FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 1995
INTELLICALL, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10588 75-1993841
(State or other jurisdiction Commission (IRS Employer
of incorporation) File Number) Identification No.)
2155 Chenault, Suite 410, Carrollton, Texas 75006
(Address of principal executive offices) (Zip Code)
(214) 416-0022
Registrant's telephone number, including area code
NONE
(Former name or former address, if changed since last
report).
<PAGE>
Item 5. Other Events.
On December 29, 1995 the Registrant executed a Note and Warrant
Purchase, Paying and Conversion/Exercise Agency Agreement (the "Note Agreement")
with Banca del Gottardo ("Gottardo"). Pursuant to the Note Agreement the
Registrant issued $7.5 million of its 8% Convertible Subordinated Notes (the
"Notes") due December 31, 2000 and warrants to purchase 300,000 shares of the
Registrant's common stock, $.01 par value (the "Common Stock") (the "Gottardo
Warrants"). The conversion price of the Notes and the exercise price of the
Gottardo Warrants will be established on March 29, 1996 and will be the lower
of: (a) $4.75 per shares, (b) the average of the closing prices of the
Registrant's Common Stock during the period from March 14 to March 29, 1996, or
(c) 120% of the average of the closing prices of the Registrant's Common Stock
during the period from December 19 to December 29, 1995.
The Registrant used the net proceeds ($7,000,000) from the sale of the
Notes to repay the outstanding 12.5% Series B Notes due to Nomura Holding
America, Inc. ($4,500,000) and for general working capital ($2,500,000)
including payment of outstanding trade payables.
In connection with the issuance of the Notes the Registrant issued an
additional Warrant to purchase 200,000 shares of the Registrant's Common Stock
(the "Additional Warrant"). The exercise price for the Additional Warrant is the
same price as for the Gottardo Warrants.
Item 7. Financial Statements and Exhibits.
(c) The following exhibits are filed as a part of this Form 8-K
Current Report:
10.1 Note and Warrant Purchase, Paying and Conversion/
Exercise Agency Agreement.
10.2 Form of 8% Convertible Subordinated Notes.
10.3 Form of Gottardo Warrants.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTELLICALL, INC.
/s/ William O. Hunt
Date: January 5, 1996 William O. Hunt,
Chairman, President and
Chief Executive Officer
NOTE AND WARRANT PURCHASE,
PAYING AND CONVERSION/EXERCISE AGENCY AGREEMENT
INTELLICALL, INC.
Carrollton, Texas, U.S.A.
USD 7'500'000.--
8% Subordinated Convertible Notes of 1995 due
December 31, 2000 and 300'000 Warrants
expiring December 31, 2000
December 22, 1995
<PAGE>
2.
TABLE OF CONTENTS
DEFINITIONS
I. SUBJECT 4
II. ANNEXES 5
III. SALES RESTRICTIONS 6
IV. COMMISSION AND EXPENSES 10
V. WARRANTIES 11
VI. PAYMENT TO THE COMPANY 13
VII. CONDITIONS TO THE OBLIGATIONS
OF BANCA DEL GOTTARDO 14
VIII. INFORMATION MEMORANDUM 15
IX. PRINTING OF THE NOTES AND WARRANTS 15
X. SERVICING OF THE NOTES 17
XI. CANCELLATION OF NOTES AND COUPONS AND WARRANTS 18
XII. COVENANTS 19
XIII. RIGHT OF TERMINATION 20
XIV. COMMUNICATIONS 21
XV. APPLICABLE LAW AND JURISDICTION 21
XVI. EFFECTIVENESS 22
XVII. CURRENCY INDEMNITY 22
XVIII. ENTIRE AGREEMENT 23
XIX. AMENDMENT, CANCELLATION AND WAIVER 23
ANNEX A TERMS OF THE NOTES 24
ANNEX B DEFINITIVE NOTE (FACE) 41
ANNEX C-1/C-2 INTEREST COUPONS 43/44
ANNEX D GLOBAL NOTE 45
ANNEX E TERMS OF THE WARRANTS 47
ANNEX F DEFINITIVE WARRANT (FACE) 65
ANNEX G GLOBAL WARRANT 67
ANNEX H CONVERSION AGENCY AGREEMENT 69
ANNEX I WARRANT AGENCY AGREEMENT 85
ANNEX J/J-2 CERTIFICATION OF NON U.S. BENEFICIAL OWNERSHIP 96/97
ANNEX K CERTIFICATE OF NO MATERIAL ADVERSE CHANGE 98
ANNEX L SPECIMEN SIGNATURE FORM 99
ANNEX M LIMITED WAIVER AND CONSENT 100
ANNEX N CERTIFICATE BY BANCA DEL GOTTARDO 105
<PAGE>
3.
NOTE AND WARRANT PURCHASE, PAYING AND CONVERSION/EXERCISE
AGENCY AGREEMENT
entered into effective as of December 22, 1995
between
INTELLICAL, INC.
being a corporation existing under the laws of the State of Delaware whose head
office is situated at 2155 Chenault, Suite 410, Carrollton, Texas 75006-5023,
U.S.A.,
(hereinafter called the "Company")
on the one part
and
BANCA DEL GOTTARDO
being a corporation duly organized with limited liability and existing under the
laws of Switzerland, whose registered office is situated at Viale Stefano
Franscini 8, 6901 Lugano, Switzerland,
on the other part
Some Definitions
The Company's 8% subordinated Convertible Notes of 1995 due December 31, 2000,
are referred to herein as the "Notes" and the Warrants of 1995 expiring December
31, 2000 as the "Warrants".
Until the Notes have been printed in definitive form pursuant to Article IX
hereof, the expression "Notes" herein shall include entitlements under the
Global Note, and the expressions "Noteholder(s)" and "Couponholder(s)", mutatis
mutandis, shall mean and include persons and entities entitled to the benefits
under the Global Note. Each Noteholder possesses a co-ownership in the Global
Note in relation to the principal amount of Notes of which he is an owner.
"Global Note" means a global note for the total principal amount of USD
7'500'000.--issued in bearer form and representing 1'500 single Notes each in
the amount of USD 5'000.--and representing the aforementioned total principal
amount. The Global Note will be destroyed by Banca del Gottardo when the Notes
are printed.
Until the Warrants have been printed in definitive form pursuant to Article IX
hereof, the expression "Warrants" herein shall include entitlements under the
Global Warrant, and the expressions "Warrantholder(s)", mutatis mutandis, shall
mean and include persons and entities entitled to the benefits under the Global
Warrant. Each Warrantholder possesses a co-ownership in the Global Warrant in
relation to the principal number of Warrants he is an owner of.
"Global Warrant" means a global Warrant for the total number of 300'000 Warrants
issued in bearer form. The Global Warrant will be destroyed by Banca del
Gottardo when the Warrants are printed.
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4.
Global Note and Global Warrant are hereinafter sometimes collectively referred
to as the "Global Certificates".
I. SUBJECT
Subject to the terms and conditions hereof
- the Company, pursuant to authorization by its Board
of Directors, agrees to issue and sell to Banca del
Gottardo USD 7'500'000 Notes at a price of 100% of
their principal amount, and 300'000 Warrants in a
ratio of one Note and 200 Warrants and
- Banca del Gottardo agrees not later December 31, 1995
(1) to purchase (i.e. underwrite) on a firm
basis for USD 7'500'000 Notes at
a price of 100% of their principal amount
and 300'000 Warrants, and
(2) to offer the Notes and Warrants in a
placement exclusively to its clients
and other financial institutions at a price
of 100% of their principal amount,
(i) Notes
with a total principal amount of USD 7'500'000.--
(United States Dollars seven
million five hundred thousand)
maturing on December 31, 2000
bearing interest at the
rate of 8% per
annum, payable
semi-annually in
arrear each June
30 and December
31, commencing
June 30, 1996
until maturity
and
(ii) Warrants
in a total number of 300'000 (three hundred
thousand)
expiring on December 31, 2000
The aggregate amount for which Notes and Warrants are sold are
hereinafter referred to as the "Proceeds".
The net Proceeds of the Notes will be utilized by the Company as
follows:
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5.
A. USD 4'500'000 to be utilized to repay in the amount of USD
4'500'000 either variable Rate Senior Bridge Notes Due 1996,
Series A and/or 12.5% Senior Bridge Notes Due 1996, Series B
floated by the Company under a note purchase agreement dated
August 11, 1994 by and between the Company and Nomura Holding
America Inc.;
B. USD 1'500'000 to be utilized to reduce outstanding trade
accounts payable; and
C. the remaining proceeds are at the Company's free disposal for
the financing of acquisitions, working capital and general
corporate purposes.
Banca del Gottardo shall not have any responsibility for or be obliged
to concern itself with the application of the net Proceeds of the
Notes.
II. ANNEXES
The contents of each of the Annexes attached hereto, i.e.
Annex A: Terms of the Notes
Annex B: Form of Definitive Note (face)
Annex C: Form of Interest Coupons
Annex D: Form of Global Note
Annex E: Terms of the Warrants
Annex F: Form of Definite Warrant (face)
Annex G: Form of Global Warrant
Annex H: Conversion Agency Agreement
Annex I: Warrant Agency Agreement
Annex J: Certification of Non U.S. Beneficial Ownership
Annex K: Form of Certificate of No Material Adverse Change
Annex L: Specimen signature form
Annex M: Limited Waiver and Consent
Annex N: Certificate by Banca del Gottardo
shall constitute an integral part of this Agreement.
III. SALES RESTRICTIONS
a) The Notes and Warrants to be issued pursuant to this Agreement
have not been registered under the United States Securities
Act of 1933, as amended (the "Securities Act"), and may not be
offered, sold or delivered, directly or indirectly, in the
United States or to, or for the account of, any U.S. person
except in transactions exempt from the registration
requirements of the Securities Act.
b) As to the Company, the Notes and Warrants are intended to be
obligations that are not required to be in registered form for
purposes of United States federal tax laws and the principal
(to the extent characterized as original issue discount) and
interest payable on the Notes are intended to be "portfolio
interest" under Sections 871(h) and 881(c) of the United
States Internal Revenue Code of 1986 as amended (the "Code").
Accordingly, the
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6.
Notes and the Warrants may not, as part of any part of the
initial distribution, be offered for sale or resale, sold or
delivered, directly or indirectly, to a person in the United
States or to a United States person. Banca del Gottardo (i)
agrees and represents that no Notes or Warrants will be
offered, sold or delivered to or on behalf of a person within
the United States or a United States person, (ii) represents
and agrees that (a) it will not offer or sell, and, during the
period beginning on the earlier of the first date that the
Notes and Warrants are offered or the date on which the Notes
are issued and ending on the date forty (40) days after the
later of the date upon which the Notes and Warrants were first
offered or the date of closing of this offering (the
"Restricted Period"), it will not offer or sell, Notes or
Warrants to a person who is within the United States or to a
United States person, (b) it has not delivered and will not
deliver within the United States definitive Notes or coupons
or definitive Warrants that are sold during the Restricted
Period, (c) it has and throughout the Restricted Period will
have in effect procedures reasonably designed to ensure that
its employees or agents who are directly engaged in selling
Notes or Warrants are aware that such Notes or Warrants may
not be offered or sold during the Restricted Period to a
person who is within the United States or to a United States
person and (d) it has not entered and will not enter into any
contractual arrangement with respect to the distribution and
delivery of the Notes and the Warrants, except with its
affiliates or with the prior written consent of the Company,
(iii) represents and agrees with respect to each affiliate
that acquires from it Notes or Warrants for the purpose of
offering or selling such Notes or Warrants during the
Restricted Period, repeating and confirming the
representations and agreements contained in clauses (ii) (a),
(b), (c) and (d) on each such affiliate's behalf and (iv)
represents and agrees that it will not sell or deliver Notes
and Warrants to a holder which is (a) immediately after the
sale or delivery, a "10- percent. shareholder" of the Company
within the meaning of Section 871(h) (3) of the Code, (b) a
bank on an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of its trade or
business, (c) a controlled foreign corporation which is
related to the Company under section 864 (d) (4) of the Code,
or (d) within a foreign country which the United States
Secretary of the Treasury has determined under section 871(h)
(6) of the Code that the exchange of information with the
foreign country is inadequate to prevent evasion of United
States tax by United States persons. Banca del Gottardo will
deliver to the Company the certificate in the form attached
hereto as Annex N within ten business days of the commencement
of the Restricted Period. For purposes of this Agreement,
whether an offer, sale or delivery is made to a person within
the United States or to a United States person will be
determined under the rules set out in the Code, and United
States Treasury Regulation Section 1.1 63- 5(c)(2)(i)(D).
Banca del Gottardo agrees that it will comply fully with the
selling restrictions set out in this Sub-Section (b) and, in
particular, Banca del Gottardo hereby covenants and agrees to
the effect set out in clauses (ii) and (iii) of the second
preceding sentence.
c) The Notes will be represented initially by a temporary Global
Convertible Note (the "Global Note"), without interest
coupons, and the Warrants will be represented initially by a
temporary Global Certificate (the "Global Warrant"), the
Global Note and Global Warrant to be deposited by the Company
with Banca del Gottardo, on the Payment Date. The Global Note
may be exchanged, as a whole or in part, for appropriate
definitive Notes, in bearer form in the denominations of USD
5'000. - with interest coupons (the "coupons") attached, and
the Global Warrant may be exchanged, as a whole or in part,
<PAGE>
7.
for appropriate definitive Warrants, in bearer form not
earlier than 40 days after the later of the date on which the
Notes and the Warrants are first offered or the Payment Date,
before which time no Notes represented by the Global Note or
Warrants represented by the Global Warrant or interest therein
may be offered, sold or transferred into the United States or
to a U.S. person. Such exchange shall be made upon
certification, in the form attached hereto as Annex J, that
the beneficial owners of the Notes or Warrants either (i) are
not United States persons or U.S. persons or (ii) are
financial institutions (within the meaning of United States
Treasury Regulation Section 1. 165-12(c)(1)(v)) located
outside the United States that are not United States persons
and have purchased such Notes or Warrants for resale during
the Restricted Period and certify they have not acquired the
Notes or the Warrants for purposes of resale directly or
indirectly to a United States person or to a person within the
United States. Any certificates provided by a clearing
organization must be based on statements provided to it by its
members. A beneficial owner of Notes must exchange its share
of the Global Note for definitive Notes before such Notes or
interests therein may be transferred or as regards the Notes
before interest payments or other payments will be made and a
beneficial owner of Warrants must exchange its position of the
Global Warrant for definitive Warrants before such Warrants
will be exercised. Banca del Gottardo agrees (i) to furnish to
the Company a properly completed certificate with respect to
each Note and Warrant, in the form attached hereto as Annex J
and J-2 (and, in the case of clearing organizations, required
statements of members of the clearing organization), on the
earlier of the date of the first actual payment of interest on
the Note or the date of delivery by the Company of the Note or
Warrant in definitive form, and (ii) to issue definitive Notes
and Warrants within a reasonable time after the end of the
Restricted Period (for this purpose, a temporary global
security is not a security in definitive form).
d) In this Agreement, references to "dollars" and "USD" are to
United States dollars, the term "United States" means the
United States of America (including the States and the
District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction, and the term "United
States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any
political subdivision thereof; or an estate or trust the
income of which is subject to United States federal income
taxation regardless of its source, "U.S.person" shall have
the meaning set forth in Sections 230.901 through 904 of
Title 17 of the United States Code of Federal Regulations
("Regulation S").
e) The following legends will appear on the Global Note and all
Notes and coupons issued pursuant to the Offer: (i) "Any
United States person who holds this obligation will be
subject to limitations under the United States income tax
laws, including the limitations provided in sections 165(j)
and 1287(a) of the Internal Revenue Code", and (ii) "This
Note has not been and will not be registered under the United
States Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered, sold or delivered, directly or
indirectly, in the United States or to, or for the benefit
of any U.S. person (as such terms are defined in Regulation S
under the Securities Act) unless this Note is registered under
the Securities Act or an exemption from the registration
requirements of the Securities Act is available." The
sections referred to in the legend provide that, with
certain exceptions, a United States person will not be
permitted to deduct any loss, and
<PAGE>
8.
will not be eligible for capital gain treatment with respect
to any gain, realized on a sale, exchange or redemption of
such Notes or coupons.
f) The following legends will appear on the Global Warrant and
all Warrants issued pursuant to the Offer: "This Warrant has
not been and will not be registered under the United Stated
Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered, sold or delivered, directly or indirectly,
in the United States or to, or for the benefit of, any U.S.
person (as such terms are defined in Regulation S under the
Securities Act) unless this Warrant is registered under the
Securities Act or an exemption from the registration
requirements of the Securities Act is available."
g) The Company represents, warrants and covenants that the Notes
and the Warrants have not been and shall not be offered or
sold except in accordance with Rule 903 promulgated under the
Securities Act or in a transaction exempt from the
registration requirements of the Securities Act. Each of the
Company and Banca del Gottardo represents, warrants and
covenants that (i) none of it, its affiliates or any person
acting on its behalf has engaged or will engage in any
directed selling efforts (as defined in Rule 902 promulgated
under the Securities Act) in the United States and it has
complied and will comply with the offering restrictions of
Regulation S under the Securities Act in connection with the
offer of the Notes and the Warrants, (ii) none of it, its
affiliates or any person acting on its behalf has utilized or
will utilize any form of general solicitation or general
advertising (as such terms are used in Regulation D
promulgated under the Securities Act) in connection with the
offer of the Notes and the Warrants in the United States,
(iii) none of it, its affiliates or any person acting on its
behalf has made or will make an offer of the Notes in
circumstances that would require the registration of the
Notes or Warrants under the Securities Act and (iv) requests
to purchase Notes and/or Warrants shall be accepted only from
persons who are not within the United States.
h) Banca del Gottardo has been advised by the Company and
acknowledges and confirms that it is aware (a) that a
violation or breach of any of the terms and conditions of
Article III of this Agreement could directly cause the
Company to become subject to damages and liabilities
(including but not limited to, excise taxes, a loss of the
interest deduction and assumption of withholding taxes) under
various United States securities and tax laws, and (b) that,
as a consequence, Banca del Gottardo could be held liable for
such damages and liabilities, in the event Banca del Gottardo
violated or breached such terms and conditions.
IV. COMMISSION AND EXPENSES
a) The Company will pay on December 29, 1995 Lugano time (the
"Closing Date") to Banca del Gottardo
(1) a managing and underwriting commission of 6%
calculated on the principal amount of the Notes
(2) USD 50'000.-- for out-of-pocket expenses incurred by
Banca del Gottardo, which shall include all its legal
fees and expenses.
<PAGE>
9.
The payment by the Company of (1) and (2) above will be made
by deduction from the payment by Banca del Gottardo to the
Company of the Proceeds, resulting in the Net Proceeds as per
Article VI.
b) The Company shall further bear when ascertainable and due
- all present or future taxes, duties or other charges
levied by or within the United States of America in
connection with the execution and delivery of this
Agreement (excluding tax on interest or principal on
the Notes which is addressed in Annex A); and
- the commissions and expenses for the servicing and
the conversion of the Notes as per Article X and the
exercise of the Warrants as set forth in the Warrant
Agency Agreement;
c) The Company will reimburse Banca del Gottardo on first demand
for all reasonable bank charges, legal fees and other
reasonable costs and expenses incurred or to be incurred by
Banca del Gottardo in case of or in connection with
reorganization, merger, restructuring or default, actual or
threatened, of the Company as well as in connection with the
convening of a Noteholders' meeting and the preservation and
enforcement of any of the rights under this Agreement, the
Global Warrant or the Warrants, the Global Note or the Notes.
d) Banca del Gottardo shall bear
- all costs and expenses in connection with the initial
offering and placement of the Notes and the Warrants
incurred by it.
Banca del Gottardo shall further bear
- the cost for the printing and delivery to the holders
of the definitive Notes or of the definitive Warrants
incurred by Banca del Gottardo on behalf of the
Company.
- all costs incurred by it in connection with the
offering, including the printing in Switzerland of
the Information Memorandum relating to the Notes and
the Warrants.
V. WARRANTIES
A) The Company warrants to and for the benefit of Banca del Gottardo that:
1. Status: it is a corporation duly incorporated and existing in
good standing under the laws of the State of Delaware capable
of suing and being sued and has the power and authority
to own its assets and to conduct the business which it
presently conducts;
2. Powers: it has the power to enter into, exercise its rights
and perform and comply with its obligations under this
Agreement;
<PAGE>
10.
3. Authorization and Consents: except as to the registration
requirements provided for herein, all actions, conditions and
things required by the laws of the State of Delaware and the
United States of America have been taken, fulfilled and done
(including the obtaining of any necessary consents) in order
a) to enable it lawfully to enter into, exercise its
rights and perform and comply with its obligations
under this Agreement; and
b) to ensure that those obligations are legally binding
and enforceable in accordance with their terms
subject to general equity principles, to applicable
bankruptcy, insolvency, conservatorship,
reorganization and other similar debtor relief laws,
and to other laws establishing liens and priorities
or otherwise relating to or affecting
creditors-rights;
4. Non-Violation of Laws, etc: its entry into, and exercise of
its rights and/or performance of or compliance with its
obligations under this Agreement, the terms of the Global Note
and the Notes and the terms of the Global Warrant and the
Warrants do not and will not violate in any material way
a) any law to which it is subject; or
b) its Certificate of Incorporation; or
c) except for matters for which the Company has received
a waiver, any agreement to which it is a party or
which is binding on it or its assets, and does not
and will not result in the existence of, or obligate
it to increase, any security interest in those
assets, except to the extent that such violations in
the aggregate would not have a material adverse
effect on the financial conditions of the Company;
5. Obligations Binding: its obligations under this Agreement, the
Global Note and the Notes, the Global Warrant and the Warrants
when duly executed are valid, binding and enforceable in
accordance with their terms subject to general equity
principles, to applicable bankruptcy, insolvency,
conservatorship, reorganization and other similar debtor
relief laws, and to other laws establishing liens and
priorities or otherwise relating to or affecting creditors'
rights;
6. Information Memorandum: the information pertaining to the
Company and its subsidiaries which is contained in the
Information Memorandum (defined in Article VIII) is accurate
in all material respects and there are no other facts the
omission of which makes any statement therein materially
misleading;
7. Accounts: the audited and unaudited consolidated financial
statements included as contained in the Information Memorandum
present fairly the results and financial condition of the
Company as a whole for the periods and as of the dates
thereof, and are in accordance with generally accepted
accounting principles in the United States of America;
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11.
8. No Material Adverse Change: save as disclosed in the
Information Memorandum and the Company's filings with the
Securities and Exchange Commission in the U.S., there has
been no material adverse change in the consolidated financial
condition of the Company since September 30, 1995;
9. Litigation; except as disclosed in the Information Memorandum,
no litigation, arbitration or administrative proceedings or
judgment or award is current or, so far as the Company
is aware, threatened or pending
a) to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or
compliance with its obligations under this Agreement;
or
b) which either individually or collectively are
material in the context of the issue and sale of the
Notes or the Warrants or the making and performance
of this Agreement;
10. No Breach or Default: neither failure by the Company to comply
with Article III nor any event described in Sections 8, 9 or
10 of the Terms of the Notes has occurred and is continuing.
The Company is not in breach or in default under any agreement
to an extent or in a manner which has had or could have a
material adverse effect on the financial condition of the
Company and its consolidated affiliates taken as a whole.
(B) Since the commitment of Banca del Gottardo to purchase the Notes and
the Warrants is made on the basis of the aforesaid representations and
warranties, the Company hereby undertakes with Banca del Gottardo that
it will hold Banca del Gottardo harmless against all losses,
liabilities, costs, charges and expenses which it may incur as a note-
holder as a result of or in relation to any material misrepresentation
or any material breach of said representations and warranties by the
Company, and as long as any of the Notes and the Warrants are
outstanding Banca del Gottardo shall be given prompt notice by the
Company of any claim, action or proceeding which might give rise to an
obligation under this clause (B) of Article V. This indemnification by
the Company shall be in addition to any other remedy available to
Banca del Gottardo under applicable law.
VI. PAYMENT TO THE COMPANY
On the Closing Date, Banca del Gottardo will pay to the Company the net
proceeds (the "Net Proceeds") of the offering - after compensation with
the commissions and expenses mentioned in Article IV against the Global
Note and the Global Warrant being delivered to Banca del Gottardo
pursuant to Article VII.
Such net proceeds will be placed by Banca del Gottardo in US Dollars to
the credit of the Company in a US Dollar denominated account designated
by the Company.
Such net proceeds will be at the free disposal of the Company subject
to any Swiss National Bank regulations or other regulations that may be
in force on the Closing Date.
VII. CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO
<PAGE>
12.
Banca del Gottardo shall have received from the Company at the latest
on December 22, 1995 the following documents:
(1) a copy of the Certificate of Incorporation, together with all
amendments thereto, of the Company certified by the Secretary
or the Assistant Secretary of the Company and a copy of a
Certificate of the Secretary of State of the State of Delaware
as to the good standing of the Company, each dated as of a
recent date;
(2) a certified copy of a resolution or resolutions duly adopted
by the Board of Directors of the Company signed by a duly
authorized officer of the Company, conferring the necessary
authority upon the person(s) signing this Agreement, the
Information Memorandum, the Global Note, the Notes, the Global
Warrant, the Warrants and any related documents; and a
certificate of the Secretary, or Assistant Secretary of the
Company as to the incumbency and signatures of the officer(s)
of the Company signing the documents provided for in this
clause (2) on behalf of the Company and the approval of this
Agreement and the Information Memorandum;
(3) Global Note (in the form of Annex D, without interest coupons
and without reproduction of the Terms of the Notes) and the
Global Warrant (in the form of Annex G) both duly issued and
signed by an authorized officer of the Company to be held in
escrow by Banca del Gottardo pending payment of the Net
Proceeds pursuant to Article VI;
(4) an executed copy of the Conversion Agency Agreement as set
forth in Annex H hereto;
(5) an executed copy of the Warrant Agency Agreement as set forth
in Annex I hereto;
(6) specimen signatures for the printing of the Notes;
(7) Certificate of No Material Adverse Change dated as of the
Closing Date and signed by an authorized officer of the
Company, substantially in the form of Annex K hereto;
(8) a legal opinion of Gardere & Wynne, L.L.P., external U.S.
counsel to the Company on the laws of the United States of
America, dated as of the Closing Date;
(9) an opinion of the Company's Tax Counsel with respect to the
status of the Notes in respect of United States taxes, dated
as of the Closing Date;
(10) a certificate of two officers of the Company approving the
terms of the Notes and of the Warrants and the issue and sale
thereof by the Company;
(11) 2 copies of the Information Memorandum duly signed by an
authorized officer of the Company; and
(12) an executed copy of the Limited Waiver and Consent as set
forth in Annex M hereto.
Each of documents 5, 6, 7, 8, 9, 11 and 12 shall be
substantially as agreed by the Company and Banca del Gottardo
prior to the Closing Date.
<PAGE>
13.
VIII. INFORMATION MEMORANDUM
The Company will supply Banca del Gottardo on behalf of the holders of
the Notes in due time with information and documentation for the
preparation by Banca del Gottardo of the Information Memorandum (the
"Information Memorandum") relating to the Issue, in compliance with
Swiss law.
The Information Memorandum shall be reviewed by the Company and Banca
del Gottardo.
IX. PRINTING OF THE NOTES AND WARRANTS
Banca del Gottardo shall provide for the printing of all, but not some
only, of the Notes or of the Warrants, at its cost on behalf of the
Company. A proof of the Notes and of the Warrants shall be approved by
the Company, unless the Company is then in default, prior to the
printing thereof.
(1) The Notes shall
- be in the form of Annex B,
- have the Terms of the Notes (as per Annex A)
reproduced in English on the reverse side,
- be dated the Closing Date, and
- bear in facsimile the signature(s) of one or more
duly authorized officer(s) of the Company
- have Coupons attached, whereas
(2) the Coupons shall
- be in the form of Annex C, and
(3) The Warrants shall
- be in the form of Annex F
- have the Terms of the Warrants (as per Annex E)
reproduced in English on the reverse side
- to be dated the Closing Date, and
- bear in facsimile the signature(s) of one or more
duly authorized officer(s) of the Company.
(4) The Notes with Coupons attached shall be exchanged against the
Global Note delivered to Banca del Gottardo pursuant to
Article VII of this Agreement.
<PAGE>
14.
The Global Certificates so exchanged shall thereafter be
cancelled and returned to the Company.
The Company hereby irrevocably authorizes Banca del Gottardo
to reproduce on the Notes, the coupons and the Warrants the
signature of the President of the Company set forth in the
specimen signature form of Annex L attached hereto, with the
same binding effect upon the Company as if the Notes and the
coupons or the Warrants had been issued and signed by the
Company on the Closing Date.
Notes and/or Coupons or Warrants which are mutilated, lost or
destroyed may be replaced by Banca del Gottardo in accordance
with the respective provisions of the Terms of the Notes and
the Terms of the Warrants respectively.
X. SERVICING OF THE NOTES
(1) Transfer of funds
The Company will effect transfer of the funds in freely
disposable United States Dollars required to make any payment
of principal or interest on the Notes, including the
commissions referred to in paragraph (2) hereafter, to Banca
del Gottardo, Lugano, as Paying Agent, for value the
respective due date provided that, if such due date does not
fall on a Business Day, the Company shall be obliged to effect
transfer of such payments for value the Business Day
immediately preceding such due date. Any transfer risk shall
be borne by the Company.
"Business Day" means a day on which commercial banks are open
for domestic business and foreign exchange (including dealings
in US Dollars) in Lugano and New York.
