entitled to attend or vote at any meeting of the Board
otherwise than in the absence of such Director. An Alternate
Director shall, subject to his giving the Company an address
at which notice may be served upon him, be entitled to receive
notices of all meetings of the Board and to attend and vote as
a Director at any such meeting at which the Director for whom
he was appointed is not personally present and generally to
perform at such meeting all the functions of the Director for
who he was appointed in the absence of that Director. An
Alternate Director shall immediately cease to be such if the
Director for whom he was appointed ceases for any reason to be
a Director but may be reappointed by the Board or the Members
in general meeting, as the case may be, as an alternate to the
person appointed to fill the vacancy in accordance with
Bye-Law 4.06. An Alternate Director may be removed at any time
by the body which appointed him. The removal of an Alternate
Director shall be effected by notice left with the Secretary
and given to the Alternate Director concerned.
4.09 MEETING BY TELEPHONE. - If all the Directors of the Company
consent thereto generally or if all the Directors of the
Company present at or participating in the meeting consent, a
Director may participate in a meeting of the Board or of a
committee of the Board by means of such telephone, electronic
or other communications facilities as permit all persons
participating in the meeting to communicate with each other,
simultaneously and instantaneously, and a Director
participating in such a meeting by such means is deemed to be
present at the meeting. Any such consent shall be effective
whether given before or after the meeting to which it relates
and may be given with respect to all meetings of the Board and
of committees of the Board.
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4.10 CALLING OF MEETINGS. - Meetings of the Board shall be convened
from time to time by the President, a Vice-President, or any
two Directors.
4.11 NOTICE OF MEETING. - Notice of the time and place of each
meeting of the Board shall be given by the Secretary by
telephone or otherwise to each Director not less than 48 hours
before the time when the meeting is to be held. No notice of a
meeting shall be necessary if all the Directors in the office
are present or if those absent waive notice of such meeting,
except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called. A notice of a
meeting of Directors need not specify the purpose of or the
business to be transacted at the meeting except where the ACT
requires such purpose or business or the general nature
thereof to be specified.
4.12 FIRST MEETING OF NEW BOARD. - Provided an quorum of Directors
is present, each newly elected Board may without notice hold
its first meeting immediately following the meeting of Members
at which such Board is elected.
4.13 ADJOURNED MEETING. - Notice of an adjourned meeting of the
Board is not required if the time and place of the adjourned
meeting is announced at the original meeting.
4.14 REGULAR MEETINGS. - The Board may appoint a day or days in any
month or months for regular meetings of the Board at a place
and hour to be named and no notice shall be required for any
such regular meeting.
4.15 CHAIRMAN. - The Chairman of any meeting of the Board shall be
the first mentioned of such of the following officers as have
been appointed and who is a Director and is present at the
Meeting: Chairman of the Board, Managing Director or
President. If no such officer is present, the Directors
present shall choose one of their number to be Chairman.
4.16 QUORUM. - The quorum for the transaction of business at any
meeting of the Board shall be three (3) Directors, or such
greater number of Directors as the Board may from time to time
determine.
4.17 VOTES TO GOVERN. - At all meetings of the board every question
shall be decided by a majority of the votes
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cast on the question. In the case of an equality of votes the
resolutions shall fail.
4.18 CONFLICT OF INTEREST. - A Director who is a party to, or who
is a Director or officer or has a material interest in any
person who is a party to a material contract or transaction or
proposed material contract with the Company shall disclose to
the Company the nature and extent of his interest at the time
and in the manner provided by the ACT. Unless disqualified by
the Chairman of the relevant Board meeting, a Director may
vote in respect of any contract or arrangement in which he is
interested and may be counted in the quorum.
4.19 REMUNERATION AND EXPENSES. - The Directors shall be paid such
remuneration for their services as the Members shall determine
by resolution and that remuneration shall be deemed to accrue
from day to day. The Directors may also be reimbursed for
travelling and other expenses properly incurred by them in
attending meetings of the Board or any committee thereof or in
connection with the business of the Company. Nothing herein
contained shall preclude any Director from serving the Company
in any other capacity and receiving remuneration therefore.
4.20 BONA FIDES ACTIONS. - All actions taken bona fides at any
meeting of the Board or by a committee of Directors or by any
person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was some defect in the
appointment of any such Director or person acting as
aforesaid, or that they or any of them were disqualified, be
as valid as if every such person had been duly appointed and
was qualified to be a Director.
GENERAL POWERS OF DIRECTORS
5.01 GENERAL POWERS. - In managing the business of the Company the
Directors may exercise all such powers of the Company as are
not by the ACT or by these Bye-Laws required to be exercised
by the Members in general meeting; subject nevertheless to the
provisions of the ACT and these Bye-Laws.
5.02 RELIANCE. - Any person contracting or dealing with the Company
in the ordinary course of business shall be entitled to rely
on any written or oral contract or agreement or deed, document
or instrument entered into or executed, as the case may be, by
any two of the
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Directors acting jointly on behalf of the Company and the same
shall be deemed to be validly entered into or executed by the
Company, as the case may be, and shall, subject to any rule of
law be binding on the Company.
5.03 MANAGING DIRECTOR. - The Board may from time to time appoint
one or more of their body to hold the office of managing
director or chief executive officer of the Company who,
subject to the control of the board, shall in general
supervise and administer all of the business and affairs of
the Company. The Directors may entrust to and confer upon such
managing director or chief executive officer any of the powers
exercisable by them upon such terms and conditions and with
such restrictions as they may think fit and either
collaterally with or to the exclusion of their own powers and
may from time to time revoke, withdraw, alter or vary all or
any of such powers.
5.04 EXECUTION OF DOCUMENTS. - The Board may, from time to time,
and at any time authorize any Director or officer to act on
behalf of the Company for any specific purpose and in
connection therewith to execute any agreement, document or
instrument on behalf of the Company.
5.05 POWER OF ATTORNEY. - The Board may from time to time and at
any time by power of attorney appoint any company, firm or
person or body of persons, whether nominated directly or
indirectly by the Directors, to be the attorney or attorneys
of the Company for such purposes and with such powers,
authority and discretion (not exceeding those vested in or
exercisable by the Directors) and for such period and subject
to such conditions as they may think fit; and any such powers
of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the
Directors may think fit and may authorize any such attorney to
subdelegate all or any of the powers, authorities and
discretions so vested in the attorney. Such attorney or
attorneys may, if so authorized under the common seal of the
Company, execute any deed or instrument under their personal
seal with the same effect as the affixation of the common seal
of the Company.
