INTELLICALL, INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Intellicall, Inc. (the "Company") will be held at the
Addison Conference and Theatre Centre, 15650 Addison Road, Addison, Texas 75248,
on Thursday, May 30, 1996, at 10:00 a.m., Dallas time, and the Proxy Statement
in connection therewith and (2) appoints William O. Hunt and Michael H. Barnes,
and each of them, his proxy with full power of substitution for and in the name,
place and stead of the undersigned, to vote upon and act with respect to all of
the shares of Common Stock of the Company standing in the name of the
undersigned, or with respect to which the undersigned is entitled to vote and
act, at the meeting and at any adjournment thereof.
This proxy will be voted as specified on the reverse side. If no
specification is made, this proxy will be voted FOR the election of the director
nominees in item 1 on the reverse side, FOR the proposal to adopt the Company's
1995 Employee Stock Purchase Plan, FOR the proposal to approve the issuance of
shares to T.J. Berthel Investments, L.P. and FOR ratification of the appointment
of independent public accountants.
The undersigned hereby revokes any proxy heretofore given to vote or act
with respect to the Common Stock of the Company and hereby ratifies and confirms
all that the proxies, their substitutes, or any of them may lawfully do by
virtue hereof.
If more than one of the proxies named shall be present in person or by
substitute at the meeting or at any adjournment thereof, the majority of the
proxies so present and voting, either in person or by substitute, shall exercise
all of the powers hereby given.
Please date, sign and mail this proxy in the enclosed envelope. No postage
is required. (Continued and to be dated and signed on the other side.)
- -------------------------------------------------------------------------------
<PAGE>
Please mark box or in blue or black ink.
The undersigned directs that his proxy be voted as follows:
1. ELECTION OF DIRECTORS
____FOR all nominees listed below _____WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
WILLIAM O. HUNT, B. MICHAEL ADLER, THOMAS J. BERTHEL,
LEWIS E. BRAZELTON III, RICHARD B. CURRAN, RICHARD E. HANLON,
AND HUGH E. HUMPHREY, JR.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
_______________________________________________________________________________
2. To act upon a proposal to adopt the Company's 1995 Employee Stock Purchase
Plan.
_____FOR _____AGAINST _____ABSTAIN
3. To act upon a proposal to approve the issuance of up to 160,000 shares
(subject to further adjustment) to T.J. Berthel Investments, L.P. pursuant to
the conversion features contained in an Amended and Restated 10% Convertible
Subordinated Note Due 1999 in the original principal amount of $1,000,000.
_____FOR _____AGAINST _____ABSTAIN
4. To act upon a proposal to ratify the appointment of independent public
accountants.
_____FOR _____AGAINST _____ABSTAIN
5. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTER WHICH MAY PROPERLY
COME BEFORE THE MEETING.
Please date this proxy and sign your name exactly as it
appears hereon. Where there is more than one owner, each should
sign. When signing as an attorney, administrator, executor
guardian or trustee, please add your title as such. If executed
by a corporation, the proxy should be signed by a duly authorized
officer.
Dated:______________________________, 1996
___________________________________________
Signature of Stockholder
___________________________________________
Signature of Stockholder
Please Mark, Date, Sign and Mail Your Proxy Promptly in the Envelope Provided.
<PAGE>
INTELLICALL, INC.
2155 Chenault, Suite 410
Carrollton, Texas 75006-5023
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 30, 1996
To the Holders of Common Stock of
INTELLICALL, INC.:
Notice is hereby given that the 1996 Annual Meeting of Stockholders of
Intellicall, Inc., a Delaware corporation (the "Company"), will be held at the
Addison Conference and Theatre Centre, 15650 Addison Road, Addison, Texas 75248,
on Thursday, May 30, 1996, at 10:00 a.m., Dallas time, for the following
purposes:
(1) To elect seven persons to serve as directors until the 1997 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified.
(2) To act upon a proposal to adopt the Company's 1995 Employee Stock
Purchase Plan.
(3) To act upon a proposal to approve the issuance of up to 160,000 shares
(subject to further adjustment) to T.J. Berthel Investments, L.P. pursuant to
the conversion features contained in an Amended and Restated 10% Convertible
Subordinated Note Due 1999 in the original principal amount of $1,000,000.
(4) To act upon a proposal to ratify the appointment of independent public
accountants.
(5) To transact any other proper business brought before the meeting or any
adjournments or postponements thereof.