Banca del Gottardo will supply the Company, by facsimile or
otherwise in writing received by the Company not less than
five Business Days prior to each due date for any payment
under the Notes, with any necessary information including
reference numbers and the name of a contact person for the
receipt of funds. Further information regarding the transfer
may be obtained by Banca del Gottardo from the Company at the
address set out in Article XIV below.
Banca del Gottardo shall credit the funds received to separate
non-interest bearing accounts with Banca del Gottardo for each
Coupon due date and/or redemption date. The receipt by Banca
del Gottardo of the due and punctual payment of the funds in
Lugano shall release the Company of its obligations under the
Global Note or under the Notes for the interest and principal,
to the extent of such payment.
Any funds held by Banca del Gottardo which will not be used as
a consequence of Coupons and Notes not having been collected
within the relevant period described by the Statute of
Limitations, shall be held by Banca del Gottardo at the
disposal of the Company. Banca del Gottardo shall promptly
after the expiry of the relevant period inform the Company
about the respective amount.
<PAGE>
15.
The risk of any exchange loss on the transfer of funds so held
by Banca del Gottardo from Banca del Gottardo to the Company
shall be borne by the Company, provided the transfer is made
by order of, or with the consent of, the Company.
(2) Commissions and Expenses
The Company will pay to Banca del Gottardo for the servicing
of the Notes a commission of
- 0.25% on the face amount of Coupons to be paid and
- 0.125% on the principal amount of Notes redeemed.
(3) Modalities
Except as provided in paragraph (1) of Article XI or in
Section 5 of the Terms of the Notes, any transfer by the
Company as per (1) and (2) above, shall be made in US Dollars
freely disposable, without any restrictions, and whatever the
circumstances may be, irrespective of the nationality or
domicile of the holder of Notes and/or Coupons, and without
requiring any affidavit, or the fulfillment of any other
formality.
(4) Paying Agency
The Company hereby appoints Banca del Gottardo as sole Paying
Agent (the "Paying Agent") and Banca del Gottardo agrees to
pay to the Noteholders all amounts to become due under the
Notes.
The Company undertakes, in connection with the Issue, not to
appoint any institutions as paying agent without the consent
of Banca del Gottardo, which consent shall not be unreasonably
withheld and not to pay to other banks any commission or
remuneration for the payment of interest or principal on the
Notes.
XI. CANCELLATION OF NOTES AND COUPONS OR WARRANTS
The Company requests and authorizes Banca del Gottardo and Banca del
Gottardo undertakes to cancel and destroy all Coupons paid and Notes
redeemed, converted or replaced and Warrants exercised or replaced,
after the period prescribed by law, and to certify to the Company in
writing the serial numbers of Notes or Warrants, as the case may be,
destroyed, the dates when such destruction took place and the names of
the persons witnessing such destruction.
Banca del Gottardo reserves the right to record cashed Coupons as well
as redeemed, repaid, converted or replaced Notes and exercised or
replaced Warrants on video tape or other data carriers and to store
them in this way instead of keeping them physically during the period
prescribed by law and to destroy them subsequently. This reproduction
of Coupons and/or Notes or Warrants will remain in safekeeping at Banca
del Gottardo during the statutory limitation.
XII. COVENANTS
As long as any of the Notes or Warrants remain outstanding the Company
undertakes:
<PAGE>
16.
(1) To send to Banca del Gottardo
a) Annual Reports, on Form 10-K, as filed with the
United States Securities and Exchange Commission
(the "SEC"), which report shall include or be
accompanied by a copy of the report of the Company's
independent auditor', and
b) such regular and periodic reports on Form 10-Q and
Form 8-K (deemed material) as the Company files with
the SEC.
Banca del Gottardo is authorized to hold these documents at
the disposal of the Noteholders and/or holders of Coupons
and/or Warrantholders for inspection.
(2) To provide Banca del Gottardo forthwith upon becoming aware
thereof with
- any change of its Certificate of Incorporation
By-laws (if any), and without waiting for Banca del
Gottardo to take any of the actions mentioned in
Section 8, 9 or 10 of the Terms of the Notes, with
- a notice in writing of any event provided for in
Section 8, 9 or 10 of the Terms of the Notes.
(3) To hold meetings of the Board of Directors on a at least
quarterly basis, i.e. at least one meeting each quarter.
(4) To provide Banca del Gottardo with quarterly financial
statements of the Company by no later than the 45th day of the
month following the quarter covered by such statements. Such
statements shall provide Banca del Gottardo with a summary of
all of the Company's operation, in addition to a brief summary
of how the Net Proceeds of this issue have been used by
Company.
(5) To appoint one member of its Board of Directors upon request
of Banca del Gottardo and thereafter to nominate such
appointee for election by the Company's stockholders and use
its best efforts to assure their election until any Note or
Notes shall be redeemed by the Company.
(6) (a) So long as any Notes are outstanding, to keep
available authorized shares of Common Stock
sufficient to permit all Notes or Warrants
outstanding and unconverted or unexercised to be
converted or exercised in accordance with the
Provisions (Exhibit 1 to ANNEX H of the Agreement)
and the terms of the Warrants respectively;
(b) to assure that all shares of Common Stock delivered
upon conversion of Notes or exercise of Warrants will
be validly issued, fully-paid and non-assessable;
(c) to file, on or before May 1, 1996, if required, any
registration under the United States securities laws
that may be required before the Shares can be
delivered upon conversion of the Notes or exercise of
Warrants and freely marketed in the United States.
<PAGE>
17.
XIII. RIGHT OF TERMINATION
Notwithstanding anything contained in this Agreement, Banca del
Gottardo may by notice to the Company terminate this Agreement at any
time before the time on the Closing Date when payment would otherwise
be due under this Agreement to the Company in respect of the Notes and
Warrants if:
(1) in the reasonable opinion of Banca del Gottardo, circumstances
shall be such as:
a) to prevent or to a material extent restrict payment
for the Notes and the Warrants in the manner
contemplated in this Agreement; or
b) to a material extent prevent or restrict settlement
of transactions in the Notes or Warrants in the
market or otherwise; or
(2) in the reasonable opinion of Banca del Gottardo, there shall
have been:
a) any change in national or international political,
legal, tax or regulatory conditions; or
b) any calamity or emergency
which has in the view of Banca del Gottardo caused a
substantial deterioration in the price and/or value of the
Notes or the Warrants.
Any such termination of this Agreement shall be without
liability on the part of Banca del Gottardo or on the part of
the Company.
Upon any such termination of this Agreement pursuant to
Article XIII (i), the parties hereto shall (except for the
liability of the Company in relation to expenses as provided
in Article IV (a) (2) hereof and except for any liability
arising before or in relation to such termination) be released
and discharged from their respective obligations under this
Agreement.
XIV. COMMUNICATIONS
All communications among the Banks and the Company regarding this
Agreement shall be made in English language, by telex or facsimile,
followed by registered letter, and shall be transmitted
by the Company to: by Banca del Gottardo to:
Banca del Gottardo Intellicall, Inc.
Viale Stefano Franscini 8 2155 Chenault, Suite 410
6901 Lugano, Switzerland Carrollton, Texas 75006-5023,
U.S.A.
Attn: Capital Market Department Attn: Chief Financial Officer
Telex-No.: 841 052
<PAGE>
18.
Facsimile: 0114191 8081843 Facsimile: 214-416-9454
XV. APPLICABLE LAW AND JURISDICTION
The Terms of this Agreement shall be governed by Swiss law, save and
except that paragraph 8 of the terms of the Notes shall be governed by
the laws of the state of New York.
Any dispute which might arise between Banca del Gottardo on the one
hand and the Company on the other hand regarding this Agreement shall
fall within the jurisdiction of the ordinary Courts of Justice of the
Canton of Ticino, the place of jurisdiction being Lugano, with the
right of appeal to the Swiss Federal Court of Justice in Lausanne where
the law permits.
Solely for purposes of the preceding paragraph and for the purpose of
execution of a judgment in Switzerland, the Company elects legal and
special domicile at Banca del Gottardo's office in Lugano, and Banca
del Gottardo shall send to the Company as soon as possible any
documents received by it in this connection.
Banca del Gottardo shall also be at liberty to enforce their rights and
to take legal action before the competent courts of the United States
of America, in which case Swiss law shall be applicable with respect to
the construction and interpretation of this Agreement.
XVI. EFFECTIVENESS
The effectiveness of this Agreement is subject to:
(a) the receipt by Banca del Gottardo of all documents as
requested in Article VII of this Agreement, in a form
acceptable to Banca del Gottardo,
(b) no exercise of the Right of Termination as per Article XIII.
XVII. CURRENCY INDEMNITY
If any sum due from the Company in favour of the Paying Agent has to be
converted from United States Dollars (the "first currency") into
another currency (the "second currency") for the purpose of (i) making
or filing a claim or proof against the Company, (ii) obtaining an order
or judgment in any court or other tribunal or (iii) enforcing any order
or judgment given or made in relation hereto, the Company shall
indemnify and hold harmless Banca del Gottardo from and against any
loss suffered as a result of any discrepancy between (a) the rate of
exchange used for such purpose to convert the sum in question from the
first currency into the second currency and (b) the rate or rates of
exchange at which Banca del Gottardo may in the ordinary course of
business purchase the first currency with the second currency upon
receipt of a sum paid to them in the second currency in satisfaction in
whole or in part of any such order, judgment, claim or proof.
This indemnity shall constitute a separate and independent obligation
from the other obligations contained herein, shall give rise to a
separate and independent cause of action and shall apply, irrespective
of any waiver granted by Banca del Gottardo from time to time and shall
continue in full force and effect notwithstanding any judgment or order
for a liquidated sum or sums in
<PAGE>
19.
respect of amounts due hereunder or under any such judgment or order.
Any such loss or damage aforesaid shall be deemed to constitute a loss
suffered by Banca del Gottardo and no further proof or evidence of any
actual loss shall be required by the Company.
XVIII. ENTIRE AGREEMENT
This Agreement together with the Annexes hereto and other agreements
and documents delivered pursuant hereto set forth the entire agreement
and understanding of the parties in respect of the subject matter
hereof and thereof and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof and thereof.
XIX. AMENDMENT, CANCELLATION AND WAIVER
This Agreement and the Annexes hereto may be amended, modified,
superseded or cancelled, and any of the terms hereof or thereof may be
waived, only by a written instrument executed by the Company and Banca
del Gottardo hereto or thereto, as the case may be, or, in the case of
a waiver, by the party or parties waiving compliance. The failure of
any party at any time or times to require performance of any provision
hereof or of any Annex hereto shall in no manner affect the rights at a
later time to enforce the same. No waiver by any party of any condition
or of the breach of any term contained in this Agreement or in any
Annex hereto, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be construed as a further or continuing
waiver of any such breach or the breach of any other term of this
Agreement or of the Annexes hereto.
THUS DONE AND SIGNED in 2 originals, of which one is for the Company,
in Carrollton/Lugano effective as of December 22, 1995
INTELLICALL, INC.
by /s/ William O. Hunt
Chief Executive Officer, President
and Chairman of the Board
December 22, 1995
BANCA DEL GOTTARDO
by /s/ Hans Gugolz
December 22, 1995
<PAGE>
20.
ANNEX A
Terms of the "Convertible Notes" of the Company
(1) Form and Denomination
The Notes are issuable in bearer form in the denominations of USD
5'000.-- nominal amount each, with interest coupons (the "Coupons")
attached. The Notes will be represented initially by a temporary Global
Note (the "Global Note"), without interest coupons, to be deposited by
the Company with Banca del Gottardo on the Payment Date. The Global
Note may be exchanged, as a whole or in part, for appropriate
definitive Notes, in bearer form in denominations of USD 5'000. -- with
the Coupons attached, not earlier than 40 days after the later of the
date on which the Notes are first offered or the Payment Date. Such
exchange shall be made upon certification that the beneficial owners of
the Notes either (i) are not United States persons or U.S. persons or
(ii) are financial institutions (as defined in United States Treasury
Regulation Section 1. 165- 12(c)(1)(v)) located outside the United
States that are not United States persons and that have purchased such
Notes for purposes of resale directly or indirectly to a United States
person or U.S. person within the United States during the Restricted
Period and that certify that they have not acquired the Notes for
purposes of resale directly or indirectly to a United States person or
to a person within the United States. A beneficial owner of Notes must
exchange its share of the Global Note for definitive Notes before such
Notes or interests therein may be transferred or interest payments or
other payments in respect of the Notes will be made.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered
or the date on which the Notes are issued (the "Payment Date") and
ending on the date forty (40) days after the later of the date upon
which the Notes and Warrants were first offered or the date of closing
of this offering, (ii) the term "United States" means the United States
of America (including the States and the District of Columbia), its
possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth
in Sections 230.901 through .904 of Title 17 of the United States Code
of Federal Regulations ("Regulation S").
(2) Interest
The Notes bear interest from the Payment Date at the rate of 8% per
annum, payable semiannually in arrear on June 30 and December 31 of
each year until maturity (the "Coupon Due Dates") whereby the first
payment shall be made on June 30, 1996 in respect of the period from
December 29, 1995 to June 30, 1996. Such interest is payable in United
States Dollars. Each Note will cease to bear interest on the date on
which they become due for redemption or repayment unless payment of
principal and/or premium (if any) is improperly withheld or refused or
default is otherwise made in respect of such payment. In such event,
interest will continue to accrue (as well
<PAGE>
21.
after as before any judgment) up to but excluding the date on which
payment in full of the principal of such Note is made or (if earlier)
the date on which, payment in full of the principal thereof having been
received by Banca del Gottardo, notice to that effect shall have been
given to the holders of the Notes. Interest is computed on the basis of
a 360-day year of twelve 30-day months.
(3) Repayment
The Company undertakes to repay the principal amount of the Notes,
unless previously redeemed, without any previous notice on December 31,
2000.
(4) Optional Redemption and Conversion
(a) The Company reserves the right to call all, but not part, of the out-
standing Notes for redemption on May 2, 1996, or thereafter up to the
close of business on December 15, 2000, at a price of 110% of the
principal amount thereof; together with interest accrued to the date
of such redemption provided that the average of the daily closing sales
prices of a Share for a period of 30 consecutive trading days, the last
day of which trading days is not more than 10 days prior to the day
upon which the Company sends a notice to Banca del Gottardo of its
intention to redeem the Notes under this sub-section (a), is at least
200% of the Conversion Price in effect on such last day (taking into
account any retroactive adjustment not then reflected in the Conversion
Price). The closing sales price for any day shall be the average of the
closing prices on the New York Stock Exchange and if not listed any
longer thereon, the average of the closing bid and asked prices on the
National Association of Securities Dealers Automated Quotation(NASDAQ).
All outstanding Notes will become due 60 days after receipt of the
aforesaid notice of early redemption by Banca del Gottardo.
As long as the Shares are listed on a stock exchange or exchanges in
the United States of America, reference in this sub-section (a) to the
sales price for any day shall be deemed to refer to the closing price
(regular way) of a Share as reported by the principal stock exchange on
which the Shares are listed for such day. If no such sales price is
reported for one or more trading days, such day or days shall not be
deemed as trading day or days and shall be disregarded in the
calculation of the said 30 trading day period.
(b) Each Noteholder will have the right to require the Company to redeem
any Note or Notes on December 31, 1999 at a price of 106% of the
principal amount thereof, together with interest accrued to the due
date of redemption. This right will have to be exercised by giving
notice and surrendering the Note(s), so to be redeemed to Banca del
Gottardo, Lugano, at any time on or after October 1, 1999 and prior to
October 31, 1999 accompanied by an irrevocable request for redemption.
Notes called for redemption will become due on December 31, 1999. Notes
called for redemption shall cease to bear interest from the date fixed
for such redemption, unless the Company shall default in providing for
the payment of the redemption price. The Notes must be presented for
repayment with all unmatured Coupons attached. An amount equal to any
missing unmatured Coupon shall be deducted from the amount due on
redemption. Such Coupons shall, however, be paid upon subsequent
presentation provided they shall not have become barred pursuant to
Section 11 hereof.
(5) Payments
<PAGE>
22.
Payments with respect to the Notes and Coupons shall be made in dollars
of the United States of America against presentation and surrender of
such Notes or Coupons in the manner specified below. Such payments
shall be made without cost to the Noteholders, without any limitations
and under all circumstances notwithstanding any transfer restrictions,
regardless of any bilateral or multilateral payment or clearing
agreement in existence between the United States of America and the
Swiss Confederation, irrespective of the nationality, residence or
domicile of any of the Noteholders and without requiring any affidavit
or the fulfillment of any formalities. The funds required for the
payment of principal and interest shall be made available to Banca del
Gottardo in Switzerland as Paying Agent by the Company prior to each
Coupon Due Date. The receipt of the funds by Banca del Gottardo in
Switzerland shall release the Company from its obligations in respect
of the payments due on the respective dates for principal and interest.
Banca del Gottardo will arrange for payment of such funds as and when
due to the holders of Notes and Coupons. Notes and coupons may be
presented for payment at the principal amount printed on the Notes and
the amount of interest printed on the Coupons only at the offices in
Switzerland of Banca del Gottardo. No payment on the Notes or Coupons
will be made by transfer to an account in, or by mailing to an address
in, the United States.
(6) Tax Status
All payments of principal and interest on the Notes and Coupons by the
Company shall be made without deduction for or on account of any
present or future tax, assessment or other governmental charge
("Taxes") imposed upon such payment by the United States of America or
any political subdivision or taxing authority thereof or therein (the
"United States"). If the Company shall at any time be required by law
to withhold any such Taxes, the Company will pay as additional amounts
to Banca del Gottardo for the account of the holders of Notes and
Coupons, such amounts as may be necessary so that every net payment on
each Note or Coupon, after withholding for or on account of any such
Taxes (including any backup withholding tax or similar charge that may
be required in order for such payment to be made without any
certification or disclosure of the nationality, residence or identity
of the beneficial owner of such Note or Coupon) will not be less than
the amount provided in such Note or Coupon to be then due or payable;
provided, however, that the Company will not be required to pay such
additional amounts for or on account of any such Taxes that are imposed
(i) otherwise than by withholding from a payment on a Note or Coupon,
(ii) upon a holder of a Note or Coupon who is subject to taxation by
the United States for any reason other than such holder's ownership or
receipt of payments in respect of such Note or Coupon, or (iii) on
interest or principal received by a holder of a Note or Coupon which is
(a) a "10-per cent. shareholder" of the Company within the meaning of
section 871(h)(3)(B)(a) of the Code, (b) a bank or an extension of
credit made pursuant to a loan agreement entered into in the ordinary
course of its trade or business, (c) a controlled foreign corporation
which is related to the Company under section 864(d)(4) of the Code,
(d) other than a nonresident individual or a foreign corporation (as
determined under United States tax principles) with respect to the
United States, or (e) a holder whose Note or Coupon is presented for
retirement or redemption, or payment is otherwise made, other than
outside the United States as provided in United States Treasury
Regulations. Any reference in this Note to the payment of principal or
interest shall be deemed to include payment of the additional amounts
payable pursuant to the provisions of this paragraph.
<PAGE>
23.
If, as the result of any change in, enactment of, or amendment to any
laws or regulations of the United States or any political subdivision
or taxing authorities thereof affecting taxation, or any change in the
official application of such laws or regulations, or any change in,
execution of or amendment to any treaty or treaties affecting taxation
to which the United States is a party, it is determined by the Company
that it would be required at any time to pay additional amounts
pursuant to the preceding paragraph, the Company is entitled to redeem
the Notes, as a whole but not in part, on giving not more than 60 days'
but not less than 30 days' prior notice to Banca del Gottardo, on or
after June 30, 1996 at par.
Notice of redemption shall be given by the Company in writing to Banca
del Gottardo and such notice so given shall constitute good and
sufficient notice and shall be binding upon all holders of the Notes,
regardless of who they may be or where they may be located.
Banca del Gottardo shall as soon as practicable notify the Noteholders
of such redemption in accordance with Section 12 hereof.
The Company has been advised by Banca del Gottardo that pursuant to the
Swiss federal laws at present in force, interest payments on the Notes
are not subject to Swiss withholding tax.
(7) Authorizations
The Company has confirmed to Banca del Gottardo that no authorizations
or approvals are required under the laws of the United States for
performance of its obligations hereunder, except for the registration
requirements provided for herein.
(8) Status of the Notes and Subordination
1. Note Subordinated to Senior Indebtedness
The Company, for itself, its successors and assigns, covenants
and agrees, and each Holder of this Note ("Holder"), by his or
its acceptance hereof, likewise covenants and agrees, that the
indebtedness evidenced by this Note (and any renewals,
refinancings, modifications or extensions thereof), including
the principal of and interest thereon and any interest payable
on such interest and all fees, costs and expenses (including
attorneys' fees and collection costs) payable in connection
with this Note, and all requirements of the Company contained
in this Note shall be subordinate and junior in right of
payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full of all Senior Indebtedness
(as hereinafter defined), and that each holder of Senior
Indebtedness whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness in reliance upon the covenants
and provisions contained in this Note.
For purposes of this Note, the term "Senior Indebtedness"
shall mean any and all indebtedness, liabilities and
obligations consisting of all principal of and premium (if
any) and accrued and unpaid interest (including but not
limited to interest accruing after the commencement by or
against the Company under the Federal Bankruptcy Code (as now
or hereafter in effect), whether or not allowed as a claim),
whether existing on the date of this Note or hereafter
incurred and whether created directly or indirectly, acquired
by
<PAGE>
24.
assignment or otherwise, absolute or contingent, joint or
several, liquidated or unliquidated, due or not due,
contractual or tortuous, secured or unsecured, in respect of
(A) the indebtedness, obligations and liabilities of the
Company incurred pursuant to the Note Purchase Agreement with
Nomura Holding America Inc. dated August 11, 1994, as from
time to time amended (B) the indebtedness, obligations and
liabilities of the Company pursuant to those certain Variable
Rate Senior Bridge Notes, Series A, dated August 11, 1994 (the
"Series A Notes ") up to an aggregate principal amount of $
16'000'000, executed by the Company, as may be modified or
amended from time to time, (C) the indebtedness, obligations
and liabilities of the Company pursuant to that certain 12.5%
Senior Bridge Note, Series B, dated August 11, 1994 (the
"Series B Notes", together with the Series A Notes, the
"Senior Notes") in the aggregate principal amount of $
8'000'000, executed by the Company, as may be modified or
amended from time to time, (D) any and all amendments,
modifications, supplements, renewals, refinancings,
extensions, replacements, restatements, substitutions,
assignments, guaranties and endorsements of any of the
indebtedness, obligations and liabilities described in clauses
(A) through (C) above (collectively, the "Nomura Debt"), (E)
indebtedness of the Company incurred after the date hereof for
money borrowed which is secured by any portion of the assets
of the Company and (or any of its subsidiaries representing
the incurrence of indebtedness from a third party provided
that any such incurrence of indebtedness from a third party
shall have been consented to by the Majority Holders (as
hereinafter defined), (F) all obligations incurred after the
date hereof required to be classified and accounted for as a
capital lease on the face of the balance sheets of the Company
prepared in accordance with generally accepted accounting
principles provided that such obligations shall have been
consented to by the Purchaser, (G) all factoring arrangements
or similar type arrangements entered into after the date
hereof by the Company or any of its subsidiaries, provided
that such arrangements shall have been consented to by the
Purchaser, (H) all obligations consisting of guaranties,
endorsements, modifications, renewals, refinancings,
extensions or replacements of any obligations described in
clauses (E) through (G) above, provided, that any such
guaranties, endorsements, modifications, renewals,
refinancings, extensions or replacements shall have been
consented to by the holders holding in the aggregate at least
50.1% of the outstanding principal amount of the Senior
Indebtedness then outstanding including any such
modifications, renewals, refinancings, extension or
replacements thereof (the "Majority Holders"), and (I) all
fees, costs, expenses (including attorneys' fees), indemnities
and other amounts at any time due and payable in connection
with any of the foregoing.
2. Note Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution Liquidation Reorganization, etc. of the Company
Upon any payment or distribution of the assets of the Company
of any kind or character, whether in cash, property or
securities to creditors upon any total or partial liquidation,
dissolution or reorganization of, or similar proceeding
relating to, the Company or its property (whether voluntary or
involuntary, or in bankruptcy, insolvency, reorganization,
liquidation or receivership proceedings), or upon an
assignment for the benefit of creditors, or any other
marshaling of the assets and liabilities of the Company, or
otherwise, then in such event, any payment or distribution of
any kind or character, whether in cash, property or
securities, which shall be payable or deliverable upon or with
<PAGE>
25.
respect to the indebtedness evidenced by this Note shall be
paid or delivered directly to the holders of Senior
Indebtedness, ratably according to the aggregate amounts of
principal remaining unpaid on account of such Senior
Indebtedness held by each until the Senior Indebtedness has
been fully paid and satisfied (including premium, if any, and
interest thereon accruing after commencement of such
proceedings whether or not an allowed claim).
The Holder hereby assigns to the holders of the Senior
Indebtedness, the right, in the name of the Holder, to file
appropriate claims or proofs of claim in respect of this Note
and vote the full amount of indebtedness represented by this
Note in any proceeding of the type described in the
immediately proceeding paragraph, including but not limited to
a proceeding to confirm a plan of reorganization in a
bankruptcy case, as directed and consented to by the Majority
Holders. The Holder agrees to take or refrain from taking any
and all actions as required or requested by the Majority
Holders and to cooperate fully with the Majority Holders in
furtherance of and without hindrance of such filing of claims
or proofs of claim and such voting. This assignment shall
expire automatically at such time as the Senior Indebtedness
has been repaid in full.
3. Payments
The Company agrees not to pay to the Holder, and by accepting
this Note Holder agrees not to take or receive from the
Company, in any manner whatsoever, the whole or any part of
indebtedness evidenced by this Note, including without
limitation any payment of principal of or interest on this
Note, unless and until the Senior Indebtedness shall have been
fully paid and satisfied; provided, however, that
notwithstanding the foregoing, the Holder shall have the right
to receive and retain from the Company, and the Company shall
have the right to pay to the Holder, scheduled payments of
interest only as and when they become due as provided herein,
so long as (i) the Company is not in default with respect to
any payment of principal, premium, if any, or interest on any
Senior Indebtedness, and (ii) no default or event of default
exists and is continuing, or would exist immediately after
giving effect to such payment to Holder, under any of the
terms and provisions of the documents relating to any of the
Senior Indebtedness.
4. Proceedings
Holder shall not commence any action for the enforcement of
this Note (except an action commenced to avoid the expiration
of an applicable statute of limitations) and will not initiate
or join with any creditor, unless the Majority Holders shall
also join, in bringing any proceeding against the Company
under any bankruptcy or insolvency law or statute of the
federal or any state government or under any such law or
statute relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement of debt,
receivership or liquidation, and will not be a proponent or
coproponent of a plan of reorganization in a bankruptcy
proceeding, unless and until all Senior Indebtedness shall
have been paid and satisfied in full or the Holder has
received the prior written consent of the Majority Holders.
5. Payments and Distributions Received by Holder
<PAGE>
26.
Should any payment or distribution (except payments currently
due which are received by the Holder as permitted herein) be
received by the Holder with respect to this Note prior to the
payment and satisfaction in full of all Senior Indebtedness,
the Holder will forthwith deliver such payments and
distributions or proceeds thereof to the holders of Senior
Indebtedness, ratably according to the aggregate amount of
principal remaining unpaid on account of such Senior
Indebtedness held by each in precisely the form received
(except for the endorsements or assignment of the Holder where
necessary), for application to the Senior Indebtedness held by
such holders, and, until so delivered, the same shall be held
in trust by the Holder as property of the holders of Senior
Indebtedness.
6. Rights Concerning Senior Indebtedness
Without affecting the rights of the holders of Senior
Indebtedness, the Holder agrees that, with or without notice
to or further assent from the Holder, any holder of Senior
Indebtedness may at any time, and from time to time, either
prior to or after any default by the Company with respect to
any indebtedness (a) advance or refuse to advance additional
credit and make other accommodations to or for the account of
the Company, (b) by written agreement or otherwise, extend,
refinance, renew or change, modify, compromise, release,
refuse to extend, renew or change the Senior Indebtedness or
any part thereof and waive any default under all or any part
thereof, and modify, rescind or waive any provision of any
related agreement or collateral undertaking, including but not
by way of limitation any provision relating to acceleration or
maturity, (c) fail to set off any or all accrued balance or
deposit balances or any part thereof on any holder's books in
favor of such holders and/or release the same, (d) sell,
surrender, release, exchange, resort to, realize upon or
apply, or fail to do any of the foregoing, with respect to any
collateral securing any part thereof held by any of the
holders of Senior Indebtedness or available to any of the
holders of Senior Indebtedness for the Senior Indebtedness,
and (e) generally deal with the Company in such manner as any
of the holders of Senior Indebtedness may see fit, including,
without limiting the generality of the foregoing, any
forbearance, failure, delay or refusal by any of the holders
of Senior Indebtedness to exercise any rights or remedies any
of the holders of Senior Indebtedness may have against the
Company, all without impairing or affecting any of such
holders' rights and remedies. Each such action and each such
failure to act by any of the holders of Senior Indebtedness
shall be deemed to be at the request of the Holder and in
reliance on this Agreement. No failure by any of the holders
of Senior Indebtedness to file, record or otherwise perfect
any lien or security interest, nor any improper filing or
recording, nor any failure by any of the holders of Senior
Indebtedness to insure or protect any of its collateral nor
any other dealing (or failure to deal) with any such
collateral by any of the holders of Senior Indebtedness, shall
impair or release the rights of any of the holders of Senior
Indebtedness hereunder.