5.06 MANAGING DIRECTOR. - The Board may appoint from their numbers
one or more committees of the Board however designated, and
may delegate to any such committee any of the powers of the
Board except those which pertain to
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items which, under the ACT, a committee of the Board has no
authority to exercise.
5.07 TRANSACTION OF BUSINESS. - The powers of a committee of the
Board may be exercised by a meeting at which a quorum is
present or by resolution in writing signed by all members of
such committee who would have been entitled to vote on that
resolution at a meeting of the committee.
5.08 AUDIT COMMITTEE. - The Board shall select annually from among
their number an audit committee to be composed of not fewer
than two (2) Directors neither of whom shall be an officer or
employee of the Company or any of its affiliates. The audit
committee shall have the powers and duties provided in the
ACT.
5.09 PROCEDURE. - Unless otherwise determined by the Board, each
committee shall have power to fix its quorum at not less than
a majority of its members, to elect is chairman and to
regulate its procedure.
OFFICERS
6.01 APPOINTMENT. - The Board may from time to time appoint a
President, one or more Vice-Presidents (to which title may be
added words indicating seniority or function), a Secretary, a
Treasurer and such other officers as the Board may determine,
including one or more assistants to any officers so appointed.
One person may hold more than one office. The Board may
specify the duties of and, in accordance with this Bye-Law and
subject to the ACT, delegate to such officers powers to manage
the business and affairs of the Company. Subject to Bye-Law
6.02, an officer may but need not be a Director.
6.02 PRESIDENT. - The Board shall, after each general meeting of
the Members at which the Directors are elected, elect one of
their number to be President of the Company and another of
their number to be Vice-President, and if more than one
Director is proposed for either of these offices, the election
to such office shall take place in such manners as the
Directors may determine.
6.03 SECRETARY. - Unless otherwise determined by the Board, the
Secretary shall be the secretary of all meetings of the Board,
committees of the Board and general meetings of the Members
that he attends. The Secretary shall enter or cause to be
entered in records kept for that
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purpose minutes of all proceedings at meetings of the Board,
committees of the Board and general meetings of the Members,
whether or nor he attends such meetings; he shall give or
cause to be given, as and when instructed, all notices to
Members, Directors, officers, auditors and members of
committees of the Board; he shall be the custodian of the
stamp or mechanical device generally used for affixing the
common seal of the Company and of all books, records and
instruments belonging to the Company, except when some other
officer or agent has been appointed for that purpose; and he
shall have such other powers and duties as otherwise may be
specified.
6.04 MANAGER. - The Board may appoint some person or persons to act
as manager of the Company's day to day business and may
entrust to and confer upon such manager such powers and duties
as they may deem appropriate for the transaction or conduct or
such business and the Directors shall not be responsible for
the negligence or default of any such person if employed in
good faith.
6.05 POWERS AND DUTIES OF OFFICERS. - The powers and duties of all
officers shall be such as the terms of their engagement call
for or as the Board may specify. The Board may, from time to
time and subject to the provisions of the ACT, vary, add to or
limit the powers and duties of any officer. Any of the powers
and duties of an officer to whom as assistant has been appoint
may be exercised and performed by such assistant, unless the
Board otherwise directs.
6.06 TERM OF OFFICE. - The Board, in its discretion, may remove any
officer of the Company. Otherwise each officer appointed by
the Board shall hold office until his successor is appointed
or until his earlier resignation.
6.07 CONFLICT OF INTEREST. - An officer who is a party to, or who
is a Director or officer of or has a material interest in any
person who is a party to a material contract or transaction or
proposed material contract or transaction with the Company
shall disclose to the Company the nature and extent of his
interest at the time and in the manner provided by the ACT.
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 LIMITATION OF LIABILITY. - Every Director and officer of the
Company in exercising his powers and discharging his
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duties shall act honestly and in good faith with a view to the
best interest of the Company and shall exercise the care,
diligence and skill that a reasonably prudent person would
exercise in comparable circumstances. Subject to the
foregoing, no Director or officer shall be liable for the
acts, receipts, neglects or defaults or any other Director,
officer or employee, or for joining in any receipt or other
act for conformity, or for any loss, damage or expense
happening to the Company through the insufficiency or
deficiency of title to any property acquired for or on behalf
of the Company, or for the insufficiency or deficiency of any
security in or upon which any of the moneys of the Company
shall be invested, or for any loss or damage arising from the
bankruptcy, insolvency or tortious acts of any person with
whom any of the moneys, securities or effects of the Company
shall be deposited, or for any loss occasioned by any error of
judgement or oversight on his part, or for any other loss,
damage or misfortune which shall happen in the execution of
the duties of his office or in relation thereto; provided that
nothing herein shall relieve any Director or officer from the
duty to act in accordance with the ACT or from liability for
any breach thereof.
7.02 INDEMNITY. - Subject to the ACT, the Company shall indemnify a
Director or officer, a former Director or officer, or a person
who acts or acted at the Company's request as a Director or
officer of a body corporate of which the Company is or was a
Member or creditor, and his heirs and legal representatives,
against all costs, judgements, fines, taxes, penalties,
charges and expenses (including attorney's fees), including an
amount paid to settle an action or satisfy a judgement,
reasonably incurred by him in respect of any civil, criminal
or administrative action or proceeding to which he is made a
party by reason of being or having been a Director or officer
of the Company or such body corporate; provided that the
obligation of the Company to so indemnify shall not extend to
any liability in respect of any wilful negligence, wilful
default, fraud or dishonesty which may attach to any such
person. The Company shall also indemnify any such person in
such other circumstances to the fullest extent as the ACT or
applicable law permits or requires. Nothing in this Bye-Law
shall limit the right of any person entitled to indemnity to
claim indemnity apart from the provisions of this Bye-Law.