The Board of Directors has fixed April 12, 1996, at the close of
business, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof. Only holders of record of the Company's common stock on that date are
entitled to vote on matters coming before the meeting and any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
meeting will be maintained in the Company's offices at 2155 Chenault, Suite 410,
Carrollton, Texas 75006 for ten days prior to the meeting and will be open to
the examination of any stockholder during ordinary business hours of the
Company.
<PAGE>
Please advise the Company's Transfer Agent, Chemical Shareholder
Services Group, Inc., 2323 Bryan Street, Suite 2300, Dallas, Texas 75201, of any
change in your address.
Your vote is important. Whether or not you plan to attend the meeting
in person, please mark, sign, date and return the enclosed proxy in the envelope
provided, which requires no postage if mailed within the United States.
By Order of the Board of Directors,
Carrollton, Texas
April 25, 1996 Michael H. Barnes,
Secretary
-2-
<PAGE>
INTELLICALL, INC.
2155 Chenault, Suite 410
Carrollton, Texas 75006-5023
--------------------
PROXY STATEMENT
--------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 30, 1996
The accompanying proxy, which has been mailed together with the Notice
of Annual Meeting and this Proxy Statement to stockholders on or about April 25,
1996, is solicited by the Board of Directors of Intellicall, Inc. (the
"Company") in connection with the Annual Meeting of Stockholders to be held at
the Addison Conference and Theatre Centre, 15650 Addison Road, Addison, Texas
75248, on May 30, 1996 at 10:00 a.m., Dallas time. The proxy may be revoked by
the stockholder at any time prior to its exercise by executing and returning a
proxy bearing a later date, by giving written notice of revocation to the
Secretary of the Company, or by attending the meeting and voting in person.
As stated in the Notice to which this Proxy Statement is attached,
matters to be acted upon at the meeting include: (i) the election to the Board
of Directors of seven directors to serve as directors until the 1997 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified, (ii) a proposal to adopt the Company's 1995 Employee Stock Purchase
Plan, (iii) a proposal to approve the issuance of shares of common stock
pursuant to a convertible subordinated note issued to T.J. Berthel Investments,
L.P., and (iv) the ratification of the appointment of independent public
accountants.
All properly executed, unrevoked proxies received before the meeting
will be voted in accordance with the directions contained therein. When no
direction has been given by a stockholder returning a proxy, the proxy will be
voted FOR the election as directors of the nominees named in this Proxy
Statement, FOR the resolution adopting the Company's 1995 Employee Stock
Purchase Plan, FOR the resolution to approve the issuance of shares of common
stock pursuant to a convertible subordinated note issued to T.J. Berthel
Investments, L.P., FOR the ratification of the selection of Price Waterhouse as
independent public accountants of the Company, and in the discretion of persons
named in the proxy with respect to any other business which may properly come
before the meeting. Votes will be tabulated by inspectors of election appointed
by the Company. An abstention from voting on a proposal will be tabulated as a
vote withheld on the proposal, but will be included in computing the number of
shares present for purposes of determining the presence of a quorum for the
meeting.
The close of business on April 12, 1996 has been set as the record date
for determination of stockholders entitled to notice of, and to vote at, the
meeting. Holders of the common stock are entitled to one vote per share on all
matters which come before the meeting.
On the record date, there were outstanding and entitled to vote
7,684,010 shares of common stock. The presence, in person or by proxy, of a
majority of the outstanding shares of common stock entitled to vote at the
meeting will constitute a quorum.
-1-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 1996, the number and
percentage of outstanding shares of common stock beneficially owned by (i) each
of the executive officers named in the Summary Compensation Table on page 11,
(ii) each person known by the Company to be the beneficial owner of more than 5%
of the Company's common stock, (iii) each director and each person nominated to
be elected a director of the Company, and (iv) all officers and directors as a
group.
<TABLE>
<CAPTION>
Shares of
Common Stock
Name and Address Beneficially Percentage
of Beneficial Owner(1) Owned(2) of Class
- ---------------------- -------- --------
<S> <C> <C>
William O. Hunt (3) 820,000 9.8%
2155 Chenault, Suite 450
Carrollton, Texas 75006
B. Michael Adler (4) 947,813 12.0%
2155 Chenault, Suite 450
Carrollton, Texas 75006
T.J. Berthel Enterprises, 696,407 8.9%
Inc. (5)