7. Repayment of Purchaser
Notwithstanding anything to the contrary contained herein, in
the event, and at such time as, the holders of Senior
Indebtedness, and their respective successors and assigns,
have been repaid in full all such Senior Indebtedness as
described in clauses (A) through (D), inclusive, and clause
(I) as it relates to clauses (A) through (D) of the definition
of
<PAGE>
27.
"Senior Indebtedness" contained in this Section 8, Subsection
I, hereof, and all obligations by the holders of Nomura Debt
to purchase Series A Notes (as defined in the Purchase
Agreement) has terminated, and all preference periods under
any bankruptcy laws as they might apply to the holders of
Senior Indebtedness, and it successors and assigns, have
expired, the restrictions set forth in this Section 8 of this
Note shall not thereafter be applicable to the Holder of this
Note.
8. Each holder of Notes acknowledges that Nomura is relying on
the terms and provisions of this Sub-Section 8 in connection
with its execution of a certain Limited Waiver and Consent
dated December 30, 1995 between the Company and Nomura a copy
of which Limited Waiver and Consent is held by Banca del
Gottardo, pursuant to which Nomura has consented to the
issuance of the Notes by the Company, and each holder of a
Note hereby acknowledges and agrees that the terms and
provisions of this Sub-Section 8 shall inure to the benefit of
Nomura.
(9) Conversion
Exhibit I to Annex H attached to the Agreement dated December 22, 1995
and entered into between the Company and Banca del Gottardo, which is
available for inspection at the Head Office in Lugano of Banca del
Gottardo, as Conversion Agent for the Notes, contains full provisions
relevant to conversion of the Notes into freely transferable Shares of
Common Stock which are duly registered under the 1933 Securities Act.
The following is a summary of such provisions:
The conversion price will be fixed on March 29, 1996 whereby such
conversion price shall be the equivalent of the average of the closing
prices during the period from March 14 to March 29, 1996, but shall in
any event not be higher than (i) 120% of the average of the closing
prices of the shares of Common Stock during the period from December 19
to 29, 1995, or (ii) USD 4.75 per share of Common Stock, whichever is
lower (Such price hereinafter called the "Conversion Price").
The holder of 10 Notes or more will be entitled at any time on and
after May 1, 1996 up to the close of business on December 31, 2000,
subject to prior redemption, to convert the Notes, at the principal
amount thereof, into freely transferable and non-restricted (such
non-restriction being subject to the effectiveness of a registration
statement under the U.S. securities laws covering such common stock, if
required,) shares of Common Stock of the Company, at the Conversion
Price, subject to adjustment as described below. No payment or
adjustment will be made on conversion of any Note for interest accrued
thereon or dividends on any Common Stock issued, except that accrued
interest will be paid on the conversion of any Note which has been
called for redemption prior to the conversion date. The Company is not
required to issue fractional shares of Common Stock upon conversion of
Notes and, in lieu thereof, will pay a cash adjustment based upon the
market price of the Common Stock on the last trading day prior to the
date of conversion. In the case of Notes called for redemption,
conversion rights will expire at the close of business on the fifth
business day prior to the redemption date. Notes may be presented for
conversion only to an office of Banca del Gottardo outside the United
States and Banca del Gottardo will deliver Common Stock or other
consideration received upon conversion only to an account or address
outside the United States.
<PAGE>
28.
The Conversion Price is subject to adjustment in the following events
occurring after December 29, 1995:
- the issuance of stock of the Company as a dividend or
distribution on the Common Stock;
- subdivisions of outstanding shares of the Common Stock into a
greater number of shares;
- combinations of outstanding shares of Common Stock into a
smaller number of shares;
- reclassification of the Common Stock into other shares of the
Company's capital stock;
- issuance to all holders of Common Stock of certain rights or
warrants entitling them to subscribe for Common Stock at a
price per share less than the current market price but not for
shares issuable under the Company's stock option and stock
purchase plans; and
- the distribution to all holders of Common Stock of debt
securities or assets of the Company or rights or warrants to
purchase assets or debt securities of the Company (excluding
cash dividends or distributions from retained earnings).
No adjustment in the Conversion Price will be made unless such
adjustment would require an increase or decrease of at least USD 0.05
in the Conversion Price then in effect; but any adjustment that would
otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made
for rights to purchase Common Stock pursuant to a Company dividend or
interest reinvestment plan. The Company may at any time reduce the
Conversion Price by any amount, provided that the Conversion Price is
not less than the par value of a share of Common Stock. If the Company
consolidates or merges into or transfers or leases all or substantially
all of its assets to any person, or is a party to a merger that
reclassifies or changes its outstanding Common Stock, the Notes will
become convertible into the kind and amount of securities, cash or
other assets which the holders of the Notes would have owned
immediately after the transaction if the holders had converted the
Notes immediately before the effective date of the transaction.
(10) Events of Default
Subject to the provisions of Section 15, Banca del Gottardo as regards
all Notes or holders having 10% or more of the aggregate principal
amount of all Notes outstanding shall have the right to declare by
notice to the Company the Notes held by such holder of a Note, plus
accrued interest, to be due and payable if any of the following events
of default shall occur:
(a) default in the payment of principal, or, for a period of 15
days, in the payment of interest on any Note; or
(b) default in the performance or observance in any material
respect of any covenant or agreement of the Company in the
Notes if such default continues for a period of 30 days after
notice thereof has been given to the Company; or
(c) a default shall occur under any evidence of indebtedness for
money borrowed by the Company or under any instrument under
which there may be issued or by which there
<PAGE>
29.
may be secured or guaranteed any indebtedness for money
borrowed by the Company, which default involves the failure to
pay when due (after any applicable grace period and subject to
any extension or postponement of such maturity), or results in
the acceleration of, indebtedness in an amount in excess of
USD 500'000.-- without such indebtedness having been
discharged or such default or acceleration having been waived,
rescinded or annulled, within a period of 30 days after notice
thereof shall have been given to the Company; or
(d) the entry of a decree or order in respect of the Company in an
involuntary case under any bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, trustee or
other similar official of the Company or for any substantial
part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 45
consecutive days; or
(e) the Company shall commence a voluntary case under any
bankruptcy, insolvency or other similar law, or consent to the
appointment of or taking possession by a receiver, liquidator,
trustee or other similar official, of the Company or for any
substantial part of its property, or the making by it of a
general assignment for the benefit of creditors, or if it
shall fail generally to pay its debts as they become due, or
shall take any corporate action in furtherance of any of the
foregoing; or
(f) if the Company shall merge or consolidate, or sell or convey all
or substantially all of its assets to, any other corporation, unless (i)
the Company is the surviving corporation, or (ii) the surviving or
transferee corporation expressly assumes all obligations of the Company
under the Notes by supplemental agreement, confirmed by an opinion of U.S.
counsel reasonably satisfactory to Banca del Gottardo and the Company, or
(iii) the Company or the surviving or transferee corporation irrevocably
deposits in trust with Banca del Gottardo, money or U.S. government
obligations sufficient to pay principal and interest on the Notes to
maturity.
Upon the occurrence of an event of default, the Company shall promptly
give notice thereof to Banca del Gottardo which shall publish such
notice of default in accordance with Section 12 hereof. Banca del
Gottardo shall in relation to any event of default have no other
obligation than the publication of such event of default.
The principal amount of all Notes declared to be due and payable plus
accrued interest thereon shall become due and payable 15 days after
notice to the Company by Banca del Gottardo or by each holder of a Note
of such event of default; provided, however, that such declaration
shall be rescinded if, within 15 days of such notice, such event of
default shall have been remedied by payment, in the case of a payment
default, or in a manner reasonably satisfactory to Banca del Gottardo.
In the event that a Resolution or Extraordinary Resolution is passed at
a meeting of Noteholders held pursuant to Section 15, any actions taken
pursuant to this Section 10 by a Noteholder shall be subject to any
previously taken action pursuant to such Section 15.
(11) Prescription
<PAGE>
30.
In accordance with the Swiss Statute of Limitations the coupons will
become barred five years and the Notes ten years after their respective
due dates.
(12) Notices and Publications
All notices to the holders of Notes shall be deemed to have been duly
given if published in the Feuille Officielle Suisse du Commerce and in
a daily newspaper in Zurich and Lugano. All notices to the Company by
any holder of Notes shall be deemed to have been duly given if sent by
cable or telex to the principal office of the Company.
(13) Listing of the Notes
No application will be made for the admission and quotation of the
Notes on any stock exchange.
(14) Replacement of Notes or Coupons
If any Note or coupon is defaced, mutilated, destroyed, stolen or lost,
it may be renewed or replaced at the head office of Banca del Gottardo
in Lugano, Switzerland on payment of such costs as may be incurred in
connection therewith and on presentation of such evidence and indemnity
as Banca del Gottardo may require. Defaced or mutilated Notes or
coupons must be surrendered before replacements may be issued.
(15) Noteholders' Meeting
a) A meeting of the Noteholders (hereinafter called a "Meeting")
may be convened by the Company or shall be convened by the
Company if so requested by Notes representing not less than
25% of the aggregate principal amount of all Notes outstanding
under the Terms of the Notes (i) after the event of default
shall have occurred and be continuing to consider a waiver of
an event of default or any modification or amendment of the
provisions of the terms of the Notes, or (ii) a substitution
of Banca del Gottardo.
The cost and expenses of a Meeting shall be borne by the
Company.
b) Notice of the Meeting specifying the place, day and hour of
the Meeting shall be given at least 20 days prior to the
proposed date thereof (exclusive of the day on which the
notice is given and the day on which the Meeting is to be
held) in accordance with Section 12 hereof Such notice shall
state generally the nature of the business to be transacted at
the Meeting thereby convened but (except for an Extraordinary
Resolution (as defined below)) it shall not be necessary to
specify in such notice the terms of any resolution to be
proposed.
c) The Meeting shall be held in Lugano and shall be chaired by a
representative of the Company or if such representative of the
Company shall not be present within 30 minutes after the time
appointed for the holding of the Meeting, the Noteholders
present shall choose one of their members to be chairman. The
Meeting shall be conducted in the English language
exclusively.
<PAGE>
31.
d) Resolutions shall only be passed if a quorum of two or
more persons holding 25% or more of the aggregate principal
amount of all Notes outstanding are present. The quorum at any
Meeting for passing an Extraordinary Resolution shall be two or
more persons holding two-thirds or more of the aggregate
principal amount of all Notes outstanding. Resolutions shall be
passed if approved by the absolute majority of votes cast save
that an Extraordinary Resolution shall be passed only if approved
by three-fourths or more of votes cast. Any resolution passed at
a Meeting duly convened and held in accordance with the terms of
the Notes shall be binding upon all the bondholders, whether
present or not present at such Meeting and whether or not voting,
and upon all the holders of coupons.
e) If within 30 minutes after the time appointed for any
such Meeting a quorum is not present, the Meeting shall, if
convened upon the request of Noteholders, be dissolved. In any
other case, it shall stand adjourned for such period being not
less than 14 days nor more than 28 days, and at such place as may
be appointed by the Company. At such adjourned Meeting, two or
more persons present holding 10% or more of the aggregate
principal amount of all Notes outstanding shall form a quorum,
provided that if the business of such adjourned Meeting includes
consideration of a proposed Extraordinary Resolution, the quorum
shall be two or more persons present holding one-third or more of
the aggregate principal amount of all Notes for the time being
outstanding.
f) If within 30 minutes after the time appointed for any
such adjourned Meeting the respective quorum is not present the
Meeting shall stand further adjourned for such period being not
less than 14 days nor more than 28 days, and at such place as may
be appointed by the Company and at such further adjourned Meeting
two or more persons present holding any Notes outstanding
(whatever the principal amount of the Notes so held by them)
shall form a quorum, provided that if the business of such
further adjourned Meeting includes consideration of a proposed
Extraordinary Resolution, the quorum shall be two or more persons
present holding one-third or more of the aggregate principal
amount of all Notes for the time being outstanding.
g) Notice of any adjourned Meeting or further adjourned
Meeting shall be given in the same manner as notice of an
original Meeting and such notice shall state, in the case of an
adjourned Meeting, that two or more persons present holding 10%
(or in the case of a Meeting the business of which includes
consideration of a proposed Extraordinary Resolution, one-third)
or more of the aggregate principal amount of all Notes for the
time being outstanding will form a quorum, or, in the case of a
further adjourned Meeting, that two or more persons present
holding any Notes outstanding (or in the case of a Meeting the
business of which includes the consideration of a proposed
Extraordinary Resolution, two or more persons present holding
one-third or more of the aggregate principal amount of all Notes
for the time being outstanding), shall form a quorum.
h) The voting rights of the holders of Notes shall be
determined according to the principal amount of Notes held, each
Note with a principal amount of USD 5'000.- giving the right to
one vote. Holders of the Coupons shall not have any voting
rights. Notes held by or on behalf of the Company shall have no
voting rights and shall be disregarded for the purpose of this
Section 15, save that the Company shall be entitled to vote in
respect of Notes held by it for the benefit of and at the
direction of an independent third party. In
<PAGE>
32.
the case of an equality of votes the chairman shall have a
casting vote in addition to the vote or votes (if any) to
which he may be entitled as a holder of Notes.
i) Any director or officer of the Company and its lawyers
and any other person authorized on its behalf by it may attend
and speak at any Meeting.
j) The Meeting shall have the following powers exercisable
by Extraordinary Resolution with the consent of the Company:
(i) extension of the date fixed for final maturity of the
Notes;
(ii) reduction or cancellation of the principal payable on
the Notes;
(iii) reduction or cancellation of the rate or amount
payable, or extension of the date of payment, in respect of any
Coupons;
(iv) alteration of the majority required to pass an
Extraordinary Resolution; and
(v) waiver of any Event of Default.
k) Any reference in these Terms of the Notes to an
"Extraordinary Resolution" shall be construed as references to
resolutions of the Noteholders passed in accordance with the
foregoing provisions of this Section 15 with respect to any of
the matters stated in sub-section j) above.
(16) Applicable Law and Jurisdiction
The terms, conditions and form of the Notes and Coupons (the English
language version of which shall govern) shall be governed by and
construed in accordance with Swiss law. Any action or proceedings
against the Company relating to the Notes may be brought and enforced
in the ordinary courts of the Canton of Ticino, venue being in the City
of Lugano, or, if such courts fail to grant jurisdiction in the
ordinary courts of the Canton of Basle-City, venue being in Basle, and
the Company hereby irrevocably submits to the jurisdiction of such
courts in respect of any such action or proceeding, with the right to
appeal, as provided by law, to the Swiss Federal Court in Lausanne, the
judgment of which shall be final. Solely for that purpose, the Company
hereby elects legal and special domicile at the office of Banca del
Gottardo, Viale Stefano Franscini 8, 6901 Lugano, Switzerland. The
Company covenants that so long as any Notes are outstanding it will
maintain an agent for service of process in Switzerland. The
aforementioned jurisdiction shall also be valid for the cancellation
and replacement of lost, stolen, defaced, mutilated or destroyed Notes
and coupons. Payment effected to a holder of Notes who has been
identified as the legitimate holder of a Note or coupon by a final
judgment of a Swiss court shall release the Company from its payment
obligations under such Note or coupon.
Any Noteholder shall also have the right to bring any legal action or
proceeding against the Company in respect of a Note or coupon and all
covenants contained therein in any state or federal court in the United
States of America which may have jurisdiction.
<PAGE>
33.
ANNEX B
(Form of Subordinated Convertible Note)
No.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO,
OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
INTELLICALL, INC.
(Incorporated in the State of Delaware)
USD 5'000.--
8% Subordinated Notes due December 31, 2000
Convertible into freely transferable and non-restricted shares
of Common Stock of the Company
INTELLICALL, INC. (the "Company"), for value received, hereby certifies that it
owes to the bearer, payable upon presentation and surrender hereof, the
principal amount of 5'000.-- US Dollars (USD five thousand) on December 31, 2000
or on such earlier date as such principal amount may become due in accordance
with the Terms of the Notes appearing on the reverse hereof, and interest from
December 29, 1995 on said principal amount at the rate of 8% (eight percent) per
annum, payable in cash, semi-annually in arrear on June 30 and December 31 of
each year and at maturity, beginning on June 30, 1996 for the period from
December 29, 1995 to June 30, 1996, until payment of said principal amount has
been made or duly provided for, but only, in the case of interest due on or
before maturity, upon presentation and surrender of the interest coupons
attached hereto as they shall severally become due, all in accordance with the
Terms of the Notes.
This Note is one of a duly authorized issue of 8% Notes due December 31, 2000 of
the Company in the aggregate principal amount of 7'500'000.-- US Dollars (the
"Notes") issued pursuant to a Note and Warrant Purchase, Paying and
Conversion/Exercise Agency Agreement, dated as of December 22, 1995 (the
"Agreement"), between the Company of the first part and Banca del Gottardo of
the second part. The Notes are issued subject to and with the benefit of the
Agreement.
<PAGE>
34.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under
its corporate seal as of December 29, 1995.
INTELLICALL, INC.
By
<PAGE>
35.
ANNEX C-1
(Form of Coupon)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO,
OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
Coupon No.1
INTELLICALL, INC.
Carrollton, TX, U.S.A.
US Dollars 5'000.--
8% Subordinated Notes due December 31, 2000
Note of US Dollars 5'000.-- (five thousand)
Interest due on June 30, 1996 for the period from December 29, 1995 to June 30,
1996 payable in cash on the terms set forth in the Terms of the Notes:
US Dollars 201.11
INTELLICALL, INC.
by
(Reverse Coupon)
This coupon is payable at the head office in Lugano of Banca del Gottardo.
<PAGE>
36.
ANNEX C-2
(Form of Coupon)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 1650) AND 1287(a) OF THE INTERNAL REVENUE CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO,
OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
Coupon No.2-10
INTELLICALL, INC.
Carrollton, TX, U.S.A.
US Dollars 5'000.--
8% Subordinated Notes due December 31, 2000
Note of US Dollars 5'000.-- (five thousand)
Semi-annual interest due on June 30 and December 31, 1996/2000 payable in cash
on the terms set forth in the Terms of the Notes:
US Dollars 200.--
INTELLICALL, INC.
by
(Reverse Coupon)
This coupon is payable at the head office in Lugano of Banca del Gottardo.
<PAGE>
37.
ANNEX D
(to be typed on security paper)
GLOBAL NOTE
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, Directly OR INDIRECTLY, IN THE UNITED STATES OR TO,
OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION
S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.
INTELLICALL, INC.
USD 7'500'000.--
8% Subordinated Notes due December 31, 2000
Convertible into freely transferable and non-restricted shares
of Common Stock of the Company
This Global Note without interest coupons is a Global Note in respect of a duly
authorized issue of 8% Notes due December 31, 2000 (the "Notes") of Intellicall,
Inc. (the "Company"), a corporation duly organized and existing under the laws
of the State of Delaware, in the principal amount of seven million five hundred
thousand US Dollars and issued pursuant to a Note and Warrant Purchase, Paying
and Conversion/Exercise Agency Agreement (the "Agreement") dated as of December
22, 1995 between the Company of the first part and Banca del Gottardo of the
second part.
Subject to the provisions of the Agreement, Intellicall, Inc., for value
received, hereby promises to pay to the holder of this Global Note, payable upon
presentation and surrender hereof, the amount of US Dollar 7'500'000.-- (USD
seven million five hundred thousand) and interest thereon at 8% per annum, in
accordance with the Terms of the Notes set forth in Annex A of the Agreement.
In accordance with Section 1 of the Terms, this Global Note may be exchanged, as
a whole or in part, for definitive Notes, in bearer form in the denominations of
USD 5'000.--, with interest coupons attached, not earlier than 40 days after the
later of the date on which the Notes are first offered or the Payment Date,
before which time no Notes represented by this Global Note or interest herein
may be transferred into the United States or to a U.S. person. Such exchange
shall be made upon certification, in the form
<PAGE>
38.
set forth in Annex 3 of the Agreement and appended to this Global Note, that the
beneficial owners of the Notes are not United States persons or U.S. persons or
are financial institutions (as defined in the United States Treasury Regulation
Section 1.165-12(c)(1)(v)) located outside the United States that have purchased
such Notes for resale during the Restricted Period and that certify that they
have not acquired the Notes for purposes of resale directly or indirectly to a
United States Person or a U.S. person or to a person within the United States. A
beneficial owner of Notes must exchange its share of the Global Note for
definitive Notes before interest payments or other payments in respect of the
Notes will be made.
The Terms of the Notes set forth in Annex A of the Agreement are hereby
incorporated by reference herein mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company shall
make all payments hereunder as and when provided in the Terms of the Notes and
shall be bound by all its covenants set forth therein.
This Global Note shall be governed by and construed in accordance with the laws
of Switzerland.
IN WITNESS WHEREOF, the Company has caused this Global Note to be duly executed
under its corporate seal as of December 29, 1995.
INTELLICALL, INC.
By
This Global Note shall not become valid for any purpose until this Global Note
has been authenticated by any two officers of Banca del Gottardo.
by: by:
Authorized Officer Authorized Officer
<PAGE>
39.
ANNEX E
TERMS OF THE "WARRANTS" OF THE COMPANY
1. General
The Warrants are issuable in bearer form and have the benefit of and
are subject to the provisions for the exercise thereof contained in the
Warrant Agency Agreement to be dated as of December 22, 1995 between
the Company and Banca del Gottardo (the "Warrant Agent" or the
"Standing Agent" as the case may be) which will be available for
inspection at the office in Lugano of the Warrant Agent or its
successor as Warrant Agent. The holders of the Warrants (the "Holders")
are deemed to have knowledge of the provisions of such Agreement, all
of which will be binding on them, provided, however, that the rights of
such Holders hereunder shall be governed by the terms hereof.
The Standing Agent or the Warrant Agent may resign in its duties and be
discharged from all further duties as Agent or Warrant Agent in
accordance with the terms of the Warrant Agency Agreement. In such
event a successor Standing Agent or Warrant Agent, which will have the
same duties as its predecessor and will agree to be bound by the terms
of the Warrant Agency Agreement, will be appointed by the Company, or
if the Company shall fail to appoint such successor Standing Agent or
Warrant Agent, by a court of competent jurisdiction.
The Global Warrant may be exchanged, as a whole or in part, for
appropriate definitive Warrants, in bearer form, not earlier than 40
days after the later of the date on which the Warrants are first
offered or the Payment Date. Such exchange shall be made upon
certification that the beneficial owners of the Warrants are not United
States persons or U.S. persons or are financial institutions (as
defined in United States Treasury Regulation Section 1.165-12(c)(1)(v))
located outside the United States that are not United States persons
and that the beneficial owners have not purchased such Warrants for
resale during the Restricted Period and that the beneficial owners
certify that they have not acquired the Warrants for purposes of resale
directly or indirectly to a United States person or to a person within
the United States. A beneficial owner of Notes must exchange its share
of the Global Warrant for definitive Warrants before such Warrants may
be transferred or shares may be delivered upon exercise of the Warrants
in respect of the Warrants will be made.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered
or the date on which the Notes are issued (the "Payment Date") and
ending on the date forty (40) days after the later of the date upon
which the Notes and Warrants were first offered or the date of closing
of this offering, (ii) the term "United States" means the United States
of America (including the States and the District of Columbia), its
possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth
in Sections
<PAGE>
40.
230.901 through .904 of Title 17 of the United States Code of Federal
Regulations ("Regulation S").
2. Duration
The right to subscribe for and purchase shares of Warrant Stock
represented by the Warrants shall commence Subject to Section 8 hereof
on May 1, 1996 and shall expire December 31, 2000 at 5:00 P.M. US
Eastern Time, provided, however, that if, on such expiration date, the
Company is then required, pursuant to an effective request therefor, to
effect, or is in the process of effecting, a registration under the
Securities Act for an underwritten public offering in which shares of
Warrant Stock are, pursuant to this Warrant, entitled to be included,
or if the Company is in default of any obligations created by this
Warrant, said right to subscribe for and purchase shares of Warrant
Sock shall expire at 5:00 P.M., US Eastern Time, on the 30th day
following the date on which such registration shall have become
effective (but in no event longer than 180 days beyond the date this
Warrant otherwise would have expired) or on the 30th day following the
date all of such defaults have been cured, as the case may be.
3. Warrant Price; Method of Exercise; Payment; Issuance of New Warrant;
Transfer and Exchange
The exercise price will be fixed on March 29, 1996 whereby such
exercise price shall be the equivalent of the average of the closing
prices during the period from March 14 to March 29, 1996, but shall in
any event not be higher than (i) 120% of the average of the closing
prices of the Common during the period from December 19 to 29, 1995 or
(ii) USD 4.75 per Common, whichever is lower (such price hereinafter
called the "Warrant Price").
The purchase right represented by this Warrant may be exercised at any
time and from time to time prior to expiration subject to Section 8
hereof.
In order to exercise the Warrants and receive certificates for Shares
legally issuable on such exercise, the Holder shall deposit 2'000
Warrants or more with the Warrant Agent at its office in Lugano and
accompanied by a written notice (which notice must contain a
certification of non-U.S. beneficial ownership) signed by or on behalf
of the Holder to the effect that such Holder elects to exercise the
Warrants and payment of the Warrant Price (the "Warrant Consideration
Amount"). As a further condition precedent to the exercise of the
Warrants, the Holder must pay all stamp, issue, registration or other
taxes and duties arising upon exercise in Switzerland or payable in any
jurisdiction upon the issue or delivery of Shares, if any, to the
exercising Holder or to the order of a person other than the exercising
Holder.
The date on which these conditions precedent to exercise as stated
above have been verified and recognized by the Warrant Agent as being
fulfilled in hereafter called the "Deposit Date". The Common Stock
Warrant shall be treated as exercised at the close of business in New
York on the Exercise Date. The "Exercise Date" for the Warrant means
the business days in New York immediately following the Deposit Date.
The "Exercise Date" for the Common Stock Warrant shall not be later
than the Termination Date.
The Company shall not be obligated to issue any fraction of a Share
upon the exercise of any Warrant or make any payment for a fraction of
a Share. If more than one Warrant shall be exercised at one time by the
same Holder, the number of full Shares which shall be issuable upon
<PAGE>
41.
exercise thereof shall be computed on the basis of the aggregate number
of shares issuable upon the exercise of all the Warrants exercised by
such Holder. Any Shares issued upon the exercise of the Common Stock
Warrants shall be delivered in accordance with the instructions of the
Holder.
In the event of any exercise of the rights represented by this Warrant
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding five Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be
the Holder of the shares of Warrant Stock so purchased as of the date
of such exercise.
Neither this Warrant nor any Warrant Stock has been registered under
the Securities Act. Accordingly, neither this Warrant nor any Warrant
Stock is transferable except as permitted under various exemptions
contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities
Act.
4. Stock Fully Paid; Reservation of Shares
The Company covenants and agrees that all shares of Warrant Stock which
may be issued upon the exercise of this Warrant will, upon issuance, be
fully paid and non-assessable and free from all taxes, liens and
charges with respect to issuance. The Company further covenants and
agrees that during the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved
for the purpose of the issue upon exercise of the subscription rights
evidenced by this Warrant a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant. If the Warrant Price is at
any time less than the par value of the Warrant Stock or if the Warrant
at any time is exercisable by its delivery alone and without payment of
any additional consideration, the Company also covenants and agrees to
cause to be taken such action (whether by decreasing the par value of
the Warrant Stock, the conversion of the Warrant Stock from par value
to no par value, or otherwise) as will permit the exercise of this
Warrant without any additional payment by the Holder hereof (other than
payment of the Warrant Price, if any, and applicable transfer taxes, if
any), and the issuance of the Warrant Stock, which Warrant Stock, upon
such issuance, will be fully paid and non-assessable.
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking if all such actions as may be
necessary or appropriate to protect the rights of the Holders hereof
against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase
in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its
best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Warrant.
<PAGE>
42.
5. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this
Warrant and the payment of the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events as
follows:
a) Recapitalization, Reorganization, Reclassification,
Consolidation Merger or Sale
In case of any recapitalization or reorganization of the
Company or any reclassification or change of outstanding
Securities issuable upon exercise of this Warrant (other than
a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of
the Company with or into another corporation (other than a
merger with another corporation in which the Company is the
surviving corporation and which does not result in any
reclassification or change - other than a change in par value,
or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination - of
outstanding Securities issuable upon exercise of this
Warrant), or in case of any sale or transfer to another
corporation of the Property of the Company as an entirety or
substantially as an entirety in connection with a liquidation
or dissolution of the Company, the Company or such successor
or purchasing corporation therefor, issue a new Warrant,
providing that the Holder(s) of this Warrant shall have the
right to exercise such new Warrant and procure upon such
exercise in lieu of each share of Warrant Stock theretofore
issuable upon exercise of this Warrant the kind and the
highest amount of shares of Stock, other securities, money and
property receivable upon such recapitalization,
reorganization, reclassification, change, consolidation,
merger, sale or transfer by a Holder of one share of Common
Stock issuable upon exercise of this Warrant had it been
exercised immediately prior to such recapitalization,
reorganization, reclassification, change, consolidation,
merger sale or transfer. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this subsection (a) shall similarly apply to
successive recapitalizations, reorganizations,
reclassifications, changes, consolidations, mergers, sales and
transfers.
b) Subdivision or Combination of Shares
If the Company, at any time while this Warrant is outstanding,
shall subdivide or combine any class or classes of its Common,
(i) in case of subdivision of shares, the Warrant Price shall
be proportionately reduced (as at the effective date of such
subdivision of, if the Company shall take a record of Holders
of its Common for the purpose of so subdividing, as at the
applicable record date, whichever is earlier) to reflect the
increase in the total number of shares of Common outstanding
as a result of such subdivision, or (ii) in the case of a
combination of shares, the Warrant Price shall be
proportionately increased (as at the effective date of such
combination, or, if the Company shall take a record of Holders
of its Common for the purpose of so combining, as at the
applicable record date, whichever is earlier) to reflect the
reduction in the total number of shares of Common outstanding
as a result of such combination.