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7.03 WAIVER. - Each Member agrees to waive any claim or right of
action which he might have, whether individually or by or in
the right of the Company, against any Director or officer on
account of any action taken by such Director or officer, or
the failure of such Director or officer to take any action in
the performance of his duties with or for the Company;
provided that such waiver shall not extend to any liability in
respect of any wilful negligence, wilful default, fraud or
dishonesty which may attach to such Director or officer.
7.04 INSURANCE. - Subject to the ACT, the Company may purchase and
maintain such insurance for the benefit of any person referred
to in Bye-Law 7.02 hereof as the Board may from time to time
determine.
SHARES
8.01 AUTHORIZED CAPITAL. - The authorized share capital of the
Company is US$950,000 divided into:
(a) 80,000,000 common shares of US$0.01 par value each
(the "Common Shares"); provided that the 80,000,000
special restricted voting shares existing prior to
the adoption of these Bye-Laws shall upon the
adoption of these Bye-Laws be converted into and
redesignated as such Common Shares; and
(b) 15,000,000 serial preferred shares of US$0.01 par
value each (the "Preferred Shares"); and the Common
Shares and the Preferred Shares shall each constitute
a separate class of shares.
8.02 ATTRIBUTES OF COMMON SHARES. - Holders of Common Shares shall
be entitled to rank pari passu in all respects with each other
holder of the Common Shares. Any Member who is a holder of
Common Shares shall be entitled to one vote for each Common
Share held by such holder. Subject to the payment of
preferential amounts to which the holders of any Preferred
Shares which may be issued from time to time may be entitled,
holders of the Common Shares shall be entitled, pro rata to
their holdings of Common Shares, to participate in any assets
or surplus of the Company distributable in any liquidation,
dissolution or winding-up of the Company.
8.03 PREFERRED SHARES. - Any Preferred Shares issued from time to
time may be issued in one or more series and in such amounts
as may be established or designated from time to time by the
Board as hereinafter provided. The board is hereby vested with
the authority to establish
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and designate any unissued Preferred Shares as a series of
such shares.
8.04 VARIATION OF RIGHTS. - If at any time the share capital is
divided into different classes of shares, the rights attached
to any class (unless otherwise provided by the terms of the
issue of the shares of that class) may, whether or not the
Company is being wound-up, be varied with the consent in
writing of the holders of three-fourths (3/4ths) of the issued
and outstanding shares of that class or with the sanction of a
resolution passed by a majority of the votes cast at a
separate general meeting of the holders of the shares of the
class in accordance with the relevant provision of the ACT.
The rights conferred upon the holders of the shares of any
class issued with preferred or other rights shall not, unless
otherwise expressly provided by the terms of issue of the
shares of that class, be deemed to be varied by the creation
or issue of further shares ranking pari passu therewith.
8.05 FINANCIAL ASSISTANCE. - Except as expressly permitted by the
relevant provisions of the ACT or Bye-Law 8.06, the Company
shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise,
any financial assistance for the purpose of a purchase or
subscription made or to be made by any person of or for any
shares of the Company.
8.06 EMPLOYEE SHARE PURCHASE PLAN. - The Company may provide money
for the purchase of fully paid shares of the Company or its
holding company in accordance with an employee share scheme as
contemplated or permitted by the relevant provisions of the
ACT and relevant securities legislation and may require or
allow the sale of such shares to the company when an employee
ceases to be employed by the Company.
8.07 AMENDMENT OF MEMORANDUM OF ASSOCIATION. - The Members in
general meeting may, from time to time, by resolution alter
the conditions of the Memorandum of Association so as to
increase, alter or reduce the share capital of the Company in
accordance with the relevant provisions of the ACT.
8.08 ALLOTMENT OF SHARES. - Subject to the ACT the Board may from
time to time alot or grant options to purchase the whole or
any part of the authorized and unissued shares of the Company
at such times and to such persons and for such consideration
as the Board shall determine,
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provided that no share shall be issue until it is fully paid.
8.09 COMMISSIONS. - The Board may from time to time authorize the
Company to pay a reasonable commission to any person in
consideration of his purchasing or agreeing to purchase shares
of the Company, whether from the Company or from any other
person, or procuring or agreeing to procure purchasers for any
such shares.
8.10 REGISTRATION OF TRANSFERS. - No transfer of a share of the
Company shall be given effect to and no transferee of any
share shall be registered in the Register of Members except
upon presentation of the certificate representing such share
with an endorsement which complies with the ACT made thereon
or delivered therewith duly executed by an appropriate person,
together with such reasonable assurance that the endorsement
is genuine and effective as the Board may from time to time
prescribe, upon payment of all applicable taxes and any
reasonable fees prescribed by the Board.
8.11 NON-RECOGNITION OF TRUSTS. - The Company may treat the
registered holder of any share as the person exclusively
entitled to vote, to receive notices, to receive any dividend
or other payment in respect of the share, and otherwise to
exercise all the rights and powers of an owner of the share.
8.12 SHARE CERTIFICATES. - Every holder of one or more shares of
the Company shall be entitled, at his option, to a share
certificate, or to a non-transferable written certificate of
acknowledgment of his right to obtain a share certificate,
stating the number and class or series of shares held by him
as shown on the Register of Members. Such certificates shall
be in such form as may be acceptable to the relevant
securities regulatory authorities and as the Board may from
time to time approve. Notwithstanding the foregoing, unless
the Board otherwise determines, certificates in respect of
which a registrar, transfer agent, branch transfer agent or
issuing or other authenticating agent has been appointed shall
not be valid unless countersigned by or on behalf of such
registrar, transfer agent, branch transfer agent or issuing or
other authenticating agent. The signature of one of the
signing officers (or, in the case of a certificate which is
not valid unless countersigned by or on behalf of a registrar,
transfer agent, branch transfer agent or issuing or other
authenticating agent,
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the signature of both signing officers) may be printed or
otherwise mechanically reproduced thereon. Every such printed
or mechanically reproduced signature shall be for all purposes
be deemed to be the signature of the officer whose signature
it reproduces and shall be binding upon the Company. A
certificate executed as aforesaid shall be valid
notwithstanding that one or both of the officers whose printed
or mechanically reproduced signature appears thereon no longer
holds office at the date of issue of the certificate.