<PAGE>
43.
c) Certain Dividends and Distributions
If the Company, at any time while this Warrant is outstanding,
shall:
(ii) Stock Dividends
Pay a dividend in, or make any other distribution of,
shares of any class or classes of Common, the Warrant
Price Shall be adjusted, as at the date the Company
shall take a record of the holders of such class or
classes of Common, for the purpose of receiving such
dividend or other distribution (or if no such record
is taken, as at the date of such payment or other
distribution), to that price determined by
multiplying the Warrant Price in effect immediately
prior to such record date (or if no such record is
taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator
of which shall be the total number of shares of
Common outstanding immediately prior to such dividend
or distribution, and (2) the denominator of which
shall be the total number of shares of Common
outstanding immediately after such dividend or
distribution (plus in the event that the Company paid
cash for fractional shares, the number of additional
shares which would have been outstanding had the
Corporation issued fractional shares in connection
with said dividends); or
(ii) Liquidating Dividends, etc.
Make a distribution of its Property to the holders of
its Common as a dividend in liquidation or partial
liquidation or by way of return of capital other than
as a dividend payable out of funds legally available
for dividends under the laws of the State of
Delaware, the Holder of this Warrant shall, upon
exercise and payment of the Warrant Price, be
entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and
without payment of any additional consideration
therefor, a sum equal to the amount of such Property
as would have been payable to such Holder as owner of
that number of shares of Warrant Stock of the
receivable by exercise of this Warrant, had such
Holder been the holder of record of such Warrant
Stock on the record date for such distribution; and
an appropriate provision therefor shall be made a
part of any such distribution.
d) Issuance of Additional Shares of Common
If the Company, at any time while this Warrant is outstanding,
shall issue any Additional Shares of Common (otherwise than as
provided in the foregoing subsections (a) through (c) of this
Section 4), at a price per share less than the Warrant Price
then in effect or less than (i) the Current Market Price then
in effect is such issue is pursuant to a public offering, or
(ii) ninety five percent (95%) of the Current Market Price
then in effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate, or
without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price determined by
multiplying the Warrant Price by a fraction:
<PAGE>
44.
(A) If issued for a consideration per share less than (i)
the Current Market Price then in effect if such issue
is pursuant to a public offering, or (ii) ninety five
percent (95%) of the Current Market Price then in
effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate,
or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
(i) the Current Market Price then in effect
if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%)
of the Current Market Price then in effect
if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the
aggregate, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
(B) If issued for a consideration per share less than the
Warrant Price or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
the Warrant Price, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
If such Additional Shares of Common shall be issued
at a price per share less than both the Warrant Price
and the Current Market Price, the Warrant Price shall
be adjusted in the manner provided in clauses (i) or
(ii) of this subsection (d) which will result in the
greater reduction in the amount of the Warrant Price.
The provisions of this subsection (d) shall not apply
under any of the circumstances for which an
adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price
shall be made under this subsection (d) upon the
issuance of any Additional Shares of Common which are
issued pursuant to any Common Stock Equivalent if
upon the issuance of such Common Stock Equivalent (1)
any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (2) no adjustment
was required pursuant to subsection (e) of this
Section 5.
<PAGE>
45.
e) Issuance of Common Stock Equivalents
In case the Company shall at any time while this
Warrant is outstanding, issue any Common Stock
Equivalent and the price per share for which
Additional Shares of Common may be issuable
thereafter pursuant to such Common Stock Equivalent
shall be less than the Warrant Price then in effect
on the date of issuance of such Common Stock
Equivalent or less than (i) the Current Market Price
then in effect if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%) of the
Current Market Price then in effect if such issue is
pursuant to a private placement in excess of $
3'500'000 in the aggregate, or if, after any such
issuance of Common Stock Equivalents, the price per
share for which Additional Shares of Common may be
issuable thereafter is amended (other than as a
result of the operation of anti-dilution provisions
of or relating to Common Stock Equivalents
outstanding as of the date hereof pursuant to events
or circumstances which would also result in an
adjustment in the Warrant Price), and such price as
so amended shall be less than the Warrant Price or
the Current Market Price in effect at the time of
such amendment, then the Warrant Price upon each such
issuance or amendment shall be adjusted as provided
in the first sentence of subsection (d) of this
Section 4 on the basis that (1) the maximum number of
Additional Shares of Common issuable pursuant to all
such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock
Equivalents are actually then exercisable,
convertible or exchangeable in whole or in part) as
of the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of
such Common Stock Equivalent, or (B) the date of
actual issuance of such Common Stock Equivalent, and
(2) the aggregate consideration for such maximum
number of Additional Shares of Common shall be deemed
to be the minimum consideration received and
receivable by the Company for the issuance of such
Additional Shares of Common pursuant to such Common
Stock Equivalent. No adjustment of the Warrant Price
shall be made under this subsection (e) upon the
issuance of any Convertible Security which is issued
pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any
adjustment shall previously have been made in the
Warrant Price then in effect upon the issuance of
such warrants or other rights pursuant to this
subsection (e).
f) Other Provisions Applicable to Adjustments Under this
Section A
The following provisions shall be applicable to the
making of adjustments in the Warrant Price
hereinbefore provided in this Section 5:
(i) Computation of Consideration
The consideration received by the Company
shall be deemed to be the following: (a) to
the extent that any Additional Shares of
Common or any Common Stock Equivalents shall
be issued for a cash consideration, the
consideration received by the Company
therefor, or, (b) if such Additional Shares
of Common or Common Stock Equivalents are
offered by the Company for subscription, the
subscription price, or, (c) if such
<PAGE>
46.
Additional Shares of Common or Common Stock
Equivalents are sold to underwriters or
dealers for public offering without a
subscription offering, the initial public
offering price, in any such case excluding
any amounts paid or receivable for accrued
interest or accrued dividends and without
deduction of any compensation, discounts,
commissions, or expenses paid or incurred by
the Company for or in connection with the
underwriting thereof or otherwise in
connection with the issue thereof; (d) to
the extent that such issuance shall be for a
consideration other than cash, then, except
as herein otherwise expressly provided, the
fair market value of such consideration at
the time of such issuance as determined in
good faith by the Board. The consideration
for any Additional Shares of Common issuable
pursuant to any Common Stock Equivalents
shall be the consideration received by the
Corporation for issuing such Common Stock
Equivalents, plus the additional
consideration payable to the Corporation
upon the exercise, conversion or exchange of
such Common Stock Equivalents. In case of
the issuance at any time of any Additional
Shares of Common or Common Stock Equivalents
in payment or satisfaction of any dividend
upon any class of Stock other than Common,
the Corporation shall be deemed to have
received for such Additional Shares of
Common or Common Stock Equivalents a
consideration equal to the mount of such
dividend so paid or satisfied. In any case
in which the consideration to be received or
paid shall be other than cash, the Board
shall notify the Holder of this Warrant
through Banca del Gottardo of its
determination of the fair market value of
such consideration prior to payment or
accepting receipt thereof. If within thirty
days after receipt of said notice, the
Holders of Warrants exercisable for at least
a majority of Warrant Stock then unissued
shall notify the Board in writing of their
objection to such determination, a
determination of fair market value of such
consideration shall be made by arbitration
in accordance with the Rules of the American
Arbitration Association, by an arbitrator in
the Borough of Manhattan, City of New York,
State of New York.
(ii) Readjustment of Warrant Price
Upon the expiration of the right to convert,
exchange or exercise any Common Stock
Equivalent the issuance of which effected an
adjustment in the Warrant Price, if such
Common Stock Equivalent shall not have been
converted, exercised or exchanged, the
number of shares of Common Stock deemed to
be issued and outstanding by reason of the
fact that they were issuable upon
conversion, exchange or exercise of any such
Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant
Price shall forthwith be readjusted and
thereafter be the price which it would have
been (but reflecting any other adjustments
in the Warrant Price made pursuant to the
provisions of this Section 5 after the
issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been
made in accordance with the issuance or sale
of the number of Additional Shares of Common
actually issued upon conversion, exchange or
issuance of such Common Stock
<PAGE>
47.
Equivalent and thereupon only the number of
Additional Shares of Common actually so
issued shall be deemed to have been issued
and only the consideration actually received
by the Company (computed as in clause (i) of
this subsection (g)) shall be deemed to have
been received by the Company.
(iii) Treasury Shares
The number of shares of Common at any time
outstanding shall not include any shares
thereof then directly or indirectly owned or
held by or for the account of the Company or
any of its Subsidiaries.
g) Other Action Affecting Common
In case after the date hereof the Company shall take
any action affecting its common, other than an action
described in any of the foregoing subsections (a)
through (f) of this Section 5, inclusive, and the
failure to make any adjustment would not failure
protect the purchase rights represented by this
Warrant in accordance with the essential intent and
principle of this Section 5, then the Warrant Price
shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable
in the circumstances.
h) Adjustment of Number of Shares
Upon each adjustment in the Warrant Price pursuant to
any provision of this Section 5, the number of shares
of Warrant Stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product
obtained by multiplying such number of shares
purchasable immediately prior to such adjustment in
the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be
the Warrant Price immediately thereafter. If the
Company shall be in default under any provision
contained in the last sentence of Section 5 of this
Warrant so that shares issued at the Warrant price
adjusted in accordance with this Section 5 would not
be validly issued, the adjustment of number of shares
provided for in the foregoing sentence shall
nonetheless be made and the Holder of this Warrant
shall be entitled to purchase such greater number of
shares at the lowest price at which such shares may
then be validly issued under applicable law. Such
exercise shall not constitute a waiver of any claim
arising against the Company by reason of its default
under Section 5 of this Warrant.
i) Notwithstanding anything in this Section 5 to the
contrary, neither the number of shares of Warrant
Stock purchasable hereunder nor the Warrant Price
shall be adjusted with respect to any Common Stock
Equivalents issued and outstanding as of the date of
the issuance of this Warrant, or the issuance of any
Securities upon exercise or conversion of any such
Common Stock Equivalent, including, without
limitation, any Securities issued from time to time
pursuant to (i) the exercise of options outstanding
as of the date of issuance of the Warrant and held by
present or former directors, officers or employees of
the Company, (ii) the
<PAGE>
48.
exercise of the Stock Purchase Warrant, dated July
31, 1992 (the "Prudential Warrant"), purchased by The
Prudential Insurance Company of America
("Prudential"), (iii) the conversion features of that
certain Amended and Restated 10% Convertible
Subordinated Note Due 1999 issued to T.J. Berthel
Investment L.P. (the "Berthel Securities"), (iv) the
exercise of the Warrant dated August 11, 1994 (the
"Nomura Warrant") issued to Nomura Holding Company,
Inc. ("Nomura"), (v) the effect of any antidilution
provisions contained in the Prudential Warrant, the
Berthel Securities and the Nomura Warrant and (vi)
the issuance of up to 150'000 stock options per
calendar year pursuant to the Company's stock option
or stock purchase plan.
6. Notice of Adjustments
Whenever the Warrant Price or number of Warrant Shares
purchasable upon exercise of this Warrant shall be adjusted
pursuant to Section 5 hereof, the Company shall deliver to
Banca del Gottardo for certification to the Holder(s) of the
Warrant a certificate (the "Adjustment Certificate") setting
forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which
such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder),
and the Warrant Price and number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (by first class
mail postage prepaid) to the Holder(s) of this Warrant
promptly after each adjustment; provided, however, that in the
event that any Holder disagrees with the calculations, amounts
or other information with respect to the adjustments set forth
in the Adjustment Certificate, such Holder shall within 10
Business Days after receipt of such Adjustment Certificate
request that the Company cause the independent accounting firm
then regularly engaged by it to audit its financial statements
to propose and execute and promptly deliver to the Holder(s) a
certificate with respect to each of the items set forth in the
Adjustment Certificate. Such determination as to adjustments
of the accounting firm shall be final and binding in the
absence of manifest error.
7. Fractional Shares
No fractional shares of Warrant Stock will be issued in
connection with any exercise hereof, but in lieu of such
fractional shares, the Company shall cause the payment
therefor equal in amount to the product of the applicable
fraction multiplied by the Warrant Price then in effect.
8. Definitions
For the purposes of this Warrant, the following terms have the
following meanings:
"Additional Shares of Common" shall mean all shares of Common
issued by the Corporation after the date hereof except Warrant
Stock.
"Board" shall mean the Board of Directors of the Corporation.
<PAGE>
49.
"Business Day" shall mean any day except a Saturday, a Sunday
or a legal holiday in New York City.
"Closing Date" shall mean the date of the closing of the sale
and delivery of the Notes.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the
Securities Act.
"Common" shall mean the Common Stock and any capital stock of
the Company of any class which shall be authorized at any time
after the date of this Warrant and which shall have the right
to participate in the distribution of earnings and assets of
the Company without limitation as to amount.
"Common Stock Equivalent" shall mean any Convertible Security
or warrant, option or other right to subscribe for or purchase
any Additional Shares of Common or any Convertible Security.
"Company" shall mean Intellicall, Inc., a Delaware
corporation, and its successors and assigns.
"Convertible Securities" shall mean evidences of Indebtedness,
shares of Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of
Common. The term "Convertible Security" shall mean one of the
Convertible Securities.
"Current Market Price" means with respect to any Trading Day
the last sale price (regular way) of the Common on such day as
reported on the New York Stock Exchange Consolidated Tape (as
published in the Wall Street Journal), or, if such Common is
not listed on the New York Stock Exchange, Inc. or reported on
such Consolidated Tape, then the last sale price on such day
on the principal domestic stock exchange on which such stock
is then listed or admitted to trading, or, if no sale takes
place on such day on such exchange, the average of the closing
bid and asked prices on such day as officially quoted on such
exchange, or, if such Common is not then listed or admitted to
trading on any domestic stock exchange but is quoted in the
National Market System ("NMS/NASDAQ") of the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ"), then the Current Market Price for each such
Trading Day shall be the last sale price on such day as quoted
by NMS/NASDAQ, or, if no sale takes place on such day or if
such Common is neither listed or admitted to trading on any
domestic stock exchange nor quoted on such National Market
System, then the Current Market Price for each such Trading
Day shall be the average of the reported closing bid and asked
price quotations on such day in the over-the-counter market,
as reported by NASDAQ, or, if not so reported, as furnished by
the National Quotation Bureau, Inc., or, if such firm at the
time is not engaged in the business of reporting such prices,
as furnished by any similar firm then engaged in such business
as selected by the Company, or if there is no such firm, as
furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company with the
written approval of the Holders of Warrants execrable for a
majority of the shares of Warrant Stock usable under then
outstanding Warrants. If at any time such Common is not listed
on any domestic exchange or quoted
<PAGE>
50.
in the domestic over-the-counter market, the Current Market
Price shall be deemed to be an amount mutually agreed upon in
writing between the Corporation and the Holder of this Warrant
within fifteen days immediately following the date on which
the Current Market Price is to be determined. If no agreement
as to Current Market Price is determined as stated herein, (i)
the Holder of this Warrant shall select an independent
appraiser who shall determine the fair market value per share
of the Common which shall be the Current Market Price,
provided the Company shall agree to such Current Market Price.
If the Company shall not agree to the Current Market Price as
determined in the preceding sentence then (ii) the Company and
Banca del Gottardo shall each select an independent appraiser
who shall, independently of the other appraiser, determine the
fair market value of the Common of the Company. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does not exceed by more than ten percent
(10%) the average of the values determined by each appraiser,
then the Current Market Price shall be the average of the
values determined by the two appraisers. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does exceed by more than ten percent
(10%) the average of the value determined by each appraiser,
then the two appraisers shall select a third independent
appraiser who shall, independently of the other appraisals,
determine the fair market value of the Common. The value
determined by the appraiser whose determination is the most
discrepant from the average of the three appraisals shall be
discarded, and the Current Market Price shall equal the
average of the remaining two appraisals; except that in the
event that the highest and lowest appraisals are equally
discrepant from the average of the three appraisals, the
Current Market Price shall be such average. The Company shall
bear the expenses of all appraisals.
"Governmental Body" shall mean any federal, state, county,
city, town, village, municipal or other governmental
department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Holders" shall mean the Persons who shall from time to time
own of record any Warrant. The term "Holder" shall mean one of
the Holders.
"Initiating Holders" shall mean the holder or holders of any
of the Registrable Securities outstanding and entitled to
registration rights under Section 8 hereof.
"Material Adverse Effect" means any change or changes or
effect or effects that individually or in the aggregate are or
are likely to be materially adverse to (i) the assets,
business, operations, income, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole, (ii) the legality, validity or
enforceability of the Warrants, and (iii) the ability of the
Corporation to fulfill its obligations under the Warrants.
"Note Purchase Agreement" shall mean the Note and Warrant
Purchase, Paying and Conversion/Warrant Agency Agreement,
dated as of December 22, 1995, by and between the Company and
Banca del Gottardo as such Agreement may hereafter from time
to time be amended, modified or supplemented in accordance
with the terms thereof.
<PAGE>
51.
"Notes" shall mean collectively the Subordinated Convertible
Notes (each as defined in the Note Purchase Agreement).
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
"Property" with respect to any Person, shall mean any interest
in any kind of property or asset, whether real, personal or
mixed, tangible or intangible, of such Person.
"Registrable Securities" shall mean (a) any Warrant Stock or
other Securities issued or issuable upon exercise of any
Warrants, and (b) any Securities issued or issuable with
respect to any such Warrant Stock or other Securities by way
of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such shares or securities
shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such
Securities shall have become effective under the Securities
Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall
have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) they
shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall
have been delivered by the Corporation and subsequent
disposition of them shall not require registration or
qualification of them under the Securities act or any similar
state law then in force, (iv) they shall have cased to be
outstanding or (v) the Company agrees to remove the legend
restricting transferability in accordance with applicable law
on the certificates evidencing such Securities.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with Section 7,
including, without limitation, all registration, filing and
National Association of Securities Dealers fees, all fees and
expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants,
including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of not more
than one firm of attorneys retained by the holders of the
Registrable Securities being registered, premiums and other
costs of policies of insurance against liabilities arising out
of the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration
Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general
overhead expenses of the Company, auditing fees, premiums or
other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the
preparation of financial statements or other data normally
prepared by the Corporation in the ordinary course of its
business or which the Company would have incurred in any
event.
<PAGE>
52.
"Securities" shall mean any debt or equity securities of the
Company whether now or hereafter authorized, and any
instrument convertible into or exchangeable for Securities or
a Security. "Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date the Securities Act
of 1933, as amended, or any similar Federal statute then in
effect.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in the
capital stock of a corporation of any class.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which at least a majority of
the outstanding Voting Stock is at the time directly or
indirectly owned or controlled by such Person or by one or
more of any entities directly or indirectly owned or
controlled by such Person.
"Trading Day" shall mean any day on which equity securities
are traded on any national securities exchange or on NASDAQ.
"Voting Stock", as applied to the Stock of any corporation,
shall mean Stock of any class or classes (however designated)
having ordinary voting power for the election of a majority of
the members of the Board of Directors (or other governing
body) of such corporation, other than Stock having such power
only by reason of the happening of a contingency.
"Warrant Price" shall mean the price specified in the first
paragraph of this Warrant and such other prices as shall
result form the adjustments specified in Section 4 hereof.
"Warrant Stock" shall mean the Common Stock issuable upon
exercise of any Warrant or Warrants.
"Warrants" shall mean the Warrants issued and sold pursuant to
the Note Purchase Agreement, including, without limitation,
this Warrant.
9. Amendment and Waiver; Assignees
Any term, covenant, agreement or condition in this Warrant may
be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively
or prospectively), by a written instrument or written
instruments executed by the Company and Banca del Gottardo;
provided, however, that no such amendment or waiver shall
reduce the number of shares of Warrant Stock issuable under
the Warrants, increase the Warrant Price, shorten the period
during which the Warrants may be exercised or modify any
provision of this Section 10 without the consent of the
Holders of all Warrants then outstanding.
10. Loss or Mutilation
Upon receipt by the Warrant Agent of evidence satisfactory to
it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant and (in the case of loss, theft or
<PAGE>
53.
destruction) of indemnity satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation thereof, the
Warrant Agent shall execute and deliver in lieu thereof a new
Warrant entitling the Holder to acquire without further
consideration the same number of Shares upon the same terms as
the Warrant so lost, stolen or destroyed or so surrendered and
canceled. Any such substitute Warrant shall constitute an
original contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant shall be at
any time enforceable by anyone. Applicants for a substitute
Warrant shall also comply with such other reasonable
regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
11. Notices and Publications
All notices to the Holders shall be deemed to have been duly
given if published in the Feuille Officielle Suisse du
Commerce and in a daily newspaper in Lugano and Zurich.
12. Governing Law
The terms, conditions and form of the Warrants and the Warrant
Agency Agreement shall be governed by and construed in
accordance with Swiss law. The issuance of the Common Stock
upon exercise of the Warrants shall be governed by and
construed in accordance with the laws of the State of
Delaware.
Any action or proceedings against the Company relating to the
Warrants may be brought and enforced in the ordinary courts of
the Canton of Ticino, venue being in the City of Lugano, or if
such courts fail to grant jurisdiction in the ordinary courts
of the Canton of Basle-City, venue being in the city of Basle,
and the Company hereby irrevocably submits to the jurisdiction
of such courts in respect of any such action or proceeding in
either case, with the right to appeal, as provided by law, to
the Swiss Federal Court in Lausanne, the judgment of which
shall be final. Solely for that purpose, the Company hereby
elects legal and special domicile at the principal office of
Banca del Gottardo, Viale Stefano Franscini 8, 6901 Lugano,
Switzerland. The Company covenants that so long as any
Warrants are outstanding it will maintain an agent for service
of process in Switzerland. The aforementioned jurisdiction
shall also be valid for the cancellation and replacement of
lost, stolen, defaced, mutilated or destroyed Warrants.
Issuance of Common Stock to a Holder who has been identified
as the legitimate Holder by a final judgment of a Swiss Court
shall release the Company from its obligations under such
Warrants.
<PAGE>
54.
ANNEX F
FORM OF WARRANT
(FACE)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR DELIVERED,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO, OR FOR THE BENEFIT OF, ANY
U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
EXCEPT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT.
WARRANT
No. Warrant to Purchase __________
Shares of Common Stock
(subject to adjustment)
INTELLICALL, INC.
Incorporated Under the Laws of the State of Delaware
This Warrant entitles the holder hereof (the "Holder") to subscribe for and
purchase, during the period specified in this Warrant, one share (subject to
adjustment as hereinafter provided) of duly authorized, validly issued, fully
paid and non-assessable Common Stock, par value $ 0.01 per share ("Common
Stock") of INTELLICALL, INC., a Delaware corporation (the "Corporation"), at an
initial exercise price per share as determined pursuant to Section 3 of the
terms of the Warrants, subject, however, to the provisions and upon the terms
and conditions hereinafter set forth (such exercise price, as form time to time
adjusted in accordance with the terms hereof, being hereinafter called the
"Warrant Price"). 2'000 Warrants or more are required for any exercise.
Reference is hereby made to the further provisions of this Warrant set forth on
the reverse hereof and such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
IN WITNESS WHEREOF, INTELLICALL, INC. has caused this Warrant to be signed
in its name by the facsimile signature of its Chief Executive Officer and
President or one of its Vice Presidents.
Dated: December 29, 1995
INTELLICALL, INC.
By
William 0. Hunt
Chief Executive Officer
and President
<PAGE>
55.
ANNEX G
(to be typed on security paper)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR DELIVERED,
Directly OR INDIRECTLY, IN THE UNITED STATES OR TO, OR FOR THE BENEFIT OF, ANY
U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT)
EXCEPT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT.
GLOBAL WARRANT
INTELLICALL, INC.
Incorporated Under the Laws of the State of Delaware
This Global Warrant is a Global Warrant in respect of a duly authorized issue of
300'000 Warrants, each entitling the holder to subscribe for and purchase,
during the period specified in this Warrant, 300'000 shares (subject to
adjustment as hereinafter provided) of duly authorized, validly issued, fully
paid and non-assessable Common Stock, par value $ 0.01 per share ("Common
Stock") of INTELLICALL, INC., a Delaware corporation (the "Company"), at an
initial exercise per share as determined pursuant to Section 3 of the terms of
the Warrants, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth (such exercise price, as from time to time
adjusted in accordance with the terms hereof; being hereinafter called the
"Warrant Price"). 2'000 Warrants or more are required for any exercise.
The Warrants are issued pursuant to the Note and Warrant Purchase, Paying and
Conversion/Exercise Agency Agreement dated as of December 22, 1995 between, the
Company as issuer of the Warrants and Banca del Gottardo (the "Agreement").
The Global Warrant may be exchanged, as a whole or in part, for appropriate
definitive Warrants, in bearer form, not earlier than 40 days after the later of
the date on which the Warrants are first offered or the Payment Date. Such
exchange shall be made upon certification that the beneficial owners of the
Warrants are not United States persons or U.S. persons or are financial
institutions (as defined in United States Treasury Regulation Section
1.165-12(c)(1)(v)) located outside the United States that are not United States
persons and that the beneficial owners have not purchased such Warrants for
resale during the Restricted Period and that the beneficial owners certify that
they have not acquired the Warrants for purposes of resale directly or
indirectly to a United States person or to a person within the United States. A
beneficial owner of Notes must exchange its share of the Global Warrant for
definitive Warrants before such Warrants may be transferred or shares may be
delivered upon exercise of the Warrants in respect of the Warrants will be made.
For purposes hereof, (i) the term "Restricted Period" means the period beginning
on the earlier of the first date that the Notes are offered or the date on which
the Notes are issued (the "Payment Date") and ending on the date forty (40) days
after the later of the date upon which the Notes and Warrants were first offered
or the date of closing of this offering, (ii) the term "United States" means the
United States of America
<PAGE>
56.
(including the States and the District of Columbia), its possessions, its
territories and other areas subject to its jurisdiction, (iii) the term "United
States person means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth in
Sections 230.901 through .904 of Title 17 of the United States Code of Federal
Regulations ("Regulation S"). Until so exchanged, this Global Warrant shall have
the same rights and benefits as the definitive Warrants.
The Terms of the Warrants set forth in Annex E of the Agreement are hereby
incorporated by reference herein mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company shall
meet all its obligations hereunder as and when provided in the Terms of the
Warrants and shall be bound by all its covenants set forth herein.
This Global Warrant shall be governed by and construed in accordance with the
laws of Switzerland.
IN WITNESS WHEREOF, the Company has caused this Global Warrant to be duly
executed under its corporate seal as of December 29, 1995.
Dated: December 29, 1995
INTELLICALL, INC.
By
William 0. Hunt
Chief Executive Officer
and President
This Global Warrant shall not become valid for any purpose until this Global
Warrant has been authenticated by any two officers of Banca del Gottardo.
by: by:
Authorized Officer Authorized Officer
<PAGE>
57.
ANNEX H
CONVERSION AGENCY AGREEMENT
This agreement is entered into effective as of December 29, 1995, between
INTELLICALL, INC., a Delaware corporation with principal offices at 2155
Chenault, Suite 410, Carrollton, Texas 75006-5023, United States of America (the
"Company") of the first part and BANCA DEL GOTTARDO, a Swiss corporation with
principal offices at Viale Stefano Franscini 8, 6901 Lugano, Switzerland ("Banca
del Gottardo") of the second part.
As authorized by its Board of Directors on December 20, 1995 and pursuant to a
Note and Warrant Purchase, Paying and Conversion/Exercise Agency Agreement dated
December 22, 1995 (the "Agreement"), the Company proposes to make an offer on
the Swiss capital market for the sale of its convertible notes (the "Convertible
Notes") and Warrants. The Convertible Notes will be convertible into freely
transferable and non-restricted shares (the "Shares") of the Common Stock of the
Company (the "Common Stock"), on the terms and conditions provided hereafter.
The Board of Directors of the Company has approved this agreement as regards the
conversion of the Notes and has authorized the conversion of the Convertible
Notes into the Common Stock of the Company on the terms and conditions hereof
Article 1 Conversion Agent
1.1. The Company hereby appoints Banca del Gottardo,
acting through its specified office in Switzerland,
as sole Conversion Agent (the "Conversion Agent") for
the conversion of Notes or coupons into Shares in
accordance with the provisions for conversion set
forth in Exhibit 1 hereto (the "Conversion
Provisions") which constitutes an integral part of
this agreement.
1.2. So long as any Notes are outstanding, the Company
shall maintain a stock transfer agent (the "Stock
Transfer Agent") or shall itself perform the
functions required of such agent under this
agreement.
1.3. The appointment of the Conversion Agent hereunder
shall continue in effect until the conversion right
in respect of the Convertible Notes shall have
terminated. So long as Banca del Gottardo
satisfactorily performs its obligations hereunder the
Company shall not without the consent of Banca del
Gottardo appoint any other Conversion Agent or pay
any other bank any commission or remuneration for the
conversion of the Convertible Notes or coupons.
Article 2 Commissions
2.1. In consideration for the services rendered by the
Conversion Agent in connection with the conversion of
the Convertible Notes and coupons, the Company
undertakes to pay upon demand to the Conversion Agent
in US Dollars a commission of 0.25 per cent of the
principal amount of each Note converted, however at
least USD 50.-- per conversion of a Convertible Note
in a principal amount of USD 5'000.-- together with
reasonable out-of-pocket expenses (e.g.,
<PAGE>
58.
telex, cable, postage, telephone, legal and insurance
expenses, if any) incurred by the Conversion Agent in
connection with its services hereunder.
2.2. Neither Banca del Gottardo nor the Noteholders shall
have any obligation to pay to the Stock Transfer
Agent any commission, fees, costs or charges in
connection with the conversion of Convertible Notes
or coupons and the making available of the respective
Shares as provided hereafter.
Article 3 Indemnification
The Company will indemnify and hold harmless the Conversion
Agent against any losses, liabilities, costs, claims, actions
or demands which it may incur or which may be made against it
as a result of or in connection with its appointment or the
exercise of its powers and duties under this Agreement other
than those based upon or arising out of the negligence of
willful misconduct on the part of the Conversion Agent or any
of its employees.
Article 4 Conversion of Convertible Notes and Coupons
Each Convertible Note and all unmatured coupons attached
thereto, submitted for conversion to the Conversion Agent (a
"Converted Note") shall be imprinted or stamped by the
Conversion Agent with a legend to the effect that such
Convertible Note or coupon has been converted. All Converted
Notes and coupons shall be held by Banca del Gottardo for the
account of the Company. Banca del Gottardo shall maintain a
record of Convertible Notes and coupons converted.
Article 5 Notices
All notices required under this Agreement shall be deemed to
have been duly given if sent by cable, telex or facsimile
transmission (confirmed in writing, sent by registered
airmail) to the following addresses:
If to the Company:
INTELLICALL, INC.
2155 Chenault, Suite 410
Carrollton, Texas 75006-5023
Attention: Chief Financial Officer
Facsimile: (214) 416-9454
If to the Conversion Agent:
BANCA DEL GOTTARDO
Viale Stefano Franscini 8
6901 Lugano, Switzerland
<PAGE>
59.
Attention: New Issue Department
Telex: 841 052
Facsimile: 0114191 8081843
or to such other address as at the party receiving the notice
shall have notified to the other party in writing. Such cable,
telex or facsimile transmission notice shall be deemed to have
been duly given at the time of dispatch. Any party receiving a
notice by cable, telex or facsimile transmission will be
protected by relying upon the cabled, telexed or transmitted
notice even though such notice is not subsequently confirmed
in writing.
Article 6 Governing Law
6.1. This agreement shall be governed by and construed in
accordance with Swiss law, except as to matters regarding
conversion of the Notes into Common Stock of the Company, which
shall be governed by and construed in accordance with the laws of
Delaware. Any action or proceedings against the Company relating
to this agreement or the Convertible Notes or coupons may be
brought and enforced in the ordinary courts of the Canton of
Ticino, venue being in the City of Lugano, and the Company hereby
irrevocably submits to such courts in respect of any such action
or proceeding with the right to appeal, as provided by law, to
the Swiss Federal Court in Lausanne, the judgment of which shall
be final. Solely for that purpose and for the purpose of
execution in Switzerland, the Company hereby elects legal and
special domicile at the office of Banca del Gottardo, Viale
Stefano Franscini 8, 6901 Lugano, Switzerland. Banca del Gottardo
shall notify the Company promptly upon receipt of any notice by
it in its capacity as the Company's agent for service of process.
6.2. The Conversion Agent shall also have the right to bring
any legal action or proceeding hereunder against the Company in
any state or federal court in the United States of America which
may have jurisdiction.
Article 7 Counterparts
This agreement may be executed in any number of counterparts,
each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
<PAGE>
60.
IN WITNESS WHEREOF, the Company and Banca del Gottardo have
caused this agreement to be signed and acknowledged by their
officers authorized to do so, as of December 29, 1995.
INTELLICALL, INC.
By
BANCA DEL GOTTARDO
By
<PAGE>
61.
Exhibit 1 to ANNEX H
CONVERSION PROVISIONS
The following are the provisions for the conversion (the "Conversion
Provisions") of the USD 7'500'000.- 8% Convertible Notes due December 31, 2000
of Intellicall, Inc., Carrollton, Texas (the "Company") into freely transferable
and non-restricted shares of the common stock of the Company. Unless otherwise
defined herein, the terms used herein have the meanings ascribed to them in the
Note and Warrant Purchase, Paying and Conversion/Exercise Agency Agreement and
the Conversion Agency Agreement (the "Agency Agreement") dated as of December
22, 1995 between the Company and Banca del Gottardo.
Article I
Conversion Right
1.1. Subject to and upon compliance with these Conversion Provisions, the
holder of any Note (a "Noteholder") will have the right at any time on and after
May 1, 1996 up to the close of business of banks in Lugano on December 31, 2000,
or, in case the Notes are called for redemption in accordance with Section 4 of
the Terms of the Notes, then prior to the close of business of banks in Lugano
on the earlier of December 31, 2000 and the fifth business day preceding the
date fixed for redemption, but in no event thereafter, to convert ten Notes or
more Notes into freely transferable and non-restricted (such non-restriction
being subject to the effectiveness of a registration statement under the U.S.
securities laws covering such common stock) shares of common stock which are
duly registered under the 1933 Securities Act, with par value USD 0.01 per share
(such presently authorized capital stock and any other stock into which such
presently authorized common stock may hereafter be changed, the "Common Stock"),
of the Company, calculated as to each conversion to the greatest number of full
Shares, disregarding fractions, at the price of initially as determined pursuant
to Section 3 of the terms of the Notes for each Share, such price being subject
to adjustment in certain instances as provided in Article 2 hereafter (as so
adjusted from time to time, the "Conversion Price"). Fractions of a share will
not be issued on conversion; provided, however, that if a Noteholder at any one
time delivers more than one Note for conversion, the number of Shares issued
shall be calculated on the basis of the aggregate principal amount of the Notes
so delivered. A cash adjustment shall be paid in respect of any fractional Share
which would otherwise be issuable upon conversion of any Note in an amount in
U.S. Dollars based upon the market price of the Common Stock on the last trading
day prior to the date of conversion. Cash adjustments for fractional shares will
not be made for amounts less than one U.S. Dollar.
1.2. In order to exercise the right of conversion, a Noteholder shall (a)
deliver the Note or Notes to be converted during normal business hours,
accompanied by the conversion notice in the form obtainable from the Conversion
Agent (the "Conversion Notice") to any Conversion Agent and (b) pay to the
Conversion Agent any stamp or other taxes that may be payable in Switzerland on
such conversion. Each Note delivered for conversion must be delivered with all
unmatured
<PAGE>
62.
coupons attached and/or with an amount equal to the face value of any
missing, unmatured coupons. Such missing, unmatured coupons shall be paid by
Banca del Gottardo upon subsequent presentation thereof, provided they shall not
have become barred pursuant to Section 11 of the Terms of the Notes.
1.3. The Conversion Agent undertakes to:
(a) make available to Noteholders the Conversion Notice in such
form as may from time to time be agreed by the Company and
the Conversion Agent;
(b) upon receipt of a Conversion Notice from a Noteholder:
(i) verify that (A) the Conversion Notice has been duly
completed and signed by or on behalf of the
Noteholder named therein, (B) the Conversion Notice
is accompanied by all Notes to which it relates and
all unmatured coupons appertaining to such Notes
and/or an amount equal to the face value of any
missing unmatured coupons and (C) the amount of any
stamp or other taxes payable by the Noteholder has
been paid; and
(ii) endorse the Conversion Notice;
(c) imprint or stamp all Notes submitted to it for conversion, and
all unmatured coupons attached thereto, in accordance with
Article 4 of the Agency Agreement promptly upon satisfaction
by the Noteholder of all conditions precedent to the
conversion, and
(d) dispatch within two business days after satisfaction by the
Noteholder of all conditions precedent to the conversion to
the relevant tax authorities, payment in respect of any stamp
or other taxes payable on the conversion, in accordance with
the laws of Switzerland.
1.4. The Conversion Agent shall promptly, upon the later of the date of
receipt of the Conversion Notice and the satisfaction of all other conditions
precedent to the conversion stated above, endorse the Conversion Notice and
notify the Company and the Stock Transfer Agent of the Company (at present
Chemical Shareholder Services Group, 2323 Bryan Street, Suite 2300, Dallas, TX
75201), by facsimile, telex or cable of (a) the principal amount and serial
numbers of the Notes deposited for conversion, (b) the number of Shares issuable
upon conversion of such Notes and (c) the name and address of each person (the
"Shareholder") to whom such Shares are to be issued. Such conversion shall
become effective at the close of business on the date (the "Conversion Date") on
which the Company shall have received at its principal executive offices, during
normal business hours, from the Conversion Agent a telex or cable notification.
If such facsimile, telex or cable notification is received after the close of
business on such date, the Conversion Date will be the immediately following
business day. At such Conversion Date the rights of the holder (other than the
Company) of a Note shall cease and the Shareholder shall be deemed to have
become the holder of such Shares.
1.5. As soon as practicable on or after the Conversion Date, but in no
event later than seven business days thereafter, the Company shall (a) cause the
Shareholder to be registered as the owner of the Shares issued upon conversion
of such Shareholder's Notes in the register of Shareholders of the
<PAGE>
63.
Company, (b) make available, or cause the Stock Transfer Agent to issue, a
certificate or certificates for such Shares registered in the name of the
Shareholder (together with any other securities, properties or cash deliverable
at the Conversion Date) and (c) at the request of the Shareholder, cause the
Stock Transfer Agent to forward, at the risk and expense and for account of such
Shareholder, such certificate or certificates (together with any other
securities, properties or cash deliverable upon conversion) to such person or
persons at the address specified in the Conversion Notice, together with such
assignments and other documents, if any, as may be required by law to effect the
transfer thereof with full benefits under the laws of the applicable
jurisdiction of the United States of America.
1.6. The Company covenants that:
(a) so long as any Notes are outstanding, it shall keep available
authorized shares of Common Stock sufficient to permit all
Notes outstanding and unconverted to be converted in
accordance with these Conversion Provisions;
(b) all shares of Common Stock delivered upon conversion of Notes
as provided herein will be validly issued, fully-paid and
non-assessable;
(c) it shall file, on or before May 1, 1996, if required, any
registration under the United States securities laws that may
be required before the Shares can be delivered upon conversion
of the Notes and freely marketed in the United States.
1.7. Shares issued upon conversion and registered in the name of the
Shareholder shall be freely transferable and non-restricted and shall be
entitled to receive all dividends paid on such Common Stock on or after the
Conversion Date, except for dividends payable to Shareholders registered as such
as of a record date occurring prior to the Conversion Date. No payments shall be
made upon conversion for interest accrued since the Coupon Due Date next
preceding the Conversion Date.
1.8. Notes may be presented for conversion only to an office of the
Conversion Agent outside the United States. The Company and the Conversion Agent
will deliver Common Stock or other consideration received upon conversion only
to an account or address outside the United States.
Article 2
The Conversion Price shall be subject to adjustments in the following
circumstances occurring after December 29, 1995:
2.1. In case the Company shall hereafter (i) pay a dividend on its Common
Stock in shares of its Common Stock or make a distribution in shares of its
Common Stock with respect to its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock or (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, the Conversion Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision
or combination shall be determined by multiplying the Conversion Price in effect
immediately prior to such record date or effective date by a fraction, the
numerator of which shall be the total number of outstanding shares of Common
Stock immediately prior to such record date or effective date, and the
<PAGE>
64.
denominator of which shall be the total number of outstanding Common Stock
immediately following such record date or effective date. Such adjustments made
pursuant to this Section 2.1 shall be made successively whenever any event
listed above shall occur.
2.2. In case the Company shall fix a record date for the issuance of
rights, options or warrants to all (but not less than all) holders of its
outstanding Common Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into shares of Common Stock) at a price
per share (or having a Conversion Price per share, if a security convertible
into Common Stock) less than the Current Market Price per share of Common Stock
(as defined in Section 2.4) on such record date, the Conversion Price to be in
effect after such record date shall be determined by multiplying the Conversion
Price in effect immediately prior to such record date by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so to be offered
(or the aggregate initial Conversion Price of the convertible securities so to
be offered) would purchase at such Current Market Price and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be offered
for subscription or purchase (or into which the convertible security so to be
offered are initially convertible). In case such subscription or exercise price
may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined by the Board
of Directors of the Company. Shares of Common Stock owned by or held for the
account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such record
date had not been fixed.
2.3. In case the Company shall fix a record date for the making of a
distribution to all (but not less than all) holders of shares of Common Stock of
evidences of its indebtedness or assets (other than cash dividends or cash
distributions payable out of surplus legally available for dividends under the
laws of the jurisdiction of incorporation of the Company, dividends or
distributions payable in shares of Common Stock as described in Section 2.1, or
rights, options or warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
Section 2.2)), the Conversion Price to be in effect after such record date shall
be determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction, of which the numerator shall be the Current
Market Price per share of Common Stock (as defined in Section 2.4) on such
record date, less the fair market value per share (as determined by the Board of
Directors of the Company, whose determination shall be conclusive, and described
in a statement filed with Banca del Gottardo) of the portion of the assets or
evidences of indebtedness so to be distributed, or of such rights, options, or
warrants or convertible securities, applicable to one share of Common Stock, and
of which the denominator shall be such Current Market Price per share of Common
Stock. Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such record date had not been fixed. If any such rights, options, or
warrants or convertible securities shall by their terms provide for an increase
or increases, with the passage of time, in the amount of additional
consideration per share of Common Stock payable to the
<PAGE>
65.
Company upon the exercise or conversion thereof, the Conversion Price then
in effect shall, forthwith upon any such increase becoming effective, be
readjusted to reflect such increase.
2.4. For the purpose of any computation under Sections 2.2 and 2.3, the
"Current Market Price" means with respect to any Trading Day the last sale price
(regular way) of the Common on such day as reported on the New York Stock
Exchange Consolidated Tape (as published in the Wall Street Journal), or, if
such Common Stock is not listed on the New York Stock Exchange, Inc. or reported
on such Consolidated Tape, then the last sale price on such day on the principal
domestic stock exchange on which such stock is then listed or admitted to
trading, or, if no sale takes place on such day on such exchange, the average of
the closing bid and asked prices on such day as officially quoted on such
exchange, or, if such Common Stock is not then listed or admitted to trading on
any domestic stock exchange but is quoted in the National Market System
("NMS/NASDAQ") of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), then the Current Market Price for each such Trading
Day shall be the last sale price on such day as quoted by NMS/NASDAQ, or, if no
sale takes place on such day or if such Common Stock is neither listed or
admitted to trading on any domestic stock exchange nor quoted on such National
Market System, then the Current Market Price for each such Trading Day shall be
the average of the reported closing bid and asked price quotations on such day
in the over-the-counter market, as reported by NASDAQ, or, if not so reported,
as furnished by the National Quotation Bureau, Inc., or, if such firm at the
time is not engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business as selected by the Company, or if
there is no such firm, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company with the written approval of
the Holders of Warrants exercisable for a majority of the shares of Warrant
Stock issuable under then outstanding Warrants. If at any time such Common Stock
is not listed on any domestic exchange or quoted in the domestic
over-the-counter market, the Current Market Price shall be deemed to be an
amount mutually agreed upon in writing between the Company and the Holder of
this Warrant within fifteen days immediately following the date on which the
Current Market Price is to be determined. If no agreement as to Current Market
Price is determined as stated herein, (i) the Holder of this Warrant shall
select an independent appraiser who shall determine the fair market value per
share of the Common Stock which shall be the Current Market Price, provided the
Company shall agree to such Current Market Price. If the Company shall not agree
to the Current Market Price as determined in the preceding sentence then (ii)
the Company and Banca del Gottardo shall each select an independent appraiser
who shall, independently of the other appraiser, determine the fair market value
of the Common Stock of the Company. If the value determined by the appraiser
whose determination is the higher of the two appraisals does not exceed by more
than ten percent (10%) the average of the values determined by each appraiser,
then the Current Market Price shall be the average of the values determined by
the two appraisers. If the value determined by the appraiser whose determination
is the higher of the two appraisals does exceed by more than ten percent (10%)
the average of the value determined by each appraiser, then the two appraisers
shall select a third independent appraiser who shall, independently of the other
appraisals, determine the fair market value of the Common Stock. The value
determined by the appraiser whose determination is the most discrepant from the
average of the three appraisals shall be discarded, and the Current Market Price
shall equal the average of the remaining two appraisals; except that in the
event that the highest and lowest appraisals are equally discrepant from the
average of the three appraisals, the Current Market Price shall be such average.
The Company shall bear the expenses of all appraisals.
<PAGE>
66.
For the purpose of this Section 2.4, "trading day" shall mean a day on
which the securities exchange or on NASDAQ specified for purposes of this
Section 2.4 shall be open for business or, if the shares of Common Stock shall
not be listed on such exchange for such period, a day with respect to which
quotations of the character referred to in the next preceding sentence shall be
reported.
2.5. In computing an adjustment in the Conversion Price pursuant to
Sections 2.1 to 2.3 above, shares of Common Stock not outstanding at the time of
such computation shall be deemed outstanding to the extent that the Conversion
Price has been previously adjusted to reflect the issuance of such shares of
Common Stock or rights, options or warrants to subscribe for or purchase such
shares of Common Stock.
2.6. Except as stated in Sections 2.1, 2.2 and 2.3 above, the Conversion
Price (except at the Company's option) shall not be adjusted for the issuance of
shares of Common Stock of the Company whether or not at less than the Current
Market Price or the current Conversion Price, whether for cash or property.
2.7. No adjustment shall be made to the Conversion Price unless such
adjustment would result in any increase or decrease of at least USD 0.05 in the
Conversion Price then in effect; provided, however, that any adjustments which
by reason of this Section 2.7 are not required to be made will by carried
forward and taken into account in any subsequent adjustment.
2.8. All calculations under these Conversion Provisions shall be made to
the nearest one U.S. cent, with 0.5 U.S. cent or more to be considered a full
U.S. cent, or to the nearest one- hundredth of a share, as the case may be.
2.9. Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly send to Banca del Gottardo a certificate of the Company
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and the date on which it
becomes effective. The contents of any certificate required by this Section 2.9
may be transmitted by telex or cable, but shall be confirmed in writing as
hereinbefore provided. Banca del Gottardo may rely upon such certificate (or
such transmission by cable or telex, whether or not so confirmed) as conclusive
evidence of the correctness of the adjustment referred to therein.
2.10. Notwithstanding the foregoing, no adjustment shall be made to the
extent that it would reduce the Conversion Price to less than the par value of
the shares of Common Stock (USD .01 at the date hereof).
2.11. Anything in this Article 2 to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such reductions in
the Conversion Price in addition to those required by this Article as it, in its
discretion, shall determine to be advisable.
2.12. In any case in which this Article shall require that an adjustment be
made retroactively immediately following a record date, the Company shall as
promptly as practicable issue to the holder of any Note converted after such
record date the shares of Common Stock and other common stock of the Company
issuable on such conversion in excess of the shares of Common Stock and other
common stock of the Company issuable on such conversion on the basis of the
Conversion Price prior to such adjustment.
<PAGE>
67.
Article 3
3.1. In the event that:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to
subscribe for or purchase any shares of Common Stock or any
securities convertible into shares of Common Stock, or of any
other subscription rights or warrants;
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions
payable out of consolidated earnings or earned surplus or
dividends payable in Common Stock);
(c) there shall be any consolidation or merger to which the
Company is a party and for which approval of any shareholders
of the Company is required, or there shall be the conveyance
or transfer of all or substantially all of the properties and
assets of the Company, or there shall be any reorganization or
reclassification or change of outstanding Common Stock
issuable upon the exercise of conversion rights hereunder
(other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination);
(d) there shall be voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) the Company proposes to take any action (other than the
actions of the type described in Section 2.1) which would
require and adjustment of the Conversion Price pursuant to
Article 2;
then the Company shall, at least 10 days prior to the applicable record
date, provide written notice of such event to Banca del Gottardo stating (x) the
record date in the United States of America as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, warrants, or
distributions are to be determined, or (y) the date in the United States of
America on which such reorganization, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding-up is expected to become
effective, and the date as of which it is expected that holders of record of the
shares of Common Stock shall be entitled to vote upon, and, if approved, to
exchange their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
3.2. If the event described in the notice given pursuant to Section 3.1.
will result in an adjustment of the Conversion Price pursuant to Article 2, such
notice shall also state the new Conversion Price unless the Conversion Price
cannot be calculated at the time such notice is given.
3.3. The failure to give or publish the notice required by this Article 3
or any defect therein shall not affect the legality or validity of the
proceedings referred to in Section 3.1.
<PAGE>
68.
Article 4
So long as any of the Convertible Notes remain convertible, the Company shall
not take any action which would result in an adjustment of the Conversion Price
pursuant to Article 2 if, after giving effect thereto, the Conversion Price
would be decreased to such an extent that the Shares could not be legally
issued, under applicable law of the jurisdiction of incorporation of the Company
then in effect, at such decreased Conversion Price as fully-paid and
non-assessable Shares.
Article 5
The Conversion Agent shall not at any time be responsible to any Noteholder for
determining whether any facts exist (a) which may require any adjustment of the
Conversion Price, (b) with respect to the nature or extent of any such
adjustment when made, (c) with respect to the method employed, or herein or in
any supplemental agreement (if any) provided to be employed in making any such
adjustment. The Conversion Agent makes no representation as to the validity or
value (or the kind or amount) of any shares of Common Stock, or of any
securities, property or cash, which may at any time be issued or delivered upon
the conversion of any Convertible Note. The Conversion Agent shall not be
responsible for any failure of the Company to make any cash payment or to issue,
transfer or deliver any shares of stock or stock certificates or other
securities or property upon the surrender of any Note for the purpose of
conversion or to comply with any of the covenants of the Company contained in
these Conversion Provisions.
Article 6
6.1. In case of any consolidation of the Company with, or merger of the
Company into, any other corporation (other than a consolidation or merger in
which the Company is the continuing corporation), or in the case of any sale or
transfer of all of the assets of the Company as an entirety or substantially as
an entirety, the corporation formed by such consolidation or the corporation
into which the Company shall have been merged or the corporation which shall
have acquired such assets, as the case may be, shall execute with Banca del
Gottardo a supplemental agreement which shall (a) provide that the holder of
each Convertible Note then outstanding shall have the right to receive
thereafter, during the period such Convertible Note shall be convertible as
specified in Article 2, upon conversion of such Convertible Note, in lieu of
each share of Common Stock deliverable on such conversion immediately prior to
such event, only the kind and amount of shares and/or other securities and/or
property and/or cash which are receivable, or which, but for the failure to
distribute to holders of Common Stock all or substantially all of the
consideration receivable on such sale or transfer of assets, would be receivable
upon such consolidation, merger, sale or transfer by a holder of one share of
Common Stock of the Company and (b) set forth the Conversion Price for the
shares and/or other securities and/or property and/or cash so issuable, which
shall be an amount equal to the Conversion Price per share of Common Stock of
the Company immediately prior to such event.
6.2. In case of any reclassification or change of the shares of Common
Stock issuable upon conversion of the Notes (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination) or in case of any consolidation or merger of another corporation
into the Company in which the Company is the continuing corporation and in which
the holders of the shares of Common Stock thereafter receive shares, other
securities, property, cash or any combination thereof for such shares of Common
Stock (including for this purpose shares reflecting
<PAGE>
69.
a change in par value or from par value to no par value or as a result of a
subdivision or combination of the shares of Common Stock), the Company shall
execute with Banca del Gottardo a supplemental agreement which shall (a) provide
that the holder of each Convertible Note then outstanding shall receive, upon
conversion thereof, in lieu of each share of Common Stock of the Company
deliverable upon such conversion immediately prior to such event, the kind and
amount of shares and/or other securities and/or property and/or cash receivable
upon such reclassification, change, consolidation or merger by a holder of one
share of Common Stock, and (b) set forth the Conversion Price for the shares
and/or other securities and/or property and/or cash so issuable, which shall be
an amount equal to the Conversion Price per share of Common Stock immediately
prior to such event.
6.3. If, as a result of Section 6.1 or Section 6.2, the holder of any
Convertible Note thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of common stock of the Company, the Board
of Directors (whose determination shall be conclusive) shall determine the
allocation of the Conversion Price between or among shares of such classes of
capital stock. Any supplemental agreement executed pursuant to Sections 6.1 and
6.2 shall provide for adjustments which shall be as nearly equivalent as
practicable to the adjustments provided for herein, and, where appropriate,
state the Conversion Price in terms of one full share of Common Stock or one
full share of common stock of any successor or purchasing corporation. The terms
of this Article 6 also shall apply to successive consolidations, merger, sales
or transfers. In the event that at any time as a result of an adjustment made
pursuant to this Article 6 the holder of any Note thereafter surrendered for
conversion shall become entitled to receive any shares or securities other than
shares of Common Stock, thereafter the prices or price of such other shares or
other securities so receivable on conversion of any Convertible Note shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common Stock
contained in Article 2, and the provisions of Article 2 with respect to the
Common Stock shall apply on like terms to any such other shares.
6.4. The Conversion Agent shall have no responsibility for any
consolidation, merger, sale or transfer, the form or substance or any plan
relating thereto or the consequences thereof to any Noteholder.
The Conversion Agent shall have no responsibility to determine the
correctness of any provision contained in any supplemental agreement relating
either to the kind or amount of shares of stock or securities or property
receivable by Noteholders upon the conversion of their Convertible Notes after
any such consolidation, merger, sale or transfer, or to any adjustment made with
respect thereto. The Conversion Agent may, at its option, receive an opinion of
counsel for the Company as conclusive evidence that any such supplemental
agreement complies with the provisions of this Article.
Article 7
Conversion Agent;
BANCA DEL GOTTARDO
Viale Stefano Franscini 8, 6901 Lugano
<PAGE>
70.
ANNEX I
INTELLICALL, INC.
AND
BANCA DEL GOTTARDO
as Standing Agent
WARRANT AGENCY AGREEMENT
Dated as of December 29, 1995
<PAGE>
71.
WARRANT AGENCY AGREEMENT dated as of December 29, 1995 between INTELLICALL,
INC., a Delaware corporation (the "Company"), and Banca del Gottardo of Lugano,
Switzerland, as Warrant Agent (the "Warrant Agent") and as Standing Agent (the
"Standing Agent").
WITNESSETH:
WHEREAS, the Company proposed to issue Warrants, as hereinafter described (the
"Warrants") (the certificate representing the Warrants being referred to herein
as the "Warrant Certificate"), in connection with the sale by the Company to
issue USD 7'500'000. -- principal amount of 8% subordinated Convertible Notes
due December 31, 2000 (the "Notes"), one warrant entitling to acquire against
consideration initially one share of Common Stock par value of USD 0.01 per
Share of the Company (the "Common Stock").
WHEREAS, the Board of Directors of the Company has duly authorized the issuance
of the Warrants and the shares issuable upon exercise thereof;
WHEREAS, the Company desires to provide for the issuance of the Warrants and to
provide herein for certain terms and provisions of the Warrants more fully then
is set forth in the Warrants Certificate; and
WHEREAS, the Company desires the Standing Agent and the Warrants Agent to act on
behalf of the Company, and the Standing Agent and the Warrant Agent are willing
so to act, in connection with the issuance of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the Warrant Certificate and the respective rights and
obligations thereunder of the Company, the holders of the Warrants and the
Standing Agent and Warrant Agent, the parties hereto agree as follows:
SECTION 1
Definitions
In addition to the definitions set forth elsewhere herein, as used herein:
"Deposit Date" shall have the meaning assigned to it in the Terms of Warrants,
as appropriate.
"Holder" shall mean the person depositing the Warrant Certificate with the
Warrant Certificate with the Warrant Agent or Sub-Warrant Agent pursuant to
Section 4.
"Termination Date" shall mean 12.00 Noon, Lugano Time, December 31, 2000.
"Terms of Warrants" shall refer to Annex E of the Note/Warrant, Purchase, Paying
and Conversion/Warrant Agency Agreement dated December 22, 1995 made by and
between the Company and Banca del Gottardo.
<PAGE>
72.
SECTION 2
Appointment of Standing Agent and Warrant Agent
The Company hereby appoints the Standing Agent and the Warrant Agent to act as
agents for the Company in accordance with the instructions set forth hereinafter
in this Agreement, and the Standing Agent and Warrants Agent hereby accept such
appointments, upon the terms and conditions hereinafter set forth.
SECTION 3
Number, Form and Execution of Warrant Certificates
The number of Warrant Certificates is limited in each case to 300'000. The
Warrant Certificate shall be in bearer form substantially in the forms annexed
hereto as Exhibit 1 (the provisions of which are hereby incorporated herein) and
may have such letters, numbers or other marks of identification or designation,
and such legends, summaries or endorsements, printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto.
The Warrant Certificate shall be signed on behalf of the Company by its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificate may be in the form of a
facsimile signature of the President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificate. The Company, the Standing Agent and the Warrant Agent may deem and
treat the Holder(s) of the Warrants as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for the purpose of any exercise thereof, any distribution to the
Holder(s) thereof, and for all other purpose, and neither the Company, the
Standing Agent nor the Warrant Agent shall be affected by any notice to the
contrary.
SECTION 4
Exercise; No Fractional Shares
(a) The provisions of Sections 5 and 7 of the Terms of the Warrants are
incorporated herein.
(b) On the Deposit Date, the Warrant Agent shall give notice of the individual
exercise of the Warrants (the "Exercise Notice") to the Standing Agent.