8.13 REPLACEMENT OF SHARE CERTIFICATES. - The Board of any officer
or agent designated by the Board may in its or his discretion
direct the issue of a new share or other such certificate in
lieu of and upon cancellation of a certificate that has been
mutilated or in substitution for a certificate claimed to have
been lost, apparently destroyed or wrongfully taken on payment
of such reasonable fee and on such terms as to indemnity,
reimbursement of expenses and evidence of loss and of title as
the Board may from time to time prescribe, whether generally
or in any particular case.
8.14 JOINT MEMBERS. - If two or more persons are registered as
joint holders of any share of the Company, the Company shall
not be bound to issue more than one certificate in respect
thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one
of such persons may give effectual receipts for the
certificate issued in respect thereof or for any dividend,
bonus, return of capital or other money payable or warrant
issuable in respect of such shares.
8.15 DECEASED MEMBERS. - In the event of death of a holders, or of
one of the joint holders, of any share, the Company shall not
be required to make any entry in the Register of Members in
respect thereof or to make any dividend or other payments in
respect thereof except upon production of all such documents
as may be required by law and upon compliance with the
reasonable requirements of the Company and its transfer
agents.
8.16 TRANSFER AGENTS AND REGISTRARS. - Subject to the relevant
provisions of the ACT, the Company may from time to time, in
respect of each class of securities issued by it, appoint a
trustee, transfer or other agent to keep the Register of
Members and the register of transfers and a registrar, trustee
or agent to maintain a record of issued security certificates
and may appoint
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one or more persons or agents to keep branch register, or
subject to the ACT, one person may be appointed to keep the
Register of Members, register of transfers and the records of
issued security certificates. Such appointments may be
terminated at any time by the Board.
DIVIDENDS AND RIGHTS
9.01 DIVIDENDS. - Subject to the ACT the Board may from time to
time declare dividends payable to the Members according to
their respective rights and interests in the Company.
Dividends may be paid in money or property or by issuing fully
paid shares of the Company or options or rights to acquire
fully paid shares of the Company. Any dividend unclaimed after
a period of six (6) years from the date on which the same has
been declared to be payable shall be forfeited and shall
revert to the Company.
9.02 DIVIDEND CHEQUES. - A dividend payable in money shall be paid
by cheque to the order of each registered holder of shares of
the class or series in respect of which it has been declared
and mailed by prepaid ordinary mail to such registered holder
at his recorded address, unless such holder otherwise directs.
In the case of joint holders the cheque shall, unless such
joint holders otherwise direct, by made payable to the order
of all of such joint holders and mailed to them at their
recorded address. The mailing of such cheque as aforesaid,
unless the same is not paid on due presentation, shall satisfy
and discharge the liability for the dividend to the extent of
the sum represented thereby plus the amount of any tax which
the Company is required to and does withhold. In the event of
non-receipt of any dividend cheque by the person to whom it is
sent as aforesaid, the Company shall issue to such person a
replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of
non-receipt and of title as the Board may from time to time
prescribe, whether generally or in any particular case.
9.03 RECORD DATE FOR DIVIDENDS AND RIGHTS. - The Board may fix in
advance a date, preceding by not more than fifty (50) days the
date for the payment of any dividend or the date for the issue
of any warrant or other evidence of the right to subscribe for
securities of the Company, as the record date for the
determination of the persons entitled to receive payment of
such dividend or to exercise the right to subscribe for such
securities, and
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notice of any such record date shall be given not less than
seven (7) business days before such record date in the manner
provided by the ACT and the relevant securities legislation.
MEETING OF MEMBERS
10.01 ANNUAL GENERAL MEETINGS. - The annual general meeting of
Members shall be held at such time in each year and, at such
place as the Board, the Chairman of the Board, the Managing
Director or the President may from time to time determine, for
the purpose of considering the financial statements and
reports required by the ACT to be placed before the annual
general meeting, electing Directors, appointing the Auditor
and for the transaction of such other business as may properly
be brought before the meeting.
10.02 SPECIAL GENERAL MEETINGS. - The Board, the Chairman of the
Board, the Managing Director or the President shall have power
to call a special general meeting of Members at any time.
10.03 PLACE OF MEETINGS. - Meetings of Members of the Company shall
be held at such place as the Directors determine or, in the
absence of such a determination, at the place where the
Registered Office of the Company is located.
10.04 NOTICE OF MEETINGS. - Notice of the time and place of each
meeting of Members shall be given in the manner provided in
Bye-Law 11.01 not less than twenty-one (21) nor more than
fifty (50) days before the date of the meeting to each
Director, to the Auditor, and to each Member who at the close
of business on the record date for notice is entered in the
Register of Members as the holder of one or more shares
carrying the right to vote at the meeting. Notice of a meeting
of Members called for any purpose other than consideration of
the minutes of an earlier meeting, financial statements and
Auditor's report, election of Directors and reappointment of
the incumbent Auditor shall state the nature of such business
in sufficient detail to permit the Members to form a reasoned
judgement thereon and shall state the text of any proposed
resolution or proposed amendment of the Bye-Laws to be
submitted to the meeting.
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10.05 LIST OF MEMBERS ENTITLED TO NOTICE. - For every meeting of
Members, the Company shall prepare a list of Members entitled
to receive notice of the meeting, arranged in alphabetical
order and showing the number of shares held by each Member
entitled to vote at the meeting. If a record date for the
meeting is fixed pursuant to Bye-Law 10.06, the Members listed
shall be those registered in the Register of Members at the
close of business on such record date. If no record date is
fixed, the Members listed shall be those registered at the
close of business on the day immediately preceding the day on
which notice of the meeting is given. The list shall be
available for examination by any Member during usual business
hours at the Registered Office of the Company or at the place
where the Register of Members or any branch Register of
Members is maintained and at the meeting for which the list
was prepared. Where a separate list of Members has not been
prepared, the names of persons appearing in the Register of
Members at the requisite time as the holder of one or more
shares carrying the right to vote at such meeting shall be
deemed to be a list of Members.