(c) Upon surrender of a Warrant Certificate, and payment of the Exercise Price,
the Standing Agent shall thereupon (i) promptly requisition, from the
transfer agent of the Common Stock of the Company, one or more certificates
for the number of shares to be purchased, and (ii) promptly after receipt
of such certificate or certificates for shares, cause the same to be
delivered in accordance with the instructions of the Holder of such Warrant
Certificate together with a check in payment for any fraction of a share.
The Company irrevocably authorizes the Standing Agent to make all such
requests for shares and the transfer agent or transfer agents for the
Common Stock of the Company to comply with all such requests.
<PAGE>
73.
SECTION 5
Authorization; Reservation of Shares; Listing; Reports to Warrantholders, etc.
The provisions of Section 8 of the Terms of Warrants are incorporated herein.
SECTION 6
Loss or Mutilation
The provisions of Section II of the Terms of Warrants are incorporated herein.
SECTION 7
Adjustment of Exercise Price and Number of Share Deliverable
The provisions of Section 5 of the Terms of Warrants are incorporated herein.
SECTION 8
Concerning the Standing Agent and the Warrant Agent
1. The Standing Agent and the Warrant Agent act hereunder solely as agents for
the Company and their duties shall be determined solely by the provisions
hereof. The Standing Agent and the Warrant Agent shall not, by delivering
the Warrant Certificate or by any other act hereunder, be deemed to make
any representations as to the validity of this Warrant Agency Agreement
(except its valid execution) or the validity or value or authorization of
the Warrant Certificate or Warrants represented thereby or of any shares or
other property delivered upon exercise of any Warrants or whether any such
shares or other shares are fully paid and non- assessable. The Standing
Agent and the Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of the Warrants to make or cause to be made
any adjustment of the Exercise Price or any adjustment to the number of
shares of Common Stock issuable upon exercise of the Warrants provided in
this Agreement, or to determine whether any fact exists which may require
any such adjustment, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in making the
same. They shall not (i) be liable for the correctness of any recital or
statement of fact contained herein or in the Warrant Certificate or for any
action taken, suffered, or omitted by them in reliance on any Warrant
Certificate or other document or instrument believed by them in good faith
to be genuine and to have been signed, sent or presented by the proper
party or parties, (ii) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations contained in
this Agreement or in the Warrant Certificate, or (iii) be liable for any
act or omission in connection with this Agreement except for their own
negligence or willful misconduct.
<PAGE>
74.
2. The Standing Agent or the Warrant Agent may at any time consult with
counsel satisfactory to them (who may be counsel to the Company) and shall
incur no liability or responsibility to the Company or to any Holder of any
Warrant or any other person or corporation for any action taken, suffered
or omitted by them in good faith in accordance with the opinion or advice
of such counsel.
3. Any notice, statement, instruction, request, direction, order, election or
demand of the Company shall be sufficiently evidenced by an instrument
signed by its President, any of its Vice Presidents, its Secretary, any of
its Assistant Secretaries or its Treasurer (unless other evidence in
respect thereof is herein specifically prescribed). The Standing Agent or
the Warrant Agent shall not be liable for any action taken, suffered or
omitted by them in accordance with such notice, statement, instruction,
request, direction, order or demand believed b the Standing Agent or
Warrant Agent to be genuine and to have been signed, sent or presented by
the proper party or parties.
4. The Company agrees to pay the Standing Agent and the Warrant Agent
reasonable compensation for its services hereunder and to reimburse it for
all expenses (e.g. telex, cable, postage, telephone, etc.), including
counsel fees, taxes and governmental charges and other charges of any kind
and nature, incurred by the Standing Agent and the Warrant Agent. In
consideration for the services rendered by the Warrant Agent, the Company
undertakes to pay upon demand to the Warrant Agent in USD a commission
which is USD -.10 for each Common Stock Warrant exercised.
5. The Company further agrees to indemnify the Standing Agent or the Warrant
Agent and save them harmless against any and all losses, expenses and
liabilities, including judgments, costs and counsel fees, for any thing
done or omitted by the Standing Agent or Warrant Agent in the execution of
their duties and powers hereunder, except losses, expenses and liabilities
arising as a result of the Standing Agent's or the Warrant Agent's
negligence or willful misconduct. The Company will not be liable for any
Swiss taxes that may be payable for or in respect of the deposit or
surrender of the Warrants, or the issue and delivery of shares or the
surrender of the Warrants.
6. Neither Banca del Gottardo nor the Warrantholders shall have any obligation
to pay to the Standing Agent and Stock Transfer Agent any commission, fees,
costs or charges in connection with the exercise of Warrants and the making
available of the respective Shares as provided hereafter.
7. The Standing Agent or the Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder (except
liabilities arising as a result of the Standing Agent's own negligence or
willful misconduct), after giving thirty days' prior written notice to the
Company. At least fifteen days prior to the date such resignation is to
become effective, the Standing Agent or the Warrant Agent shall cause a
copy of such notice of resignation to be published in the manner set forth
in Section 10. Upon such resignation, the Company shall appoint in writing
a new Standing Agent or Warrant Agent and if the Company shall fail to make
such appointment within a period of thirty days after it has notified in
writing of such resignation by the resigning Standing Agent or Warrant
Agent, then the Holders of any Warrant may apply to any court of competent
jurisdiction for the appointment of such successor Standing Agent or
Warrant Agent and if such successor Standing Agent or the Warrant Agent
shall be carried out by the Company pending such appointment.
<PAGE>
75.
After acceptance in writing of such appointment by the successor Standing
Agent or Warrant Agent is received by the Company, such successor Standing Agent
or Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Standing Agent
or the Warrant Agent, without any further assurance, conveyance, act or deed.
Not later than the effective date of any such appointment the Company shall file
notice thereof with the resigning Standing Agent or Warrant Agent and shall
cause a copy of such notice to be published in the manner set forth in Section
10. Any corporation into which the Standing Agent or the Warrant Agent or any
successor Standing Agent or Warrant Agent may be converted or merged or any
corporation resulting from any consolidation succeeding to the corporate trust
business of the Standing Agent or the Warrant Agent, shall be a successor
Standing Agent or Warrant Agent under this Agreement without any further act.
Any such successor Standing Agent or Warrant Agent shall promptly cause notice
of its succession as Standing Agent or Warrant Agent to be mailed to the Company
and notice published in the manner set forth in Section 10.
The Warrant Agent, its subsidiaries and affiliates, and any of its
officers, directors, stockholders, or employees may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with the Company
in the same manner and to the same extent and with like effect as though it were
not Warrant Agent. Nothing herein shall preclude the Standing Agent or the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
SECTION 9
Modification of Agreement
The Standing Agent, the Warrant Agent and the Company may, by supplemental
agreement, make any changes or corrections in this Agreement that they shall
deem appropriate to cure any ambiguity or to correct any defective or
inconsistent provisions or manifest mistake or error herein contained.
SECTION 10
Notices
The provisions of Section 12 of the Terms of Warrants are incorporated herein.
SECTION 11
Governing Law
The provisions of Section 13 of the Terms of Warrants are incorporated herein.
SECTION 12
Persons Benefiting
This Agreement shall be binding upon and inure to the benefit of the Company,
the Standing Agent, the Warrant Agent and their respective successor and
assigns, and, to the extent that the provisions hereof are incorporated in the
Warrants by the terms thereof, shall be binding upon and shall inure to the
benefit of
<PAGE>
76.
the Holders form time to time of the Warrants, and their respective successor
and assigns. Nothing in this Agreement is intended or shall be construed to
confer upon any other person or corporation any legal or equitable, remedy, or
claim or to impose upon any other persons any duty, liability or obligation.
SECTION 13
Notices
All notices required under this Agreement shall be deemed to have been duly
given if sent by cable, telex or facsimile transmission (confirmed in writing,
sent by registered airmail) to the following addresses:
If to the Company:
INTELLICALL, INC.
2155 Chenault, Suite 410
Carrollton, Texas 75006-5023, U.S.A.
Attention: Chief Financial Officer
Facsimile: (214) 416 9454
If to the Warrant Agent and to the Standing Agent:
BANCA DEL GOTTARDO
Viale Stefano Franscini 8
6901 Lugano, Switzerland
Attention: New Issue Department
Telex: 841 052
Facsimile: 0114191 8081843
or to such other address as at the party receiving the notice shall nave
notified to the other party in writing. Such cable, telex or facsimile
transmission notice shall be deemed to have been duly given at the time of
dispatch. Any party receiving a notice by cable, telex or facsimile transmission
will be protected by relying upon the cabled, telexed or transmitted notice even
though such notice is not subsequently confirmed in writing.
SECTION 14
Descriptive Headings
The descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
<PAGE>
77.
SECTION 15
Termination
This Agreement shall terminate on the Termination Date of Warrants, subject to
completion of actions taken on or prior thereto pursuant to this Agreement, or
on any earlier date if all the Warrants have been exercised.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
INTELLICALL, INC.
By
Its
BANCA DEL GOTTARDO
As Warrant Agent and Standing Agent
By
Its
<PAGE>
78.
Exhibit 1 to ANNEX I
COMMON STOCK WARRANT EXERCISE FORM
FOR THE EXERCISE OF WARRANTS ISSUED BY INTELLICALL, INC. EXPIRING
DECEMBER 31, 2000
To:
(Warrant Agent)
The undersigned, the holder of Warrants
(please list serial numbers):
(A) hereby irrevocably elects to exercise the above-mentioned Warrant(s) in
accordance with the terms thereof and agrees to accept shares of common
stock of the Company on the terms of the Warrant Agency Agreement dated
as of December 29, 1995 (the "Warrant Agreement") duly executed and
delivered by the Company, and Banca del Gottardo, as Warrant Agent (the
"Warrant Agent") and as Standing Agent (the "Standing Agent");
(B) requests that a certificate or certificates for shares be
issued in the name(s) of and sent to the following address:
Address
_______________, 19
Name:
Title:
<PAGE>
79.
Exhibit 2 to ANNEX I
BANCA DEL GOTTARDO
Facsimile Transmission
To: [ ]
Attn:
Exercise of INTELLICALL, INC. Common Stock Warrants
Ladies and Gentlemen:
We kindly ask you to take note and to execute the following exercise of Common
Stock Warrants:
Exercise number
a) number of Common Stock Warrants:
b) equal number of shares:
c) shares to be registered in the name of:
d) shares to be sent to:
e) amounts, if any, to be sent to:
The transfer of USD [ ] will be effected according to your standing
instructions. Please confirm receipt of this fax by return fax.
Thanks and regards,
BANCA DEL GOTTARDO
<PAGE>
80.
ANNEX J
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
INTELLICALL, INC.
8% CONVERTIBLE NOTES DUE DECEMBER 31,2000
The undersigned certifies that as to the portion of the Global Note (i) hereby
presented for exchange into definitive Notes, or (ii) hereby presented for
conversion into Common Stock the beneficial owners of the Notes (a) are not
either United States persons or U.S. persons or (b) are financial institutions
(within the meaning of United States Treasury Regulation Section 1.165-
12(c)(1)(v)) located outside the United States that are not United States
persons and that have purchased such Notes for purposes of resale during the
Restricted Period. Financial institutions that have purchased the Notes for
purposes of resale during the Restricted Period also hereby certify that they
have not acquired the Notes for purposes of resale directly or indirectly to a
United States person or U.S. person or to a person within the United States. The
undersigned certifies further that it is (i) the beneficial owner of the portion
of the Global Note tendered for exchange or (ii) a financial institution (within
the meaning of United States Treasury Regulation Section 1. 165-12(c)(1)(v))
through which the beneficial owner directly or indirectly holds the portion of
the Global Note tendered.
For purposes of this certification, (i) the term "Restricted Period" means the
period beginning on the earlier of the first date that the Notes are offered or
the date on which the Notes are issued (the "Payment Date") and ending forty
(40) days after the later of the date upon which the Notes were first offered or
the date of closing of the offering, (ii) the term "United States" means the
United States of America (including the States and the District of Columbia),
its possessions, its territories and other areas subject to its jurisdiction,
(iii) the term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source and (iv) the term "U.S. person" has the
meaning set forth in Sections 230.901 through .904 of Title 17 of the United
States Code of Federal Regulations ("Regulation S").
Beneficial Owner or
Financial Institution
Name:
Address:
<PAGE>
81.
ANNEX J-2
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
INTELLICALL, INC.
WARRANTS EXPIRING DECEMBER 31, 2000
The undersigned certifies that as to the portion of the Global Warrant (i)
hereby presented for exchange into definitive Warrants, or (ii) presented for
exercise into Common Stock the beneficial owners of the Warrants (a) are not
either United States persons or U.S. persons or (b) are financial institutions
(within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v)) located outside the United States that are not United States
persons and that have purchased such Warrants for purposes of resale during the
Restricted Period. Financial institutions that have purchased the Warrants for
purposes of resale during the Restricted Period also hereby certify that they
have not acquired the Warrants for purposes of resale directly or indirectly to
a United States person or U.S. person or to a person within the United States.
The undersigned certifies further that it is (i) the beneficial owner of the
portion of the Global Warrant tendered for exchange or (ii) a financial
institution (within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v)) through which the beneficial owner directly or indirectly
holds the portion of the Global Warrant tendered.
For purposes of this certification, (i) the term "Restricted Period" means the
period beginning on the earlier of the first date that the Warrants are offered
or the date on which the Warrants are issued (the "Payment Date") and ending
forty (40) days after the later of the date upon which the Notes were first
offered or the date of closing of the offering, (ii) the term "United States"
means the United States of America (including the States and the District of
Columbia), its possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or resident
of the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, or an estate or trust the income of which is subject to United States
federal income taxation regardless of its source and (iv) the term "U.S. person"
has the meaning set forth in Sections 230.901 through .904 of Title 17 of the
United States Code of Federal Regulations ("Regulation S").
Beneficial Owner or
Financial Institution
Name:
Address:
<PAGE>
82.
ANNEX K
Dated: December 29, 1995
To: Banca del Gottardo
Viale Stefano Franscini 8
CH-6901 Lugano/Switzerland
Re: Intellicall, Inc. (the "Company")
USD 7'500'000.-- 8% Convertible Notes of 1995
Due December 31, 2000 (the "Notes")
and Warrants of 1995 expiring December 31, 2000
(the "Warrants")
"Certificate of No Material Adverse Change"
Pursuant to the Note and Warrant Purchase, Paying and Conversion/Exercise Agency
Agreement dated December 22, 1995 (the "Agreement") between the Company and
Banca del Gottardo covering the issue of the Notes and Warrants by the Company.
I, William 0. Hunt, being President of the Company HEREBY CERTIFY on behalf of
the Company that except as set forth in the Information Memorandum as to the
date hereof.
a) there has been no material adverse change in the financial
condition of the Company and its consolidated affiliates taken as a whole
since September 30, 1995, and
b) no event has occurred rendering untrue or incorrect any of the
warranties set forth in Article V of the Agreement to a material extent,
and
c) no event has occurred which constitutes or which with the giving of
notice or lapse of time would constitute one of the events referred to in
Section 10 of the Terms of the Notes.
Yours truly,
Intellicall, Inc.
William 0. Hunt
President
<PAGE>
83.
ANNEX L
(Specimen Signature Form)
INTELLICALL, INC.
Carrollton, Texas, U.S.A.
US Dollars 7'500'000.-- 8 per cent US Dollars
Convertible Notes
Due December 31, 2000
and
Warrants
expiring December 31, 2000
The specimen signature of Mr. William 0. Hunt, the President to be used for the
printing of the above-captioned Notes and coupons and Warrants is as follows:
December 29, 1995
<PAGE>
84.
ANNEX M
LIMITED WAIVER AND CONSENT
THIS LIMITED WAIVER AND CONSENT (this "Waiver") is made as of December 29,
1995 by and between Intellicall, Inc., a Delaware corporation (together with its
successors, assigns and transferees, the "Company"), and Nomura Holding America
Inc., a Delaware corporation (together with its successors, assigns and
transferees, the "Purchaser"). Capitalized terms used herein without definition
shall have the respective meanings ascribed to them in that certain Note
Purchase Agreement, dated as of August 11, 1994, by and between the Company and
the Purchaser, as amended (as heretofore amended, the "Purchase Agreement").
RECITALS
A. Pursuant to the Purchase Agreement, the Purchaser purchased certain
secured promissory notes of the Company, consisting of its Variable
Rate Senior Bridge Notes Due 1996, Series A, in an aggregate principal
amount not to exceed US$ 16'000'000 at any one time outstanding and its
12.5% Senior Bridge Notes Due 1996, Series B, in the aggregate
principal amount of US$ 8'000'000 (collectively, the "Notes");
B. The Company desires to issue and sell to Banca del Gottardo, a Swiss
corporation ("Banca del Gottardo") having its registered office at
Viale Stefano Franscini 8, 6901 Lugano, Switzerland, subject to the
terms and conditions hereafter provided, certain unsecured subordinated
notes (the "Gottardo Notes") and warrants (the "Gottardo Warrants") as
more fully set forth in a separate Note and Warrant Purchase, Paying
and Conversion/Exercise Agency Agreement dated December 22, 1995 by and
between the Company and Banca del Gottardo (the "Gottardo Agreement");
C. Pursuant to Section 3.1(c) of the Purchase Agreement, the Company is
required to deliver to the Purchaser an Officers Certificate describing
the terms of the issuance of the Gottardo Notes and the Gottardo
Warrants no later than 5 days prior to such issuance and, concurrently
with such issuance, pay to the Purchaser 100% of the Net Cash Proceeds
received by the Company in respect of such issuance (the "BDG
Proceeds"); and
D. The Company has requested that the Purchaser enter into this Waiver in
order to, among other things, permit the Company to (a) enter into the
Gottardo Agreement and issue the Gottardo Notes and the Gottardo
Warrants thereunder and (b) pay to the Purchaser less than 100% of the
BDG Proceeds.
NOW THEREFORE, in consideration of the terms and conditions contained herein and
of other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
85.
1. Limited Waiver and Consent
Effective on the Effective Date (as hereinafter defined), in
consideration of the covenants and agreements of the Company set forth
in this Waiver (including, without limitation, compliance with each of
the conditions set forth in Section 2 hereof), the Purchaser hereby (a)
consents to the execution, delivery and performance by the Company of
the Gottardo Agreement and all documents, certificates and other
instruments to be executed and delivered by the Company in connection
therewith (collectively, the "Gottardo Transaction Documents") and to
the issuance by the Company of the Gottardo Notes and the Gottardo
Warrants, 0,) consents to the payment by the Company to the Purchaser
of less than 100% of the Gottardo Proceeds, notwithstanding the
provisions of Section 3.1(c) of the Purchase Agreement, provided that
the Company pays to the Purchaser, on or prior to the Effective Date,
at least US$ 4'500'000.-- of the Gottardo Proceeds and (c) waives any
Default or Event of Default by the Company in the performance or
observance of the provisions of Sections 3.1 and 10.1 of the Purchase
Agreement to the extent such Default or Event of Default is exclusively
the result of the transactions contemplated by the Gottardo Transaction
Documents. The waivers and consents set forth in this Section 1 shall
be limited to the specific transactions described herein and shall not
be deemed to (i) be a waiver of any other term or condition of the
Purchase Agreement or (ii) prejudice any rights not specifically waived
herein which the Purchaser or any other holder of Notes may now have or
may have in the future under the Purchase Agreement or any Related
Document. In particular, and without limiting the generality of the
foregoing, nothing herein shall be deemed to waive any rights of the
Purchaser with respect to any adjustment which may be required under
Section 4 of the Warrants by reason of the issuance or conversion of
the Gottardo Notes, the issuance or exercise of the Gottardo Warrants,
or the determination or redemption of any conversion price or exercise
price applicable with respect thereto.
2. Effective Date
This Waiver shall become and be effective only if, and at and as of the
date that, all of the following conditions shall have been satisfied or
shall have been waived in writing by the Purchaser (such date being
herein called the "Effective Date"):
a) Proceedings Satisfactory
All corporate and other proceedings taken or to be taken in
connection with this Waiver and all documents incident thereto
shall be satisfactory in form and substance to the Purchaser,
and the Purchaser shall have received all such counterpart
originals or certified or other copies of such documents as it
may reasonably request. The Company shall have performed all
obligations required to be performed on or prior to the
Effective Date under this Waiver.
b) Execution of Waiver
The Company shall have duly executed and delivered a
counterpart hereof to the Purchaser or its representative.
<PAGE>
86.
c) Documentation
The Gottardo Agreement and each of the other Gottardo
Transaction Documents shall have been executed and delivered
and shall be in ill force and effect, and each shall be
satisfactory to the Purchaser in all respects. The
transactions contemplated by the Gottardo Transaction
Documents shall have been duly consummated in accordance with
the applicable terms thereof.
d) Payment of Proceeds
The Company shall have delivered to the Purchaser, in
immediately available funds, at least US$ 4'500'000 of the
Gottardo Proceeds.
3. Amendments to Gottardo Documents
The Company hereby agrees that it will not amend or modify or consent
or agree to any amendment or modification of any provision of the
Gottardo Agreement, the Gottardo Notes or any of the other agreements,
instruments or documents executed pursuant thereto or in connection
therewith, without in each case obtaining the prior written consent of
the Purchaser.
4. Acknowledgement of Registration Rights
By its signature below, the Company hereby acknowledges and confirms
that upon registration under the Securities Act of any shares of the
Company's Common Stock issuable upon conversion of the Gottardo Notes
or issuable upon exercise of the Gottardo Warrants as contemplated by
the Gottardo Transaction Documents, the Purchaser shall have the right,
pursuant to Section 8.1 of the Warrants, to request that the Company
include in such registration Registrable Securities (as defined in the
Warrants) held by the Purchaser.
5. Effect of Waiver
It is hereby agreed that, except as specifically provided herein, this
Waiver does not in any way affect or impair the terms, conditions and
other provisions of the Purchase Agreement or any of the other Related
Documents, or the obligations of the Company thereunder, and all terms,
conditions and other provisions of the Purchase Agreement shall remain
in full force and effect except to the extent specifically amended,
modified or waived pursuant to the provisions of this Waiver.
6. Payment of Fees
The Company agrees to pay all fees, costs and expenses incurred by the
Purchaser in connection with the negotiation, preparation, execution
and delivery of this Waiver and all other documents executed pursuant
to or in connection herewith, including, without limitation, the fees
and disbursements of Sonnenschein Nath & Rosenthal, special counsel to
the Purchaser, in connection herewith.
<PAGE>
87.
7. Counterparts
This Waiver may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which taken together
shall be deemed to constitute one and the same instrument.
8. Governing Law
THIS WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
9. Headings; Miscellaneous
Section headings are included herein for convenience of reference only
and shall not constitute a part of this Waiver for any other purposes.
10. Amendments and Modifications
Any term, covenant, agreement or condition of this Waiver may, with the
consent of the parties hereto, be amended, or compliance therewith may
be waived (either generally or in a particular instance and either
retroactively or prospectively), by one or more substantially
concurrent written instruments signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Waiver as of the day
and year first written above.
INTELLICALL, INC. NOMURA HOLDING AMERICA INC.
By: By:
Name: Name: Howard Gellis
Title: Title: Attorney-in-Fact
Read and acknowledged:
BANCA DEL GOTTARDO
By:
Name:
Title:
<PAGE>
88.
ANNEX N
CERTIFICATE OF COMPLETION OF DISTRIBUTION
The undersigned, being the duly authorized officer of Banca del Gottardo, a
corporation duly organized with limited liability and existing under the laws of
Switzerland ("Gottardo"), does hereby certify for and on behalf of Gottardo that
the offering of those certain 8% Subordinated Convertible Notes due 2000 of
Intellicall, Inc., a Delaware corporation ("Intellicall"), and those certain
Warrants to Purchase Common Stock of Intellicall, each as described in that
certain Note and Warrant Purchase, Paying and Conversion/Agency Agreement,
effective December 29, 1995 (the "Note and Warrant Purchase Agreement"), between
the Gottardo and Intellicall, has closed and the 40-day restricted period
described in the Note and Warrant Purchase Agreement has commenced.
IN WITNESS WHEREOF, the undersigned has executed this document as of the date
set forth below.
BANCA DEL GOTTARDO
By:
Its:
1
Terms of the "Convertible Notes" of the Company
(1) Form and Denomination
The Notes are issuable in bearer form in the denominations of USD
5'000.-- nominal amount each, with interest coupons (the "Coupons")
attached. The Notes will be represented initially by a temporary Global
Note (the "Global Note"), without interest coupons, to be deposited by
the Company with Banca del Gottardo on the Payment Date. The Global
Note may be exchanged, as a whole or in part, for appropriate
definitive Notes, in bearer form in denominations of USD 5'000. -- with
the Coupons attached, not earlier than 40 days after the later of the
date on which the Notes are first offered or the Payment Date. Such
exchange shall be made upon certification that the beneficial owners of
the Notes either (i) are not United States persons or U.S. persons or
(ii) are financial institutions (as defined in United States Treasury
Regulation Section 1. 165- 12(c)(1)(v)) located outside the United
States that are not United States persons and that have purchased such
Notes for purposes of resale directly or indirectly to a United States
person or U.S. person within the United States during the Restricted
Period and that certify that they have not acquired the Notes for
purposes of resale directly or indirectly to a United States person or
to a person within the United States. A beneficial owner of Notes must
exchange its share of the Global Note for definitive Notes before such
Notes or interests therein may be transferred or interest payments or
other payments in respect of the Notes will be made.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered
or the date on which the Notes are issued (the "Payment Date") and
ending on the date forty (40) days after the later of the date upon
which the Notes and Warrants were first offered or the date of closing
of this offering, (ii) the term "United States" means the United States
of America (including the States and the District of Columbia), its
possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth
in Sections 230.901 through .904 of Title 17 of the United States Code
of Federal Regulations ("Regulation S").
(2) Interest
The Notes bear interest from the Payment Date at the rate of 8% per
annum, payable semiannually in arrear on June 30 and December 31 of
each year until maturity (the "Coupon Due Dates") whereby the first
payment shall be made on June 30, 1996 in respect of the period from
December 29, 1995 to June 30, 1996. Such interest is payable in United
States Dollars. Each Note will cease to bear interest on the date on
which they become due for redemption or repayment unless payment of
principal and/or premium (if any) is improperly withheld or refused or
default is otherwise made in respect of such payment. In such event,
interest will continue to accrue (as well
<PAGE>
2.
after as before any judgment) up to but excluding the date on which
payment in full of the principal of such Note is made or (if earlier)
the date on which, payment in full of the principal thereof having been
received by Banca del Gottardo, notice to that effect shall have been
given to the holders of the Notes. Interest is computed on the basis of
a 360-day year of twelve 30-day months.
(3) Repayment
The Company undertakes to repay the principal amount of the Notes,
unless previously redeemed, without any previous notice on December 31,
2000.
(4) Optional Redemption and Conversion
(a) The Company reserves the right to call all, but not part, of the out-
standing Notes for redemption on May 2, 1996, or thereafter up to the
close of business on December 15, 2000, at a price of 110% of the
principal amount thereof; together with interest accrued to the date
of such redemption provided that the average of the daily closing sales
prices of a Share for a period of 30 consecutive trading days, the last
day of which trading days is not more than 10 days prior to the day
upon which the Company sends a notice to Banca del Gottardo of its
intention to redeem the Notes under this sub-section (a), is at least
200% of the Conversion Price in effect on such last day (taking into
account any retroactive adjustment not then reflected in the Conversion
Price). The closing sales price for any day shall be the average of the
closing prices on the New York Stock Exchange and if not listed any
longer thereon, the average of the closing bid and asked prices on the
National Association of Securities Dealers Automated Quotation(NASDAQ).
All outstanding Notes will become due 60 days after receipt of the
aforesaid notice of early redemption by Banca del Gottardo.
As long as the Shares are listed on a stock exchange or exchanges in
the United States of America, reference in this sub-section (a) to the
sales price for any day shall be deemed to refer to the closing price
(regular way) of a Share as reported by the principal stock exchange on
which the Shares are listed for such day. If no such sales price is
reported for one or more trading days, such day or days shall not be
deemed as trading day or days and shall be disregarded in the
calculation of the said 30 trading day period.
(b) Each Noteholder will have the right to require the Company to redeem
any Note or Notes on December 31, 1999 at a price of 106% of the
principal amount thereof, together with interest accrued to the due
date of redemption. This right will have to be exercised by giving
notice and surrendering the Note(s), so to be redeemed to Banca del
Gottardo, Lugano, at any time on or after October 1, 1999 and prior to
October 31, 1999 accompanied by an irrevocable request for redemption.
Notes called for redemption will become due on December 31, 1999. Notes
called for redemption shall cease to bear interest from the date fixed
for such redemption, unless the Company shall default in providing for
the payment of the redemption price. The Notes must be presented for
repayment with all unmatured Coupons attached. An amount equal to any
missing unmatured Coupon shall be deducted from the amount due on
redemption. Such Coupons shall, however, be paid upon subsequent
presentation provided they shall not have become barred pursuant to
Section 11 hereof.
(5) Payments
<PAGE>
3.
Payments with respect to the Notes and Coupons shall be made in dollars
of the United States of America against presentation and surrender of
such Notes or Coupons in the manner specified below. Such payments
shall be made without cost to the Noteholders, without any limitations
and under all circumstances notwithstanding any transfer restrictions,
regardless of any bilateral or multilateral payment or clearing
agreement in existence between the United States of America and the
Swiss Confederation, irrespective of the nationality, residence or
domicile of any of the Noteholders and without requiring any affidavit
or the fulfillment of any formalities. The funds required for the
payment of principal and interest shall be made available to Banca del
Gottardo in Switzerland as Paying Agent by the Company prior to each
Coupon Due Date. The receipt of the funds by Banca del Gottardo in
Switzerland shall release the Company from its obligations in respect
of the payments due on the respective dates for principal and interest.