10.06 RECORD DATE FOR NOTICE. - The Board may fix in advance a date,
preceding the date of any meeting of Members by not more fifty
(50) days and not less than twenty-one (21) days, as a record
date for the determination of the Members entitled to notice
of the meeting, and notice of any such record date shall be
given not less than seven (7) days before such record date, by
newspaper advertisement and by written notice to each stock
exchange in Canada and the United States on which the shares
of the Company are listed for trading. If no such record date
is so fixed, the record date for the determination of the
Members entitled to receive notice of the meeting shall be at
the close of business on the day immediately preceding the day
on which the notice is given.
10.07 CHAIRMAN, SECRETARY AND SCRUTINEERS. - The chairman of any
meeting of members shall be the first mentioned of such of the
following officers as have been appointed and who is present
at the meeting: Chairman of the Board, Managing Director,
President, or a Vice-President who is a Member. If no such
officer is present within 15 minutes from the time fixed for
holding the meeting, the persons present and entitled to vote
shall choose one of their number to be chairman. If the
Secretary of the Company is absent, the chairman shall appoint
some person, who need not be a Member, to act as secretary of
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the meeting. If desired, one or more scrutineers, who need not
be Members, may be appointed by a resolution or by the
chairman with the consent of the meeting.
10.08 PERSONS ENTITLED TO BE PRESENT. - The only person entitled to
be present at the meeting of Members shall be those entitled
to vote thereat, the Directors and the Auditor and others who,
although not entitled to vote, are entitled or required under
any provision of the ACT or these Bye-Laws to be present at
the meeting. Any other person may be admitted only on the
invitation or by the chairman with the consent of the meeting.
10.09 QUORUM. - A quorum for the transaction of business at any
meeting of Members hall be at least two (2) persons present in
person, each being a Member entitled to vote thereat or a duly
appointed proxy holder or representative for a Member so
entitled, together representing in excess of thirty five (35%)
of the outstanding voting shares of the Company. If a quorum
is present at the opening of any meeting of Members, the
Member or Members present or represented may proceed with the
business of the meeting notwithstanding that a quorum is not
present throughout the meeting. If a quorum is not present at
the time appointed for the meeting or within a reasonable time
thereafter as the Members may determine, the Members present
or represented may adjourn the meeting to a fixed time and
place but may not transact any other business.
10.10. RIGHT TO VOTE. - Every person named in the list referred to in
Bye-Law 10.05 shall be entitled to vote the shares shown
thereon opposite his name at the meeting to which such list
relates, except to the extent that (a) where the Company has
fixed a record date in respect of such meeting, such person
has transferred any of his shares after such record date or,
where the Company has not fixed a record date in respect of
such meeting, such person has transferred any of his shares
after the date on which such list is prepared, and (b) the
transferee, having produced properly endorsed certificates
evidencing such shares or having otherwise established that he
owns such shares, has demanded not later than ten (10) days
before the meeting that his name be included in such list. In
any such excepted case the transferee shall be entitled to
vote the transferred shares at such meeting.
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10.11 PROXYHOLDER AND REPRESENTATIVE. - Every Member entitled to
vote at a meeting of Members may appoint a proxyholder, or one
or more alternate proxyholders, as his nominee to attend and
act at the meeting in the manner and to the extent authorized
and with the authority conferred by the proxy. A proxy shall
be in writing executed by the Member or his attorney and shall
conform with the requirements of the ACT. Alternatively, every
such Member which is a body corporate or association may
authorize by resolution of its Directors or governing body an
individual to represent it at a meeting of Members and such
individual may exercise on the Member's behalf all the powers
it could exercise if it were an individual Member. The
authority of such an individual shall be established by
depositing with the Company a certified copy of such
resolution, or in such other manner as may be satisfactory to
the Secretary of the Company or the chairman of the meeting.
Any such proxyholder or representative need not be a Member. A
proxy ceases to be valid one year from its date.
10.12 TIME FOR DEPOSIT OF PROXIES. - The Board may fix a time not
exceeding 48 hours, excluding Saturdays and holidays,
preceding any meeting or adjourned meeting of Members before
which time proxies to be used at the meeting must be deposited
with the Company or an agent thereof, and any period of time
so fixed shall be specified in the notice calling the meeting.
A proxy shall be acted upon only if, prior to the time so
specified, it shall have been deposited with the Company or an
agent thereof specified in such notice or if, no such time
having been specified in such notice, it has been received by
the Secretary of the Company or by the chairman of the meeting
or any adjournment thereof prior to the time of voting
10.13 JOINT HOLDERS. - If two or more persons hold shares jointly,
any one of them present in person or duly represented at a
meeting of Members may, in the absence of the other or others,
vote the shares; but if two or more of those persons are
present in person or represented and vote, they shall vote as
one the shares jointly held by them.
10.14 VOTES TO GOVERN. - At any general meeting of Members every
question shall, unless otherwise required by these Bye-Laws or
by applicable law, be determined by a majority of the votes
cast on the question. In case of an equality of votes either
upon a show of hands or upon
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a poll, the chairman of the meeting shall be entitled to a
second or casting vote.
10.15 APPROVAL FOR BUSINESS COMBINATIONS. - The provision of this
Bye-Law 10.15 shall apply to any vote by the Members in
relation to any proposed Business Combination (as hereinafter
defined):
(a) No Business Combinations shall be consummated or
effected unless such Business Combination shall have
been approved by the affirmative vote of the holders
of not less than ninety percent (90%) of the total
voting power of all outstanding shares of voting
stock of the Company, voting as a single class. Such
vote shall be required notwithstanding the fact that
no vote for such transaction may be required by law
or that approval by some lesser percentage of Members
may be specified by law or in any agreement with any
securities exchange on which the Company's shares are
listed or otherwise; provided, however, that such
ninety percent (90%) vote shall not be required, and
the provisions of Bermuda law relating to the vote
required for the approval of Members, if any, shall
apply to any such Business Combination if the
Continuing Directors (as hereinafter defined) shall
have expressly approved such Business Combination by
a two-thirds (2/3rds) vote either in advance of or
subsequent to the acquisition of outstanding shares
of capital stock of the Company that caused the
Interested Member (as hereinafter defined) involved
to become an Interested Member. In determining
whether or not to approve any such Business
Combination, the Continuing Directors may give due
consideration to all factors they consider relevant,
including without limitation (a) its long-term
effects on the profitability of the Company, (b) its
social, legal, environmental and economic effects,
both short-term and long-term, on the employees of
the Company and its subsidiaries and on the
communities and the geographic areas in which the
Company and its subsidiaries operate or are located,
and on any of the business and properties of the
Company and its subsidiaries, and (c) the adequacy of
the consideration offered in relation not only to the
current market price of the Company's outstanding
securities, but also to the current value of the
Company in a freely negotiated transaction and the
Continuing Director's estimate of the Company's
future value
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(including the unrealized value of its properties and
assets) as an independent going concern.
(b) Prior to the consummation of any proposed Business
Combination and prior to any vote of the Members
under paragraph (a) of this Bye-law 10.15, a proxy
statement or information statement complying with the
requirements of the United States Securities Exchange
Act of 1934, as amended, and the Ontario Securities
Act shall be mailed to all Members for the purpose of
informing the Members about such proposed Business
Combination and, if their approval is required by
paragraph (a) of this Bye-Law 10.15, for the purpose
of soliciting Member approval of such Business
Combination. Such proxy statement or information
statement shall contain at the front thereof, in a
prominent place, a statement by the Continuing
Directors of their position on the advisability (or
inadvisability) or the proposed Business Combination.
(c) For the purpose of this Bye-Law 10.15:
(i) The term "Business Combination" shall
mean (a) any amalgamation, merger,
consolidation or share exchange of the
Company or any of its subsidiaries with
or into an Interested Member, in each
case irrespective of which corporation
or company is to be the surviving
entity; (b) any sale lease, exchange,
mortgage, pledge, transfer or other
disposition to or with an Interested
Member (in a single transaction or a
series of related transactions) of all
or a substantial part of the assets of
the Company (including without
limitation any securities of a
subsidiary of the Company) or all or a
substantial part of the assets of any
of its subsidiaries; (c) any sale,
lease, exchange, mortgage, pledge,
transfer or other disposition to or
with the Company, or to or with any of
its subsidiaries (in a single
transaction or series of related
transactions) of all or a substantial
part of the assets of an Interest
Member; (d) the issuance or transfer by
the Company or any of its subsidiaries
of any securities of the Company or any
of its subsidiaries to an Interested
Member other than an issuance or
transfer of securities which is
effected on a pro rata basis to all
Members; (e) any acquisition by the
Company or any of its
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subsidiaries of any securities issued
by an Interested Member; (f) any
recapitalization or reclassification of
shares of any class of voting stock of
the Company or any amalgamation, merger
or consolidation of the Company with
any of its subsidiaries which would
have the effect, directly or
indirectly, of increasing the
proportionate share of the outstanding
shares of any class of capital stock of
the Company (or any securities
convertible into any class of such
capital stock) owned by any Interested
Member; (g) any amalgamation, merger or
consolidation of the Company with any
of its subsidiaries after which the
provisions of this Bye-Law 10.15 shall
not appear in the Memorandum of
Association (or the equivalent charter
documents) of the surviving entity; (h)
any plan or proposal for the
liquidation or dissolution of the
Company; and (i) any agreement,
contract or other arrangement providing
for any of the transactions described
in this definition of Business
Combination.
(ii) The term "Interested Member" means any
individual, corporation, partnership or
other person or entity which, as of the
record date for the determination of
Members entitled to notice of and to
vote on any Business Combination, or
immediately prior to the consummation
of any such Business Combination, is a
"Beneficial Owner" (as defined in Rule
13d-3 of the General Rules and
Regulations under the Securities
Exchange Act of 1934 as in effect at
the date of adoption of this Bye-Law
10.15 by the Members of the Company)
(the "Exchange Act") of shares of any
class or series of capital stock of the
Company which, when combined with the
shares of such class or series of stock
of which any "Affiliates" or
"Associates" (as defined in Rule l2b-2
under the Exchange Act) of such
individual, corporation, partnership or
other person or entity are Beneficial
Owners, amount to ten percent (10%) or
more of the outstanding shares of such
class or series of stock, and any
Affiliate or Associate of any such
Interested Member;
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(iii) The term "Continuing Director" shall
mean any Director of the Company who
was a Director on the date of approval
of these Bye-Laws by the Members, and
any other Director whose election as a
Director was recommended or approved by
a majority of Continuing Directors; and
(vi) Any action required to be taken by the
vote of the Continuing Directors shall
be effective only if taken at a meeting
at which a "Continuing Director Quorum"
is present. The term "Continuing
Director Quorum" means two-thirds
(2/3rds) of the Continuing Directors
capable of exercising the powers
conferred upon them under the
provisions of the ACT or these Bye-Laws
or by other applicable law.
(d) Notwithstanding Bye-Law 12.03, this Bye-Law 10.15 may
not be amended or repealed unless and until such
amendment or repeal has been approved by the
Continuing Directors and confirmed by the affirmative
vote of a majority of the shares voted at a general
meeting.
10.16 SHOW OF HANDS. - Subject to the ACT, any question at a general
meeting of Members shall be decided by a show of hands, unless
a ballot thereon is required or demanded as hereinafter
provided, and upon a show of hands every person who is present
and entitled to vote shall have one vote. Whenever a vote by
show of hands shall have been taken upon a question, unless a
ballot thereon is so required or demanded, a declaration by
the chairman of the meeting that the vote upon the question
has been carried or carried by a particular majority or not
carried and an entry to that effect in the minutes of the
meeting shall be prima facie evidence of the fact without
proof of the number of proportion of the votes recorded in
favour of against any resolution or other proceeding in
respect of the said question, and the result of the vote so
taken shall be the decision of the Members upon the said
question.
10.17 BALLOTS. - On any question proposed for consideration at a
general meeting of Members, and whether or not a show of hands
has been taken thereon, the chairman may require a ballot or
any person who is present and entitled to vote on such
question at the meeting may demand a ballot. A ballot so
required or demanded shall be taken in such manner as the
chairman shall direct. A requirement or demand for a ballot
may be withdrawn at
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any time prior to the taking of the ballot. If a ballot is
taken each person present shall be entitled, in respect of the
shares which he is entitled to vote at the meeting upon the
question, to that number of votes provided by the ACT or these
Bye-Laws, and the result of the ballot so taken shall be the
decision of the Members upon the said question.