Banca del Gottardo will arrange for payment of such funds as and when
due to the holders of Notes and Coupons. Notes and coupons may be
presented for payment at the principal amount printed on the Notes and
the amount of interest printed on the Coupons only at the offices in
Switzerland of Banca del Gottardo. No payment on the Notes or Coupons
will be made by transfer to an account in, or by mailing to an address
in, the United States.
(6) Tax Status
All payments of principal and interest on the Notes and Coupons by the
Company shall be made without deduction for or on account of any
present or future tax, assessment or other governmental charge
("Taxes") imposed upon such payment by the United States of America or
any political subdivision or taxing authority thereof or therein (the
"United States"). If the Company shall at any time be required by law
to withhold any such Taxes, the Company will pay as additional amounts
to Banca del Gottardo for the account of the holders of Notes and
Coupons, such amounts as may be necessary so that every net payment on
each Note or Coupon, after withholding for or on account of any such
Taxes (including any backup withholding tax or similar charge that may
be required in order for such payment to be made without any
certification or disclosure of the nationality, residence or identity
of the beneficial owner of such Note or Coupon) will not be less than
the amount provided in such Note or Coupon to be then due or payable;
provided, however, that the Company will not be required to pay such
additional amounts for or on account of any such Taxes that are imposed
(i) otherwise than by withholding from a payment on a Note or Coupon,
(ii) upon a holder of a Note or Coupon who is subject to taxation by
the United States for any reason other than such holder's ownership or
receipt of payments in respect of such Note or Coupon, or (iii) on
interest or principal received by a holder of a Note or Coupon which is
(a) a "10-per cent. shareholder" of the Company within the meaning of
section 871(h)(3)(B)(a) of the Code, (b) a bank or an extension of
credit made pursuant to a loan agreement entered into in the ordinary
course of its trade or business, (c) a controlled foreign corporation
which is related to the Company under section 864(d)(4) of the Code,
(d) other than a nonresident individual or a foreign corporation (as
determined under United States tax principles) with respect to the
United States, or (e) a holder whose Note or Coupon is presented for
retirement or redemption, or payment is otherwise made, other than
outside the United States as provided in United States Treasury
Regulations. Any reference in this Note to the payment of principal or
interest shall be deemed to include payment of the additional amounts
payable pursuant to the provisions of this paragraph.
<PAGE>
4.
If, as the result of any change in, enactment of, or amendment to any
laws or regulations of the United States or any political subdivision
or taxing authorities thereof affecting taxation, or any change in the
official application of such laws or regulations, or any change in,
execution of or amendment to any treaty or treaties affecting taxation
to which the United States is a party, it is determined by the Company
that it would be required at any time to pay additional amounts
pursuant to the preceding paragraph, the Company is entitled to redeem
the Notes, as a whole but not in part, on giving not more than 60 days'
but not less than 30 days' prior notice to Banca del Gottardo, on or
after June 30, 1996 at par.
Notice of redemption shall be given by the Company in writing to Banca
del Gottardo and such notice so given shall constitute good and
sufficient notice and shall be binding upon all holders of the Notes,
regardless of who they may be or where they may be located.
Banca del Gottardo shall as soon as practicable notify the Noteholders
of such redemption in accordance with Section 12 hereof.
The Company has been advised by Banca del Gottardo that pursuant to the
Swiss federal laws at present in force, interest payments on the Notes
are not subject to Swiss withholding tax.
(7) Authorizations
The Company has confirmed to Banca del Gottardo that no authorizations
or approvals are required under the laws of the United States for
performance of its obligations hereunder, except for the registration
requirements provided for herein.
(8) Status of the Notes and Subordination
1. Note Subordinated to Senior Indebtedness
The Company, for itself, its successors and assigns, covenants
and agrees, and each Holder of this Note ("Holder"), by his or
its acceptance hereof, likewise covenants and agrees, that the
indebtedness evidenced by this Note (and any renewals,
refinancings, modifications or extensions thereof), including
the principal of and interest thereon and any interest payable
on such interest and all fees, costs and expenses (including
attorneys' fees and collection costs) payable in connection
with this Note, and all requirements of the Company contained
in this Note shall be subordinate and junior in right of
payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full of all Senior Indebtedness
(as hereinafter defined), and that each holder of Senior
Indebtedness whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness in reliance upon the covenants
and provisions contained in this Note.
For purposes of this Note, the term "Senior Indebtedness"
shall mean any and all indebtedness, liabilities and
obligations consisting of all principal of and premium (if
any) and accrued and unpaid interest (including but not
limited to interest accruing after the commencement by or
against the Company under the Federal Bankruptcy Code (as now
or hereafter in effect), whether or not allowed as a claim),
whether existing on the date of this Note or hereafter
incurred and whether created directly or indirectly, acquired
by
<PAGE>
5.
assignment or otherwise, absolute or contingent, joint or
several, liquidated or unliquidated, due or not due,
contractual or tortuous, secured or unsecured, in respect of
(A) the indebtedness, obligations and liabilities of the
Company incurred pursuant to the Note Purchase Agreement with
Nomura Holding America Inc. dated August 11, 1994, as from
time to time amended (B) the indebtedness, obligations and
liabilities of the Company pursuant to those certain Variable
Rate Senior Bridge Notes, Series A, dated August 11, 1994 (the
"Series A Notes ") up to an aggregate principal amount of $
16'000'000, executed by the Company, as may be modified or
amended from time to time, (C) the indebtedness, obligations
and liabilities of the Company pursuant to that certain 12.5%
Senior Bridge Note, Series B, dated August 11, 1994 (the
"Series B Notes", together with the Series A Notes, the
"Senior Notes") in the aggregate principal amount of $
8'000'000, executed by the Company, as may be modified or
amended from time to time, (D) any and all amendments,
modifications, supplements, renewals, refinancings,
extensions, replacements, restatements, substitutions,
assignments, guaranties and endorsements of any of the
indebtedness, obligations and liabilities described in clauses
(A) through (C) above (collectively, the "Nomura Debt"), (E)
indebtedness of the Company incurred after the date hereof for
money borrowed which is secured by any portion of the assets
of the Company and (or any of its subsidiaries representing
the incurrence of indebtedness from a third party provided
that any such incurrence of indebtedness from a third party
shall have been consented to by the Majority Holders (as
hereinafter defined), (F) all obligations incurred after the
date hereof required to be classified and accounted for as a
capital lease on the face of the balance sheets of the Company
prepared in accordance with generally accepted accounting
principles provided that such obligations shall have been
consented to by the Purchaser, (G) all factoring arrangements
or similar type arrangements entered into after the date
hereof by the Company or any of its subsidiaries, provided
that such arrangements shall have been consented to by the
Purchaser, (H) all obligations consisting of guaranties,
endorsements, modifications, renewals, refinancings,
extensions or replacements of any obligations described in
clauses (E) through (G) above, provided, that any such
guaranties, endorsements, modifications, renewals,
refinancings, extensions or replacements shall have been
consented to by the holders holding in the aggregate at least
50.1% of the outstanding principal amount of the Senior
Indebtedness then outstanding including any such
modifications, renewals, refinancings, extension or
replacements thereof (the "Majority Holders"), and (I) all
fees, costs, expenses (including attorneys' fees), indemnities
and other amounts at any time due and payable in connection
with any of the foregoing.
2. Note Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution Liquidation Reorganization, etc. of the Company
Upon any payment or distribution of the assets of the Company
of any kind or character, whether in cash, property or
securities to creditors upon any total or partial liquidation,
dissolution or reorganization of, or similar proceeding
relating to, the Company or its property (whether voluntary or
involuntary, or in bankruptcy, insolvency, reorganization,
liquidation or receivership proceedings), or upon an
assignment for the benefit of creditors, or any other
marshaling of the assets and liabilities of the Company, or
otherwise, then in such event, any payment or distribution of
any kind or character, whether in cash, property or
securities, which shall be payable or deliverable upon or with
<PAGE>
6.
respect to the indebtedness evidenced by this Note shall be
paid or delivered directly to the holders of Senior
Indebtedness, ratably according to the aggregate amounts of
principal remaining unpaid on account of such Senior
Indebtedness held by each until the Senior Indebtedness has
been fully paid and satisfied (including premium, if any, and
interest thereon accruing after commencement of such
proceedings whether or not an allowed claim).
The Holder hereby assigns to the holders of the Senior
Indebtedness, the right, in the name of the Holder, to file
appropriate claims or proofs of claim in respect of this Note
and vote the full amount of indebtedness represented by this
Note in any proceeding of the type described in the
immediately proceeding paragraph, including but not limited to
a proceeding to confirm a plan of reorganization in a
bankruptcy case, as directed and consented to by the Majority
Holders. The Holder agrees to take or refrain from taking any
and all actions as required or requested by the Majority
Holders and to cooperate fully with the Majority Holders in
furtherance of and without hindrance of such filing of claims
or proofs of claim and such voting. This assignment shall
expire automatically at such time as the Senior Indebtedness
has been repaid in full.
3. Payments
The Company agrees not to pay to the Holder, and by accepting
this Note Holder agrees not to take or receive from the
Company, in any manner whatsoever, the whole or any part of
indebtedness evidenced by this Note, including without
limitation any payment of principal of or interest on this
Note, unless and until the Senior Indebtedness shall have been
fully paid and satisfied; provided, however, that
notwithstanding the foregoing, the Holder shall have the right
to receive and retain from the Company, and the Company shall
have the right to pay to the Holder, scheduled payments of
interest only as and when they become due as provided herein,
so long as (i) the Company is not in default with respect to
any payment of principal, premium, if any, or interest on any
Senior Indebtedness, and (ii) no default or event of default
exists and is continuing, or would exist immediately after
giving effect to such payment to Holder, under any of the
terms and provisions of the documents relating to any of the
Senior Indebtedness.
4. Proceedings
Holder shall not commence any action for the enforcement of
this Note (except an action commenced to avoid the expiration
of an applicable statute of limitations) and will not initiate
or join with any creditor, unless the Majority Holders shall
also join, in bringing any proceeding against the Company
under any bankruptcy or insolvency law or statute of the
federal or any state government or under any such law or
statute relating to the relief of debtors, readjustment of
indebtedness, reorganization, arrangement of debt,
receivership or liquidation, and will not be a proponent or
coproponent of a plan of reorganization in a bankruptcy
proceeding, unless and until all Senior Indebtedness shall
have been paid and satisfied in full or the Holder has
received the prior written consent of the Majority Holders.
5. Payments and Distributions Received by Holder
<PAGE>
7.
Should any payment or distribution (except payments currently
due which are received by the Holder as permitted herein) be
received by the Holder with respect to this Note prior to the
payment and satisfaction in full of all Senior Indebtedness,
the Holder will forthwith deliver such payments and
distributions or proceeds thereof to the holders of Senior
Indebtedness, ratably according to the aggregate amount of
principal remaining unpaid on account of such Senior
Indebtedness held by each in precisely the form received
(except for the endorsements or assignment of the Holder where
necessary), for application to the Senior Indebtedness held by
such holders, and, until so delivered, the same shall be held
in trust by the Holder as property of the holders of Senior
Indebtedness.
6. Rights Concerning Senior Indebtedness
Without affecting the rights of the holders of Senior
Indebtedness, the Holder agrees that, with or without notice
to or further assent from the Holder, any holder of Senior
Indebtedness may at any time, and from time to time, either
prior to or after any default by the Company with respect to
any indebtedness (a) advance or refuse to advance additional
credit and make other accommodations to or for the account of
the Company, (b) by written agreement or otherwise, extend,
refinance, renew or change, modify, compromise, release,
refuse to extend, renew or change the Senior Indebtedness or
any part thereof and waive any default under all or any part
thereof, and modify, rescind or waive any provision of any
related agreement or collateral undertaking, including but not
by way of limitation any provision relating to acceleration or
maturity, (c) fail to set off any or all accrued balance or
deposit balances or any part thereof on any holder's books in
favor of such holders and/or release the same, (d) sell,
surrender, release, exchange, resort to, realize upon or
apply, or fail to do any of the foregoing, with respect to any
collateral securing any part thereof held by any of the
holders of Senior Indebtedness or available to any of the
holders of Senior Indebtedness for the Senior Indebtedness,
and (e) generally deal with the Company in such manner as any
of the holders of Senior Indebtedness may see fit, including,
without limiting the generality of the foregoing, any
forbearance, failure, delay or refusal by any of the holders
of Senior Indebtedness to exercise any rights or remedies any
of the holders of Senior Indebtedness may have against the
Company, all without impairing or affecting any of such
holders' rights and remedies. Each such action and each such
failure to act by any of the holders of Senior Indebtedness
shall be deemed to be at the request of the Holder and in
reliance on this Agreement. No failure by any of the holders
of Senior Indebtedness to file, record or otherwise perfect
any lien or security interest, nor any improper filing or
recording, nor any failure by any of the holders of Senior
Indebtedness to insure or protect any of its collateral nor
any other dealing (or failure to deal) with any such
collateral by any of the holders of Senior Indebtedness, shall
impair or release the rights of any of the holders of Senior
Indebtedness hereunder.
7. Repayment of Purchaser
Notwithstanding anything to the contrary contained herein, in
the event, and at such time as, the holders of Senior
Indebtedness, and their respective successors and assigns,
have been repaid in full all such Senior Indebtedness as
described in clauses (A) through (D), inclusive, and clause
(I) as it relates to clauses (A) through (D) of the definition
of
<PAGE>
8.
"Senior Indebtedness" contained in this Section 8, Subsection
I, hereof, and all obligations by the holders of Nomura Debt
to purchase Series A Notes (as defined in the Purchase
Agreement) has terminated, and all preference periods under
any bankruptcy laws as they might apply to the holders of
Senior Indebtedness, and it successors and assigns, have
expired, the restrictions set forth in this Section 8 of this
Note shall not thereafter be applicable to the Holder of this
Note.
8. Each holder of Notes acknowledges that Nomura is relying on
the terms and provisions of this Sub-Section 8 in connection
with its execution of a certain Limited Waiver and Consent
dated December 30, 1995 between the Company and Nomura a copy
of which Limited Waiver and Consent is held by Banca del
Gottardo, pursuant to which Nomura has consented to the
issuance of the Notes by the Company, and each holder of a
Note hereby acknowledges and agrees that the terms and
provisions of this Sub-Section 8 shall inure to the benefit of
Nomura.
(9) Conversion
Exhibit I to Annex H attached to the Agreement dated December 22, 1995
and entered into between the Company and Banca del Gottardo, which is
available for inspection at the Head Office in Lugano of Banca del
Gottardo, as Conversion Agent for the Notes, contains full provisions
relevant to conversion of the Notes into freely transferable Shares of
Common Stock which are duly registered under the 1933 Securities Act.
The following is a summary of such provisions:
The conversion price will be fixed on March 29, 1996 whereby such
conversion price shall be the equivalent of the average of the closing
prices during the period from March 14 to March 29, 1996, but shall in
any event not be higher than (i) 120% of the average of the closing
prices of the shares of Common Stock during the period from December 19
to 29, 1995, or (ii) USD 4.75 per share of Common Stock, whichever is
lower (Such price hereinafter called the "Conversion Price").
The holder of 10 Notes or more will be entitled at any time on and
after May 1, 1996 up to the close of business on December 31, 2000,
subject to prior redemption, to convert the Notes, at the principal
amount thereof, into freely transferable and non-restricted (such
non-restriction being subject to the effectiveness of a registration
statement under the U.S. securities laws covering such common stock, if
required,) shares of Common Stock of the Company, at the Conversion
Price, subject to adjustment as described below. No payment or
adjustment will be made on conversion of any Note for interest accrued
thereon or dividends on any Common Stock issued, except that accrued
interest will be paid on the conversion of any Note which has been
called for redemption prior to the conversion date. The Company is not
required to issue fractional shares of Common Stock upon conversion of
Notes and, in lieu thereof, will pay a cash adjustment based upon the
market price of the Common Stock on the last trading day prior to the
date of conversion. In the case of Notes called for redemption,
conversion rights will expire at the close of business on the fifth
business day prior to the redemption date. Notes may be presented for
conversion only to an office of Banca del Gottardo outside the United
States and Banca del Gottardo will deliver Common Stock or other
consideration received upon conversion only to an account or address
outside the United States.
<PAGE>
9.
The Conversion Price is subject to adjustment in the following events
occurring after December 29, 1995:
- the issuance of stock of the Company as a dividend or
distribution on the Common Stock;
- subdivisions of outstanding shares of the Common Stock into a
greater number of shares;
- combinations of outstanding shares of Common Stock into a
smaller number of shares;
- reclassification of the Common Stock into other shares of the
Company's capital stock;
- issuance to all holders of Common Stock of certain rights or
warrants entitling them to subscribe for Common Stock at a
price per share less than the current market price but not for
shares issuable under the Company's stock option and stock
purchase plans; and
- the distribution to all holders of Common Stock of debt
securities or assets of the Company or rights or warrants to
purchase assets or debt securities of the Company (excluding
cash dividends or distributions from retained earnings).
No adjustment in the Conversion Price will be made unless such
adjustment would require an increase or decrease of at least USD 0.05
in the Conversion Price then in effect; but any adjustment that would
otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made
for rights to purchase Common Stock pursuant to a Company dividend or
interest reinvestment plan. The Company may at any time reduce the
Conversion Price by any amount, provided that the Conversion Price is
not less than the par value of a share of Common Stock. If the Company
consolidates or merges into or transfers or leases all or substantially
all of its assets to any person, or is a party to a merger that
reclassifies or changes its outstanding Common Stock, the Notes will
become convertible into the kind and amount of securities, cash or
other assets which the holders of the Notes would have owned
immediately after the transaction if the holders had converted the
Notes immediately before the effective date of the transaction.
(10) Events of Default
Subject to the provisions of Section 15, Banca del Gottardo as regards
all Notes or holders having 10% or more of the aggregate principal
amount of all Notes outstanding shall have the right to declare by
notice to the Company the Notes held by such holder of a Note, plus
accrued interest, to be due and payable if any of the following events
of default shall occur:
(a) default in the payment of principal, or, for a period of 15
days, in the payment of interest on any Note; or
(b) default in the performance or observance in any material
respect of any covenant or agreement of the Company in the
Notes if such default continues for a period of 30 days after
notice thereof has been given to the Company; or
(c) a default shall occur under any evidence of indebtedness for
money borrowed by the Company or under any instrument under
which there may be issued or by which there
<PAGE>
10.
may be secured or guaranteed any indebtedness for money
borrowed by the Company, which default involves the failure to
pay when due (after any applicable grace period and subject to
any extension or postponement of such maturity), or results in
the acceleration of, indebtedness in an amount in excess of
USD 500'000.-- without such indebtedness having been
discharged or such default or acceleration having been waived,
rescinded or annulled, within a period of 30 days after notice
thereof shall have been given to the Company; or
(d) the entry of a decree or order in respect of the Company in an
involuntary case under any bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, trustee or
other similar official of the Company or for any substantial
part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 45
consecutive days; or
(e) the Company shall commence a voluntary case under any
bankruptcy, insolvency or other similar law, or consent to the
appointment of or taking possession by a receiver, liquidator,
trustee or other similar official, of the Company or for any
substantial part of its property, or the making by it of a
general assignment for the benefit of creditors, or if it
shall fail generally to pay its debts as they become due, or
shall take any corporate action in furtherance of any of the
foregoing; or
(f) if the Company shall merge or consolidate, or sell or convey all
or substantially all of its assets to, any other corporation, unless (i)
the Company is the surviving corporation, or (ii) the surviving or
transferee corporation expressly assumes all obligations of the Company
under the Notes by supplemental agreement, confirmed by an opinion of U.S.
counsel reasonably satisfactory to Banca del Gottardo and the Company, or
(iii) the Company or the surviving or transferee corporation irrevocably
deposits in trust with Banca del Gottardo, money or U.S. government
obligations sufficient to pay principal and interest on the Notes to
maturity.
Upon the occurrence of an event of default, the Company shall promptly
give notice thereof to Banca del Gottardo which shall publish such
notice of default in accordance with Section 12 hereof. Banca del
Gottardo shall in relation to any event of default have no other
obligation than the publication of such event of default.
The principal amount of all Notes declared to be due and payable plus
accrued interest thereon shall become due and payable 15 days after
notice to the Company by Banca del Gottardo or by each holder of a Note
of such event of default; provided, however, that such declaration
shall be rescinded if, within 15 days of such notice, such event of
default shall have been remedied by payment, in the case of a payment
default, or in a manner reasonably satisfactory to Banca del Gottardo.
In the event that a Resolution or Extraordinary Resolution is passed at
a meeting of Noteholders held pursuant to Section 15, any actions taken
pursuant to this Section 10 by a Noteholder shall be subject to any
previously taken action pursuant to such Section 15.
(11) Prescription
<PAGE>
11.
In accordance with the Swiss Statute of Limitations the coupons will
become barred five years and the Notes ten years after their respective
due dates.
(12) Notices and Publications
All notices to the holders of Notes shall be deemed to have been duly
given if published in the Feuille Officielle Suisse du Commerce and in
a daily newspaper in Zurich and Lugano. All notices to the Company by
any holder of Notes shall be deemed to have been duly given if sent by
cable or telex to the principal office of the Company.
(13) Listing of the Notes
No application will be made for the admission and quotation of the
Notes on any stock exchange.
(14) Replacement of Notes or Coupons
If any Note or coupon is defaced, mutilated, destroyed, stolen or lost,
it may be renewed or replaced at the head office of Banca del Gottardo
in Lugano, Switzerland on payment of such costs as may be incurred in
connection therewith and on presentation of such evidence and indemnity
as Banca del Gottardo may require. Defaced or mutilated Notes or
coupons must be surrendered before replacements may be issued.
(15) Noteholders' Meeting
a) A meeting of the Noteholders (hereinafter called a "Meeting")
may be convened by the Company or shall be convened by the
Company if so requested by Notes representing not less than
25% of the aggregate principal amount of all Notes outstanding
under the Terms of the Notes (i) after the event of default
shall have occurred and be continuing to consider a waiver of
an event of default or any modification or amendment of the
provisions of the terms of the Notes, or (ii) a substitution
of Banca del Gottardo.
The cost and expenses of a Meeting shall be borne by the
Company.
b) Notice of the Meeting specifying the place, day and hour of
the Meeting shall be given at least 20 days prior to the
proposed date thereof (exclusive of the day on which the
notice is given and the day on which the Meeting is to be
held) in accordance with Section 12 hereof Such notice shall
state generally the nature of the business to be transacted at
the Meeting thereby convened but (except for an Extraordinary
Resolution (as defined below)) it shall not be necessary to
specify in such notice the terms of any resolution to be
proposed.
c) The Meeting shall be held in Lugano and shall be chaired by a
representative of the Company or if such representative of the
Company shall not be present within 30 minutes after the time
appointed for the holding of the Meeting, the Noteholders
present shall choose one of their members to be chairman. The
Meeting shall be conducted in the English language
exclusively.
<PAGE>
12.
d) Resolutions shall only be passed if a quorum of two or
more persons holding 25% or more of the aggregate principal
amount of all Notes outstanding are present. The quorum at any
Meeting for passing an Extraordinary Resolution shall be two or
more persons holding two-thirds or more of the aggregate
principal amount of all Notes outstanding. Resolutions shall be
passed if approved by the absolute majority of votes cast save
that an Extraordinary Resolution shall be passed only if approved
by three-fourths or more of votes cast. Any resolution passed at
a Meeting duly convened and held in accordance with the terms of
the Notes shall be binding upon all the bondholders, whether
present or not present at such Meeting and whether or not voting,
and upon all the holders of coupons.
e) If within 30 minutes after the time appointed for any
such Meeting a quorum is not present, the Meeting shall, if
convened upon the request of Noteholders, be dissolved. In any
other case, it shall stand adjourned for such period being not
less than 14 days nor more than 28 days, and at such place as may
be appointed by the Company. At such adjourned Meeting, two or
more persons present holding 10% or more of the aggregate
principal amount of all Notes outstanding shall form a quorum,
provided that if the business of such adjourned Meeting includes
consideration of a proposed Extraordinary Resolution, the quorum
shall be two or more persons present holding one-third or more of
the aggregate principal amount of all Notes for the time being
outstanding.
f) If within 30 minutes after the time appointed for any
such adjourned Meeting the respective quorum is not present the
Meeting shall stand further adjourned for such period being not
less than 14 days nor more than 28 days, and at such place as may
be appointed by the Company and at such further adjourned Meeting
two or more persons present holding any Notes outstanding
(whatever the principal amount of the Notes so held by them)
shall form a quorum, provided that if the business of such
further adjourned Meeting includes consideration of a proposed
Extraordinary Resolution, the quorum shall be two or more persons
present holding one-third or more of the aggregate principal
amount of all Notes for the time being outstanding.
g) Notice of any adjourned Meeting or further adjourned
Meeting shall be given in the same manner as notice of an
original Meeting and such notice shall state, in the case of an
adjourned Meeting, that two or more persons present holding 10%
(or in the case of a Meeting the business of which includes
consideration of a proposed Extraordinary Resolution, one-third)
or more of the aggregate principal amount of all Notes for the
time being outstanding will form a quorum, or, in the case of a
further adjourned Meeting, that two or more persons present
holding any Notes outstanding (or in the case of a Meeting the
business of which includes the consideration of a proposed
Extraordinary Resolution, two or more persons present holding
one-third or more of the aggregate principal amount of all Notes
for the time being outstanding), shall form a quorum.
h) The voting rights of the holders of Notes shall be
determined according to the principal amount of Notes held, each
Note with a principal amount of USD 5'000.- giving the right to
one vote. Holders of the Coupons shall not have any voting
rights. Notes held by or on behalf of the Company shall have no
voting rights and shall be disregarded for the purpose of this
Section 15, save that the Company shall be entitled to vote in
respect of Notes held by it for the benefit of and at the
direction of an independent third party. In
<PAGE>
13.
the case of an equality of votes the chairman shall have a
casting vote in addition to the vote or votes (if any) to
which he may be entitled as a holder of Notes.
i) Any director or officer of the Company and its lawyers
and any other person authorized on its behalf by it may attend
and speak at any Meeting.
j) The Meeting shall have the following powers exercisable
by Extraordinary Resolution with the consent of the Company:
(i) extension of the date fixed for final maturity of the
Notes;
(ii) reduction or cancellation of the principal payable on
the Notes;
(iii) reduction or cancellation of the rate or amount
payable, or extension of the date of payment, in respect of any
Coupons;
(iv) alteration of the majority required to pass an
Extraordinary Resolution; and
(v) waiver of any Event of Default.
k) Any reference in these Terms of the Notes to an
"Extraordinary Resolution" shall be construed as references to
resolutions of the Noteholders passed in accordance with the
foregoing provisions of this Section 15 with respect to any of
the matters stated in sub-section j) above.
(16) Applicable Law and Jurisdiction
The terms, conditions and form of the Notes and Coupons (the English
language version of which shall govern) shall be governed by and
construed in accordance with Swiss law. Any action or proceedings
against the Company relating to the Notes may be brought and enforced
in the ordinary courts of the Canton of Ticino, venue being in the City
of Lugano, or, if such courts fail to grant jurisdiction in the
ordinary courts of the Canton of Basle-City, venue being in Basle, and
the Company hereby irrevocably submits to the jurisdiction of such
courts in respect of any such action or proceeding, with the right to
appeal, as provided by law, to the Swiss Federal Court in Lausanne, the
judgment of which shall be final. Solely for that purpose, the Company
hereby elects legal and special domicile at the office of Banca del
Gottardo, Viale Stefano Franscini 8, 6901 Lugano, Switzerland. The
Company covenants that so long as any Notes are outstanding it will
maintain an agent for service of process in Switzerland. The
aforementioned jurisdiction shall also be valid for the cancellation
and replacement of lost, stolen, defaced, mutilated or destroyed Notes
and coupons. Payment effected to a holder of Notes who has been
identified as the legitimate holder of a Note or coupon by a final
judgment of a Swiss court shall release the Company from its payment
obligations under such Note or coupon.
Any Noteholder shall also have the right to bring any legal action or
proceeding against the Company in respect of a Note or coupon and all
covenants contained therein in any state or federal court in the United
States of America which may have jurisdiction.
1.
TERMS OF THE "WARRANTS" OF THE COMPANY
1. General
The Warrants are issuable in bearer form and have the benefit of and
are subject to the provisions for the exercise thereof contained in the
Warrant Agency Agreement to be dated as of December 22, 1995 between
the Company and Banca del Gottardo (the "Warrant Agent" or the
"Standing Agent" as the case may be) which will be available for
inspection at the office in Lugano of the Warrant Agent or its
successor as Warrant Agent. The holders of the Warrants (the "Holders")
are deemed to have knowledge of the provisions of such Agreement, all
of which will be binding on them, provided, however, that the rights of
such Holders hereunder shall be governed by the terms hereof.
The Standing Agent or the Warrant Agent may resign in its duties and be
discharged from all further duties as Agent or Warrant Agent in
accordance with the terms of the Warrant Agency Agreement. In such
event a successor Standing Agent or Warrant Agent, which will have the
same duties as its predecessor and will agree to be bound by the terms
of the Warrant Agency Agreement, will be appointed by the Company, or
if the Company shall fail to appoint such successor Standing Agent or
Warrant Agent, by a court of competent jurisdiction.
The Global Warrant may be exchanged, as a whole or in part, for
appropriate definitive Warrants, in bearer form, not earlier than 40
days after the later of the date on which the Warrants are first
offered or the Payment Date. Such exchange shall be made upon
certification that the beneficial owners of the Warrants are not United
States persons or U.S. persons or are financial institutions (as
defined in United States Treasury Regulation Section 1.165-12(c)(1)(v))
located outside the United States that are not United States persons
and that the beneficial owners have not purchased such Warrants for
resale during the Restricted Period and that the beneficial owners
certify that they have not acquired the Warrants for purposes of resale
directly or indirectly to a United States person or to a person within
the United States. A beneficial owner of Notes must exchange its share
of the Global Warrant for definitive Warrants before such Warrants may
be transferred or shares may be delivered upon exercise of the Warrants
in respect of the Warrants will be made.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered
or the date on which the Notes are issued (the "Payment Date") and
ending on the date forty (40) days after the later of the date upon
which the Notes and Warrants were first offered or the date of closing
of this offering, (ii) the term "United States" means the United States
of America (including the States and the District of Columbia), its
possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth
in Sections
<PAGE>
2.
230.901 through .904 of Title 17 of the United States Code of Federal
Regulations ("Regulation S").
2. Duration
The right to subscribe for and purchase shares of Warrant Stock
represented by the Warrants shall commence Subject to Section 8 hereof
on May 1, 1996 and shall expire December 31, 2000 at 5:00 P.M. US
Eastern Time, provided, however, that if, on such expiration date, the
Company is then required, pursuant to an effective request therefor, to
effect, or is in the process of effecting, a registration under the
Securities Act for an underwritten public offering in which shares of
Warrant Stock are, pursuant to this Warrant, entitled to be included,
or if the Company is in default of any obligations created by this
Warrant, said right to subscribe for and purchase shares of Warrant
Sock shall expire at 5:00 P.M., US Eastern Time, on the 30th day
following the date on which such registration shall have become
effective (but in no event longer than 180 days beyond the date this
Warrant otherwise would have expired) or on the 30th day following the
date all of such defaults have been cured, as the case may be.
3. Warrant Price; Method of Exercise; Payment; Issuance of New Warrant;
Transfer and Exchange
The exercise price will be fixed on March 29, 1996 whereby such
exercise price shall be the equivalent of the average of the closing
prices during the period from March 14 to March 29, 1996, but shall in
any event not be higher than (i) 120% of the average of the closing
prices of the Common during the period from December 19 to 29, 1995 or
(ii) USD 4.75 per Common, whichever is lower (such price hereinafter
called the "Warrant Price").
The purchase right represented by this Warrant may be exercised at any
time and from time to time prior to expiration subject to Section 8
hereof.
In order to exercise the Warrants and receive certificates for Shares
legally issuable on such exercise, the Holder shall deposit 2'000
Warrants or more with the Warrant Agent at its office in Lugano and
accompanied by a written notice (which notice must contain a
certification of non-U.S. beneficial ownership) signed by or on behalf
of the Holder to the effect that such Holder elects to exercise the
Warrants and payment of the Warrant Price (the "Warrant Consideration
Amount"). As a further condition precedent to the exercise of the
Warrants, the Holder must pay all stamp, issue, registration or other
taxes and duties arising upon exercise in Switzerland or payable in any
jurisdiction upon the issue or delivery of Shares, if any, to the
exercising Holder or to the order of a person other than the exercising
Holder.
The date on which these conditions precedent to exercise as stated
above have been verified and recognized by the Warrant Agent as being
fulfilled in hereafter called the "Deposit Date". The Common Stock
Warrant shall be treated as exercised at the close of business in New
York on the Exercise Date. The "Exercise Date" for the Warrant means
the business days in New York immediately following the Deposit Date.
The "Exercise Date" for the Common Stock Warrant shall not be later
than the Termination Date.
The Company shall not be obligated to issue any fraction of a Share
upon the exercise of any Warrant or make any payment for a fraction of
a Share. If more than one Warrant shall be exercised at one time by the
same Holder, the number of full Shares which shall be issuable upon
<PAGE>
3.
exercise thereof shall be computed on the basis of the aggregate number
of shares issuable upon the exercise of all the Warrants exercised by
such Holder. Any Shares issued upon the exercise of the Common Stock
Warrants shall be delivered in accordance with the instructions of the
Holder.
In the event of any exercise of the rights represented by this Warrant
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding five Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be
the Holder of the shares of Warrant Stock so purchased as of the date
of such exercise.
Neither this Warrant nor any Warrant Stock has been registered under
the Securities Act. Accordingly, neither this Warrant nor any Warrant
Stock is transferable except as permitted under various exemptions
contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities
Act.
4. Stock Fully Paid; Reservation of Shares
The Company covenants and agrees that all shares of Warrant Stock which
may be issued upon the exercise of this Warrant will, upon issuance, be
fully paid and non-assessable and free from all taxes, liens and
charges with respect to issuance. The Company further covenants and
agrees that during the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved
for the purpose of the issue upon exercise of the subscription rights
evidenced by this Warrant a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant. If the Warrant Price is at
any time less than the par value of the Warrant Stock or if the Warrant
at any time is exercisable by its delivery alone and without payment of
any additional consideration, the Company also covenants and agrees to
cause to be taken such action (whether by decreasing the par value of
the Warrant Stock, the conversion of the Warrant Stock from par value
to no par value, or otherwise) as will permit the exercise of this
Warrant without any additional payment by the Holder hereof (other than
payment of the Warrant Price, if any, and applicable transfer taxes, if
any), and the issuance of the Warrant Stock, which Warrant Stock, upon
such issuance, will be fully paid and non-assessable.
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking if all such actions as may be
necessary or appropriate to protect the rights of the Holders hereof
against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase
in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its
best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Warrant.
<PAGE>
4.
5. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this
Warrant and the payment of the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events as
follows:
a) Recapitalization, Reorganization, Reclassification,
Consolidation Merger or Sale
In case of any recapitalization or reorganization of the
Company or any reclassification or change of outstanding
Securities issuable upon exercise of this Warrant (other than
a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of
the Company with or into another corporation (other than a
merger with another corporation in which the Company is the
surviving corporation and which does not result in any
reclassification or change - other than a change in par value,
or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination - of
outstanding Securities issuable upon exercise of this
Warrant), or in case of any sale or transfer to another
corporation of the Property of the Company as an entirety or
substantially as an entirety in connection with a liquidation
or dissolution of the Company, the Company or such successor
or purchasing corporation therefor, issue a new Warrant,
providing that the Holder(s) of this Warrant shall have the
right to exercise such new Warrant and procure upon such
exercise in lieu of each share of Warrant Stock theretofore
issuable upon exercise of this Warrant the kind and the
highest amount of shares of Stock, other securities, money and
property receivable upon such recapitalization,
reorganization, reclassification, change, consolidation,
merger, sale or transfer by a Holder of one share of Common
Stock issuable upon exercise of this Warrant had it been
exercised immediately prior to such recapitalization,
reorganization, reclassification, change, consolidation,
merger sale or transfer. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this subsection (a) shall similarly apply to
successive recapitalizations, reorganizations,
reclassifications, changes, consolidations, mergers, sales and
transfers.
b) Subdivision or Combination of Shares
If the Company, at any time while this Warrant is outstanding,
shall subdivide or combine any class or classes of its Common,
(i) in case of subdivision of shares, the Warrant Price shall
be proportionately reduced (as at the effective date of such
subdivision of, if the Company shall take a record of Holders
of its Common for the purpose of so subdividing, as at the
applicable record date, whichever is earlier) to reflect the
increase in the total number of shares of Common outstanding
as a result of such subdivision, or (ii) in the case of a
combination of shares, the Warrant Price shall be
proportionately increased (as at the effective date of such
combination, or, if the Company shall take a record of Holders
of its Common for the purpose of so combining, as at the
applicable record date, whichever is earlier) to reflect the
reduction in the total number of shares of Common outstanding
as a result of such combination.
<PAGE>
5.
c) Certain Dividends and Distributions
If the Company, at any time while this Warrant is outstanding,
shall:
(ii) Stock Dividends
Pay a dividend in, or make any other distribution of,
shares of any class or classes of Common, the Warrant
Price Shall be adjusted, as at the date the Company
shall take a record of the holders of such class or
classes of Common, for the purpose of receiving such
dividend or other distribution (or if no such record
is taken, as at the date of such payment or other
distribution), to that price determined by
multiplying the Warrant Price in effect immediately
prior to such record date (or if no such record is
taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator
of which shall be the total number of shares of
Common outstanding immediately prior to such dividend
or distribution, and (2) the denominator of which
shall be the total number of shares of Common
outstanding immediately after such dividend or
distribution (plus in the event that the Company paid
cash for fractional shares, the number of additional
shares which would have been outstanding had the
Corporation issued fractional shares in connection
with said dividends); or
(ii) Liquidating Dividends, etc.
Make a distribution of its Property to the holders of
its Common as a dividend in liquidation or partial
liquidation or by way of return of capital other than
as a dividend payable out of funds legally available
for dividends under the laws of the State of
Delaware, the Holder of this Warrant shall, upon
exercise and payment of the Warrant Price, be
entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and
without payment of any additional consideration
therefor, a sum equal to the amount of such Property
as would have been payable to such Holder as owner of
that number of shares of Warrant Stock of the
receivable by exercise of this Warrant, had such
Holder been the holder of record of such Warrant
Stock on the record date for such distribution; and
an appropriate provision therefor shall be made a
part of any such distribution.
d) Issuance of Additional Shares of Common
If the Company, at any time while this Warrant is outstanding,
shall issue any Additional Shares of Common (otherwise than as
provided in the foregoing subsections (a) through (c) of this
Section 4), at a price per share less than the Warrant Price
then in effect or less than (i) the Current Market Price then
in effect is such issue is pursuant to a public offering, or
(ii) ninety five percent (95%) of the Current Market Price
then in effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate, or
without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price determined by
multiplying the Warrant Price by a fraction:
<PAGE>
6.
(A) If issued for a consideration per share less than (i)
the Current Market Price then in effect if such issue
is pursuant to a public offering, or (ii) ninety five
percent (95%) of the Current Market Price then in
effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate,
or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
(i) the Current Market Price then in effect
if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%)
of the Current Market Price then in effect
if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the
aggregate, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
(B) If issued for a consideration per share less than the
Warrant Price or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
the Warrant Price, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
If such Additional Shares of Common shall be issued
at a price per share less than both the Warrant Price
and the Current Market Price, the Warrant Price shall
be adjusted in the manner provided in clauses (i) or
(ii) of this subsection (d) which will result in the
greater reduction in the amount of the Warrant Price.
The provisions of this subsection (d) shall not apply
under any of the circumstances for which an
adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price
shall be made under this subsection (d) upon the
issuance of any Additional Shares of Common which are
issued pursuant to any Common Stock Equivalent if
upon the issuance of such Common Stock Equivalent (1)
any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (2) no adjustment
was required pursuant to subsection (e) of this
Section 5.
<PAGE>
7.
e) Issuance of Common Stock Equivalents
In case the Company shall at any time while this
Warrant is outstanding, issue any Common Stock
Equivalent and the price per share for which
Additional Shares of Common may be issuable
thereafter pursuant to such Common Stock Equivalent
shall be less than the Warrant Price then in effect
on the date of issuance of such Common Stock
Equivalent or less than (i) the Current Market Price
then in effect if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%) of the
Current Market Price then in effect if such issue is
pursuant to a private placement in excess of $
3'500'000 in the aggregate, or if, after any such
issuance of Common Stock Equivalents, the price per
share for which Additional Shares of Common may be
issuable thereafter is amended (other than as a
result of the operation of anti-dilution provisions
of or relating to Common Stock Equivalents
outstanding as of the date hereof pursuant to events
or circumstances which would also result in an
adjustment in the Warrant Price), and such price as
so amended shall be less than the Warrant Price or
the Current Market Price in effect at the time of
such amendment, then the Warrant Price upon each such
issuance or amendment shall be adjusted as provided
in the first sentence of subsection (d) of this
Section 4 on the basis that (1) the maximum number of
Additional Shares of Common issuable pursuant to all
such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock
Equivalents are actually then exercisable,
convertible or exchangeable in whole or in part) as
of the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of
such Common Stock Equivalent, or (B) the date of
actual issuance of such Common Stock Equivalent, and
(2) the aggregate consideration for such maximum
number of Additional Shares of Common shall be deemed
to be the minimum consideration received and
receivable by the Company for the issuance of such
Additional Shares of Common pursuant to such Common
Stock Equivalent. No adjustment of the Warrant Price
shall be made under this subsection (e) upon the
issuance of any Convertible Security which is issued
pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any
adjustment shall previously have been made in the
Warrant Price then in effect upon the issuance of
such warrants or other rights pursuant to this
subsection (e).
f) Other Provisions Applicable to Adjustments Under this
Section A
The following provisions shall be applicable to the
making of adjustments in the Warrant Price
hereinbefore provided in this Section 5:
(i) Computation of Consideration
The consideration received by the Company
shall be deemed to be the following: (a) to
the extent that any Additional Shares of
Common or any Common Stock Equivalents shall
be issued for a cash consideration, the
consideration received by the Company
therefor, or, (b) if such Additional Shares
of Common or Common Stock Equivalents are
offered by the Company for subscription, the
subscription price, or, (c) if such
<PAGE>
8.
Additional Shares of Common or Common Stock
Equivalents are sold to underwriters or
dealers for public offering without a
subscription offering, the initial public
offering price, in any such case excluding
any amounts paid or receivable for accrued
interest or accrued dividends and without
deduction of any compensation, discounts,
commissions, or expenses paid or incurred by
the Company for or in connection with the
underwriting thereof or otherwise in
connection with the issue thereof; (d) to
the extent that such issuance shall be for a
consideration other than cash, then, except
as herein otherwise expressly provided, the
fair market value of such consideration at
the time of such issuance as determined in
good faith by the Board. The consideration
for any Additional Shares of Common issuable
pursuant to any Common Stock Equivalents
shall be the consideration received by the
Corporation for issuing such Common Stock
Equivalents, plus the additional
consideration payable to the Corporation
upon the exercise, conversion or exchange of
such Common Stock Equivalents. In case of
the issuance at any time of any Additional
Shares of Common or Common Stock Equivalents
in payment or satisfaction of any dividend
upon any class of Stock other than Common,
the Corporation shall be deemed to have
received for such Additional Shares of
Common or Common Stock Equivalents a
consideration equal to the mount of such
dividend so paid or satisfied. In any case
in which the consideration to be received or
paid shall be other than cash, the Board
shall notify the Holder of this Warrant
through Banca del Gottardo of its
determination of the fair market value of
such consideration prior to payment or
accepting receipt thereof. If within thirty
days after receipt of said notice, the
Holders of Warrants exercisable for at least
a majority of Warrant Stock then unissued
shall notify the Board in writing of their
objection to such determination, a
determination of fair market value of such
consideration shall be made by arbitration
in accordance with the Rules of the American
Arbitration Association, by an arbitrator in
the Borough of Manhattan, City of New York,
State of New York.
(ii) Readjustment of Warrant Price
Upon the expiration of the right to convert,
exchange or exercise any Common Stock
Equivalent the issuance of which effected an
adjustment in the Warrant Price, if such
Common Stock Equivalent shall not have been
converted, exercised or exchanged, the
number of shares of Common Stock deemed to
be issued and outstanding by reason of the
fact that they were issuable upon
conversion, exchange or exercise of any such
Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant
Price shall forthwith be readjusted and
thereafter be the price which it would have
been (but reflecting any other adjustments
in the Warrant Price made pursuant to the
provisions of this Section 5 after the
issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been
made in accordance with the issuance or sale
of the number of Additional Shares of Common
actually issued upon conversion, exchange or
issuance of such Common Stock
<PAGE>
9.
Equivalent and thereupon only the number of
Additional Shares of Common actually so
issued shall be deemed to have been issued
and only the consideration actually received
by the Company (computed as in clause (i) of
this subsection (g)) shall be deemed to have
been received by the Company.
(iii) Treasury Shares
The number of shares of Common at any time
outstanding shall not include any shares
thereof then directly or indirectly owned or
held by or for the account of the Company or
any of its Subsidiaries.
g) Other Action Affecting Common
In case after the date hereof the Company shall take
any action affecting its common, other than an action
described in any of the foregoing subsections (a)
through (f) of this Section 5, inclusive, and the
failure to make any adjustment would not failure
protect the purchase rights represented by this
Warrant in accordance with the essential intent and
principle of this Section 5, then the Warrant Price
shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable
in the circumstances.
h) Adjustment of Number of Shares
Upon each adjustment in the Warrant Price pursuant to
any provision of this Section 5, the number of shares
of Warrant Stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product
obtained by multiplying such number of shares
purchasable immediately prior to such adjustment in
the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be
the Warrant Price immediately thereafter. If the
Company shall be in default under any provision
contained in the last sentence of Section 5 of this
Warrant so that shares issued at the Warrant price
adjusted in accordance with this Section 5 would not
be validly issued, the adjustment of number of shares
provided for in the foregoing sentence shall
nonetheless be made and the Holder of this Warrant
shall be entitled to purchase such greater number of
shares at the lowest price at which such shares may
then be validly issued under applicable law. Such
exercise shall not constitute a waiver of any claim
arising against the Company by reason of its default
under Section 5 of this Warrant.
i) Notwithstanding anything in this Section 5 to the
contrary, neither the number of shares of Warrant
Stock purchasable hereunder nor the Warrant Price
shall be adjusted with respect to any Common Stock
Equivalents issued and outstanding as of the date of
the issuance of this Warrant, or the issuance of any
Securities upon exercise or conversion of any such
Common Stock Equivalent, including, without
limitation, any Securities issued from time to time
pursuant to (i) the exercise of options outstanding
as of the date of issuance of the Warrant and held by
present or former directors, officers or employees of
the Company, (ii) the
<PAGE>
10.
exercise of the Stock Purchase Warrant, dated July
31, 1992 (the "Prudential Warrant"), purchased by The
Prudential Insurance Company of America
("Prudential"), (iii) the conversion features of that
certain Amended and Restated 10% Convertible
Subordinated Note Due 1999 issued to T.J. Berthel
Investment L.P. (the "Berthel Securities"), (iv) the
exercise of the Warrant dated August 11, 1994 (the
"Nomura Warrant") issued to Nomura Holding Company,
Inc. ("Nomura"), (v) the effect of any antidilution
provisions contained in the Prudential Warrant, the
Berthel Securities and the Nomura Warrant and (vi)
the issuance of up to 150'000 stock options per
calendar year pursuant to the Company's stock option
or stock purchase plan.
6. Notice of Adjustments
Whenever the Warrant Price or number of Warrant Shares
purchasable upon exercise of this Warrant shall be adjusted
pursuant to Section 5 hereof, the Company shall deliver to
Banca del Gottardo for certification to the Holder(s) of the
Warrant a certificate (the "Adjustment Certificate") setting
forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which
such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder),
and the Warrant Price and number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (by first class
mail postage prepaid) to the Holder(s) of this Warrant
promptly after each adjustment; provided, however, that in the
event that any Holder disagrees with the calculations, amounts
or other information with respect to the adjustments set forth
in the Adjustment Certificate, such Holder shall within 10
Business Days after receipt of such Adjustment Certificate
request that the Company cause the independent accounting firm
then regularly engaged by it to audit its financial statements
to propose and execute and promptly deliver to the Holder(s) a
certificate with respect to each of the items set forth in the
Adjustment Certificate. Such determination as to adjustments
of the accounting firm shall be final and binding in the
absence of manifest error.
7. Fractional Shares
No fractional shares of Warrant Stock will be issued in
connection with any exercise hereof, but in lieu of such
fractional shares, the Company shall cause the payment
therefor equal in amount to the product of the applicable
fraction multiplied by the Warrant Price then in effect.
8. Definitions
For the purposes of this Warrant, the following terms have the
following meanings:
"Additional Shares of Common" shall mean all shares of Common
issued by the Corporation after the date hereof except Warrant
Stock.
"Board" shall mean the Board of Directors of the Corporation.
<PAGE>
11.
"Business Day" shall mean any day except a Saturday, a Sunday
or a legal holiday in New York City.
"Closing Date" shall mean the date of the closing of the sale
and delivery of the Notes.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the
Securities Act.
"Common" shall mean the Common Stock and any capital stock of
the Company of any class which shall be authorized at any time
after the date of this Warrant and which shall have the right
to participate in the distribution of earnings and assets of
the Company without limitation as to amount.
"Common Stock Equivalent" shall mean any Convertible Security
or warrant, option or other right to subscribe for or purchase
any Additional Shares of Common or any Convertible Security.
"Company" shall mean Intellicall, Inc., a Delaware
corporation, and its successors and assigns.
"Convertible Securities" shall mean evidences of Indebtedness,
shares of Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of
Common. The term "Convertible Security" shall mean one of the
Convertible Securities.
"Current Market Price" means with respect to any Trading Day
the last sale price (regular way) of the Common on such day as
reported on the New York Stock Exchange Consolidated Tape (as
published in the Wall Street Journal), or, if such Common is
not listed on the New York Stock Exchange, Inc. or reported on
such Consolidated Tape, then the last sale price on such day
on the principal domestic stock exchange on which such stock
is then listed or admitted to trading, or, if no sale takes
place on such day on such exchange, the average of the closing
bid and asked prices on such day as officially quoted on such
exchange, or, if such Common is not then listed or admitted to
trading on any domestic stock exchange but is quoted in the
National Market System ("NMS/NASDAQ") of the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ"), then the Current Market Price for each such
Trading Day shall be the last sale price on such day as quoted
by NMS/NASDAQ, or, if no sale takes place on such day or if
such Common is neither listed or admitted to trading on any
domestic stock exchange nor quoted on such National Market
System, then the Current Market Price for each such Trading
Day shall be the average of the reported closing bid and asked
price quotations on such day in the over-the-counter market,
as reported by NASDAQ, or, if not so reported, as furnished by
the National Quotation Bureau, Inc., or, if such firm at the
time is not engaged in the business of reporting such prices,
as furnished by any similar firm then engaged in such business
as selected by the Company, or if there is no such firm, as
furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company with the
written approval of the Holders of Warrants execrable for a
majority of the shares of Warrant Stock usable under then
outstanding Warrants. If at any time such Common is not listed
on any domestic exchange or quoted
<PAGE>
12.
in the domestic over-the-counter market, the Current Market
Price shall be deemed to be an amount mutually agreed upon in
writing between the Corporation and the Holder of this Warrant
within fifteen days immediately following the date on which
the Current Market Price is to be determined. If no agreement
as to Current Market Price is determined as stated herein, (i)
the Holder of this Warrant shall select an independent
appraiser who shall determine the fair market value per share
of the Common which shall be the Current Market Price,
provided the Company shall agree to such Current Market Price.
If the Company shall not agree to the Current Market Price as
determined in the preceding sentence then (ii) the Company and
Banca del Gottardo shall each select an independent appraiser
who shall, independently of the other appraiser, determine the
fair market value of the Common of the Company. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does not exceed by more than ten percent
(10%) the average of the values determined by each appraiser,
then the Current Market Price shall be the average of the
values determined by the two appraisers. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does exceed by more than ten percent
(10%) the average of the value determined by each appraiser,
then the two appraisers shall select a third independent
appraiser who shall, independently of the other appraisals,
determine the fair market value of the Common. The value
determined by the appraiser whose determination is the most
discrepant from the average of the three appraisals shall be
discarded, and the Current Market Price shall equal the
average of the remaining two appraisals; except that in the
event that the highest and lowest appraisals are equally
discrepant from the average of the three appraisals, the
Current Market Price shall be such average. The Company shall
bear the expenses of all appraisals.
"Governmental Body" shall mean any federal, state, county,
city, town, village, municipal or other governmental
department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Holders" shall mean the Persons who shall from time to time
own of record any Warrant. The term "Holder" shall mean one of
the Holders.
"Initiating Holders" shall mean the holder or holders of any
of the Registrable Securities outstanding and entitled to
registration rights under Section 8 hereof.
"Material Adverse Effect" means any change or changes or
effect or effects that individually or in the aggregate are or
are likely to be materially adverse to (i) the assets,
business, operations, income, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole, (ii) the legality, validity or
enforceability of the Warrants, and (iii) the ability of the
Corporation to fulfill its obligations under the Warrants.
"Note Purchase Agreement" shall mean the Note and Warrant
Purchase, Paying and Conversion/Warrant Agency Agreement,
dated as of December 22, 1995, by and between the Company and
Banca del Gottardo as such Agreement may hereafter from time
to time be amended, modified or supplemented in accordance
with the terms thereof.
<PAGE>
13.
"Notes" shall mean collectively the Subordinated Convertible
Notes (each as defined in the Note Purchase Agreement).
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
"Property" with respect to any Person, shall mean any interest
in any kind of property or asset, whether real, personal or
mixed, tangible or intangible, of such Person.
"Registrable Securities" shall mean (a) any Warrant Stock or
other Securities issued or issuable upon exercise of any
Warrants, and (b) any Securities issued or issuable with
respect to any such Warrant Stock or other Securities by way
of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such shares or securities
shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such
Securities shall have become effective under the Securities
Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall
have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) they
shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall
have been delivered by the Corporation and subsequent
disposition of them shall not require registration or
qualification of them under the Securities act or any similar
state law then in force, (iv) they shall have cased to be
outstanding or (v) the Company agrees to remove the legend
restricting transferability in accordance with applicable law
on the certificates evidencing such Securities.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with Section 7,
including, without limitation, all registration, filing and
National Association of Securities Dealers fees, all fees and
expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants,
including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of not more
than one firm of attorneys retained by the holders of the
Registrable Securities being registered, premiums and other
costs of policies of insurance against liabilities arising out
of the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration
Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general
overhead expenses of the Company, auditing fees, premiums or
other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the
preparation of financial statements or other data normally
prepared by the Corporation in the ordinary course of its
business or which the Company would have incurred in any
event.
<PAGE>
14.
"Securities" shall mean any debt or equity securities of the
Company whether now or hereafter authorized, and any
instrument convertible into or exchangeable for Securities or
a Security. "Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date the Securities Act
of 1933, as amended, or any similar Federal statute then in
effect.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in the
capital stock of a corporation of any class.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which at least a majority of
the outstanding Voting Stock is at the time directly or
indirectly owned or controlled by such Person or by one or
more of any entities directly or indirectly owned or
controlled by such Person.
"Trading Day" shall mean any day on which equity securities
are traded on any national securities exchange or on NASDAQ.
"Voting Stock", as applied to the Stock of any corporation,
shall mean Stock of any class or classes (however designated)
having ordinary voting power for the election of a majority of
the members of the Board of Directors (or other governing
body) of such corporation, other than Stock having such power
only by reason of the happening of a contingency.
"Warrant Price" shall mean the price specified in the first
paragraph of this Warrant and such other prices as shall
result form the adjustments specified in Section 4 hereof.
"Warrant Stock" shall mean the Common Stock issuable upon
exercise of any Warrant or Warrants.
"Warrants" shall mean the Warrants issued and sold pursuant to
the Note Purchase Agreement, including, without limitation,
this Warrant.
9. Amendment and Waiver; Assignees
Any term, covenant, agreement or condition in this Warrant may
be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively
or prospectively), by a written instrument or written
instruments executed by the Company and Banca del Gottardo;
provided, however, that no such amendment or waiver shall
reduce the number of shares of Warrant Stock issuable under
the Warrants, increase the Warrant Price, shorten the period
during which the Warrants may be exercised or modify any
provision of this Section 10 without the consent of the
Holders of all Warrants then outstanding.
10. Loss or Mutilation
Upon receipt by the Warrant Agent of evidence satisfactory to
it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant and (in the case of loss, theft or
<PAGE>
15.
destruction) of indemnity satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation thereof, the
Warrant Agent shall execute and deliver in lieu thereof a new
Warrant entitling the Holder to acquire without further
consideration the same number of Shares upon the same terms as
the Warrant so lost, stolen or destroyed or so surrendered and
canceled. Any such substitute Warrant shall constitute an
original contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant shall be at
any time enforceable by anyone. Applicants for a substitute
Warrant shall also comply with such other reasonable
regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
11. Notices and Publications
All notices to the Holders shall be deemed to have been duly
given if published in the Feuille Officielle Suisse du
Commerce and in a daily newspaper in Lugano and Zurich.
12. Governing Law
The terms, conditions and form of the Warrants and the Warrant
Agency Agreement shall be governed by and construed in
accordance with Swiss law. The issuance of the Common Stock
upon exercise of the Warrants shall be governed by and
construed in accordance with the laws of the State of
Delaware.
Any action or proceedings against the Company relating to the
Warrants may be brought and enforced in the ordinary courts of
the Canton of Ticino, venue being in the City of Lugano, or if
such courts fail to grant jurisdiction in the ordinary courts
of the Canton of Basle-City, venue being in the city of Basle,
and the Company hereby irrevocably submits to the jurisdiction
of such courts in respect of any such action or proceeding in
either case, with the right to appeal, as provided by law, to
the Swiss Federal Court in Lausanne, the judgment of which
shall be final. Solely for that purpose, the Company hereby
elects legal and special domicile at the principal office of
Banca del Gottardo, Viale Stefano Franscini 8, 6901 Lugano,
Switzerland. The Company covenants that so long as any
Warrants are outstanding it will maintain an agent for service
of process in Switzerland. The aforementioned jurisdiction
shall also be valid for the cancellation and replacement of
lost, stolen, defaced, mutilated or destroyed Warrants.
Issuance of Common Stock to a Holder who has been identified
as the legitimate Holder by a final judgment of a Swiss Court
shall release the Company from its obligations under such
Warrants.