10.18 ADJOURNMENT. - The chairman at a general meeting of Members
may, with the consent of the general meeting and subject to
such conditions as the meeting may decide, adjourn the meeting
from time to time and from place to place. If a meeting of
Members is adjourned for less than thirty (30) days, it shall
not be necessary to give notice of the adjourned meeting,
other than by announcement at the earliest meeting that is
adjourned. Subject to the ACT, if a meeting of Members is
adjourned by one or more adjournments for an aggregate of
thirty (30) days or more, notice of the adjourned meeting
shall be given as for an original meeting.
10.19 REQUISITION. - Members holding not less than one-tenth
(1/10th) of the issued and outstanding shares of the Company
shall at all times have the right, by written requisition to
the President, Vice-President or Secretary of the Company, to
require a special general meeting to be called by the
Directors for the transaction of any business specified in
such requisition; such meeting shall be held within two (2)
months after the deposit of such requisition. If, within
twenty-one (21) days of such deposit, the Directors fail to
proceed to convene such meeting, the requisitionists
themselves may do so in accordance with the relevant
provisions of the ACT.
NOTICES
11.01 METHOD OF GIVING NOTICES. - Any notice (which term includes
any communication or document) to be given (which term
includes sent, delivered or served) pursuant to the ACT, these
Bye-Laws or otherwise to a Member, Director, officer, Auditor
or member of a committee of the Board shall be sufficiently
given if delivered personally to the person to whom it is to
be given or if mailed to him at his recorded address by
prepaid mail or by overnight courier. A notice so delivered
shall be deemed to have been received when it is delivered
personally and a notice so mailed shall be deemed to have been
received on the fifth day after it is
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deposited in a post office or public letter box. The Secretary
may change or cause to be change the recorded address of any
Member, Director, officer, Auditor or a member of a committee
of the Board in accordance with any information believed by
him to be reliable.
11.02 NOTICE OF JOINT MEMBERS. - If two or more persons are
registered as joint holders of any share, any notice may be
addressed to all such joint holders, but notice addressed to
one of such persons shall be sufficient notice to all of them.
11.03 COMPUTATION OF TIME. - In computing the date when notice must
be given under any provision requiring a specified number of
days' notice of any meeting or other event, the day of giving
the notice shall be excluded and the day of the meeting or
other event shall be excluded.
11.04 UNDELIVERED NOTICES. - If any notice given to a Member
pursuant to Bye-Law 11.01 is returned on three (3) consecutive
occasions because he cannot be found, the Company shall not be
required to give any further notices to such Member until he
informs the Company in writing of his new address.
11.05 OMISSIONS AND ERRORS. - The accidental omission to give any
notice to any Member, Director, officer, Auditor or a member
of a committee of the Board or the non-receipt of any notice
of any such person or any error in any notice not affecting
the substance thereof shall not invalidate any action taken at
any meeting held pursuant to such notice or otherwise founded
thereon.
11.06 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW. - Every person
who, by operation of law, transfer, death of a Member or any
other means whatsoever, shall become entitled to any share,
shall be bound by every notice in respect of such share which
shall have been duly given to the Member from whom he derives
his title to such share prior to his name and address being
entered on the Register of Members (whether such notice was
given before or after the happening of the event upon which he
became so entitled) and prior to his furnishings to the
Company the proof or authority or evidence of his entitlement
prescribed by the ACT.
11.07 WAIVER OF NOTICE. - Any Member, proxyholder or other person
entitled to attend a meeting of Members, Director, officer,
Auditor or member of a committee of the Board may at any time
waive any notice, or waive or
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abridge the time for any notice, required to be given to him
under the ACT, these Bye-Laws or otherwise, and such waiver or
abridgement, whether given before or after the meeting or
other event of which notice is required to be given, shall
cure any default in the giving or in the time of such notice,
as the case may be. Any such waiver or abridgement shall be in
writing except a waiver of notice of a meeting of Members or
of the Board or a committee of the Board which may be given in
any manner.
OPERATIVE DATE
12.01 OPERATIVE DATE. - These Bye-Laws when made by the Board in
accordance with the ACT, shall become operative when approved
by the Members in general meeting.
12.02 REPEAL. - The previous Bye-Laws of the Company are repealed as
of the coming into force of these Bye-Laws. Such repeal shall
not affect the previous operation of such Bye-Laws so repealed
or affect the validity of any act done or right, privilege,
obligation or liability acquired or incurred under, or the
validity of any contract or agreement made pursuant to or
amendment of the Memorandum of Association obtained pursuant
to, any such Bye-Laws prior to their repeal. All officers and
persons acting under the Bye-Laws so repealed shall continue
to act as if appointed under the provisions of these Bye-Laws
and all resolutions of the Members or the Board or a committee
of the Board with continuing effect passed under the repealed
Bye-Laws and all resolutions of the Members or the Board or a
committee of the Board with continuing effect passed under the
repealed Bye-Laws shall continue to be good and valid except
to the extend inconsistent with these Bye-Laws and until
amended or repealed.
12.03 AMENDMENTS. - No Bye-Law shall be rescinded, altered or
amended and no new Bye-Law shall become operative until the
same has approved by a resolution of the Board and confirmed
by the affirmative vote of a majority of the shares voted at a
general meeting.
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EXHIBIT 5.1
[LETTERHEAD OF APPLEBY,
SPURLING & KEMPE]
APPLEBY, SPURLING & KEMPE
BARRISTERS & ATTORNEYS
CEDAR HOUSE, 41 CEDAR AVENUE, HAMILTON HM12, BERMUDA
MAIL: PO BOX HM 1179, HAMILTON HM EX, BERMUDA
TELEPHONE: + 441 295 2244
FAX: + 441 292 8666/441 295 5328
YOUR REF:
OUR REF: ASM/RT
26th July, 1996
Intelect Communications Systems Limited
Reid House
Church Street
Hamilton HM 12
Bermuda
Dear Sirs,
RE: INTELECT COMMUNICATIONS SYSTEMS LIMITED
---------------------------------------
We have acted as Bermuda advisers to Intelect Communications Systems
Limited, a Bermuda company (the "Company"). We have been requested to render
this opinion as to Bermuda law in connection with its registration for resale of
2,057,401 shares of Common Stock (the "Resale Shares") as described in the
Company's Prospectus (the "Prospectus") contained in the Form S-3 Registration
Statement (the "Registration Statement"), filed with the United States
Securities and Exchange Commission under the Securities Act of 1933, as amended.
For the purposes of this opinion, we have been supplied with and
reviewed a copy of the Registration Statement, and have relied upon the
Memorandum of Association and Bye-Laws of the Company and such other documents,
certificates and records and have made such investigations as we deem necessary
or appropriate in order to give the opinion expressed herein.
BERMUDA O HONG KONG O ISLE OF MAN O GENEVA
WITH AFFILIATES IN THE BRITISH VIRGIN ISLAND, GUEBNSEY AND THE CAYMAN ISLANDS
<PAGE>
APPLEBY, SPURLING & KEMPE
2
We have assumed:-
(i) the genuineness of all signatures on the documents which we
have examined; and
(ii) the conformity to original documents of all documents produced
to us as copies and the authenticity of all original documents
which, or copies of which, have been submitted to us.
Based upon and subject to the foregoing and subject to the reservations
mentioned below and to any matters not disclosed to us, we are of the opinion
that:-
(i) the Company is duly incorporated and validly existing under
Bermuda law;
(ii) the Resale Shares have been duly authorised and validly issued
by the Company and subject to no further calls; and
(ii) the statements set forth in the Prospectus under the headings
"Enforceability of Civil Liabilities under United States
Federal Securities Law" and "Description of Capital Stock" to
the extent that they constitute matters of Bermuda law, or
legal conclusions with respect thereto, have been reviewed by
us and are accurate in all material respects and fairly
present the information disclosed therein in all material
respects.
Our reservations are as follows:-
(A) We express no opinion as to any law other than Bermuda law and
none of the opinions expressed herein relates to compliance
with or matters governed by the laws of any jurisdiction other
than Bermuda. Where an obligation is to be performed in a
jurisdiction other than Bermuda, a Bermuda court may decline
to enforce it to the extent that such performance would be
illegal or contrary to public policy under the laws of such
other jurisdiction.
(B) We express no opinion as to the availability of equitable
remedies, such as specific performance or injunctive relief,
or as to any matters which are within the discretion of the
Bermuda courts, such as the award of costs, or questions
related to jurisdiction. Further, we express no opinion as to
the validity or binding effect in Bermuda of any waiver of or
obligation to waive any provision of law (whether substantive
or procedural) or any right or remedy arising through
circumstances not known at the time of the filing of the
Registration Statement.
(C) Section 9 of the Interest and Credit Charges (Regulation) Act
1975 provides that the Bermuda courts have discretion as to
the amount of interest if any payable on the amount of a
judgment after date of judgment. If the court does not
exercise that
<PAGE>
APPLEBY, SPURLING & KEMPE
3
discretion, then interest will accrue at the statutory rate
which is currently seven per cent per annum.
(D) Where a party is vested with a discretion or may determine a
matter in its opinion, such discretion may have to be
exercised reasonably or such an opinion may have to be based
on reasonable grounds.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption
"Enforceability of Civil Liabilities under United States Federal Securities Law"
and "Legal Matters" in the Prospectus which is a part of the Registration
Statement.
This opinion is issued on the basis that it will be construed in
accordance with the provisions of Bermuda law. It is issued solely for the
benefit of the addressee in relation to the transaction described above and is
not to be made available to or relied upon by any other person, firm or entity.
Yours faithfully,
/s/ Appleby, Spurling & Kempe
EXHIBIT 23.2
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
To the Board of Directors
Intelect Communications Systems Limited
We consent to the incorporation by reference in the registration statement
relating to the offering for sale of 2,057,401 common shares on Form S-3 of
Intelect Communications Systems Limited of our report dated March 15, 1996
relating to the consolidated balance sheets of Intelect Communications Systems
Limited and subsidiaries as of December 31, 1995 and October 31, 1995 and 1994
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the two month period ended December 31, 1995 and each
of the years in the three-year period ended October 31, 1995, and all related
schedules, which report appears in the December 31, 1995 Form 10-K Transition
Report of Intelect Communications Systems Limited, and our report dated January
19, 1996 relating to the consolidated balance sheets of Intelect Communications
Systems Limited and subsidiaries as of October 31, 1995 and 1994 and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended October 31, 1995, and
all related schedules, which report appears in the October 31, 1995 Form 10-K of
Intelect Communications Systems Limited.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
Hamilton, Bermuda Chartered Accountants
July 26, 1996
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
To The Board of Directors
Intelect Communications Systems Limited:
We consent to the incorporation by reference in the registration statement
relating to the offering for sale of 2,057,401 common shares on Form S-3 of
Intelect Communications Systems Limited of our report dated May 22, 1996
relating to the balance sheets of MOSAIC Information Technologies, Inc. (a
development stage corporation) as December 31, 1993, 1994 and 1995, and the
related statements of operations, stockholders' equity (deficiency) and cash
flows for the years ended December 31, 1993, 1994 and 1995 and for the period
from January 24, 1992 (date of inception) through December 31, 1995, which
report appears in the June 3, 1996 Form 8-K/A of Intelect Communications
Limited. Our report dated May 22, 1996, contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations since
inception and has a working capital deficiency and net capital deficiency, which
raise substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
We consent to the use of our report incorporated herein by reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
New York, New York
July 26, 1996
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Intelect Communications Systems Limited:
We Consent to (a) the use of our report dated February 16, 1996 relating to the
balance sheets of DNA Enterprises, Inc. as of December 31, 1995 and 1994 and the
related statements of income, stockholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1995, incorporated herein
by reference and included in the Form 8-K/A dated April 12, 1996, (b) the use of
our report dated November 22, 1995 relating to the balance sheets of Intelect,
Inc. as of April 24, 1995 and December 31, 1994 and 1993 and the related
statements of operations and accumulated deficit and cash flows for the period
from January 1, 1995 to April 24, 1995 and for each of the years in the two-year
period ended December 31, 1994, incorporated herein by reference and included in
the Form 8-K/A dated December 4, 1995, and (c) the reference to our firm under
the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Dallas, Texas
July 26, 1996