100 Second St. S.E.
Cedar Rapids, Iowa 52407-4250
Nomura Holding America 551,954 6.7%
Inc.(6)
2 World Financial Center,
Bldg. B - 22nd Floor
New York, New York 10281
Dimension Fund Advisors, 507,325 6.2%
Inc. (7)
1299 Ocean Avenue,
11th Floor
Santa Monica, California 90401
Banca Del Gottardo(8) 500,000 6.1%
viale S. Franscini 8
6901 Lugano
Switzerland
Michael H. Barnes(9) 123,295 1.6%
Thomas J. Berthel(5)(10) 716,407 9.1%
Lewis E. Brazelton III(11) 68,873 *
-2-
<PAGE>
<CAPTION>
Shares of
Common Stock
Name and Address Beneficially Percentage
of Beneficial Owner Owned(2) of Class
- ------------------- -------- --------
<S> <C> <C>
John M. Carradine(12) 20,034 *
Richard B. Curran(13) 105,600 1.3%
Richard E. Hanlon(14) 39,000 *
Hugh E. Humphrey, Jr.(15) 82,000 1.1%
Thomas R. Kessler(16) 12,500 *
Ray S. Naeini (17) 75,000 1.0%
Dennis J. Stoutenburgh(18) 84,625 1.1%
All officers and directors as a 3,095,147 33.7%
group (12 persons)(19)
- -------------------------
* less than one percent
<FN>
(1) The persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned
by them, subject to community property laws, where applicable, and the
information contained in the footnotes to the table.
(2) Includes shares issuable upon the conversion of subordinated debt or
shares issuable upon exercise of options or warrants that have vested
or will vest within 60 days.
(3) Includes 76,985 shares as to which Mr. Hunt has shared voting and
investment power and 670,000 shares of common stock issuable upon
exercise of options.
(4) Includes (i) 37,000 shares held in the name of Adler Computer Systems,
Inc., a company wholly owned by B. Michael Adler, a member of the Board
of Directors of the Company, (ii) 150,000 shares held by a partnership
in which Mr. Adler serves as the general partner and (iii) 200,000
shares of common stock issuable upon exercise of options.
(5) Includes a convertible debenture held by T.J. Berthel Investments,L.P.,
an affiliate, which debenture is convertible into approximately 160,000
shares of common stock. See "Proposal to Approve Stock Issuance".
(6) Includes 551,954 shares of common stock issuable upon exercise of a
warrant.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 507,325 shares of
the Company's stock as of December 31, 1995, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a
registered open-end investment company, or in series of the DFA
Investment Trust Company,
-3-
<PAGE>
a Delaware business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit plans,
all of which Dimensional Fund Advisors Inc. serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
(8) Includes 500,000 shares of common stock issuable upon exercise of a
warrant.
(9) Includes 106,250 shares of common stock issuable upon exercise of
options.
(10) Includes 20,000 shares of common stock issuable upon exercise of
options.
(11) Includes 5,091 shares owned by Mr. Brazelton's wife, as to which Mr.
Brazelton disclaims beneficial ownership, and 30,000 shares of common
stock issuable upon exercise of options.
(12) Includes 19,250 shares of common stock issuable upon exercise of
options.
(13) Includes 53,600 shares held by Mr. Curran's wife and a trust of which
Mr. Curran's wife is a beneficiary, as to which Mr. Curran disclaims
beneficial ownership, and 30,000 shares of common stock issuable upon
exercise of options.
(14) Includes 20,000 shares of common stock issuable upon exercise of
options.
(15) Includes 80,000 shares of common stock issuable upon exercise of
options.
(16) Includes 12,500 shares of common stock issuable upon exercise of
options.
(17) Includes 75,000 shares of common stock issuable upon exercise of
options.
(18) Includes 81,625 shares of common stock issuable upon exercise of
options.
(19) Includes 1,344,625 shares of common stock issuable upon exercise of
options and 160,000 shares of common stock issuable upon conversion of
a convertible debenture.
</FN>
</TABLE>
-4-
<PAGE>
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting, to hold office
until the next annual meeting or until their successors have been elected and
qualified, or they have sooner resigned or been removed. The Board of Directors
proposes the election of the persons listed below, all of whom are currently
directors. It is not contemplated that any of the nominees will be unable or
unwilling to serve as a director; however, if that should occur, the proxies
will be voted for the election of such other person or persons as are nominated
by the board of directors, unless the board reduces the number of directors. The
seven nominees for director receiving a plurality of the votes cast at the
Annual Meeting in person or by proxy shall be elected. Proxies cannot be voted
for a greater number of persons than the number of nominees named below.
The following table sets forth certain information as to the nominees
for director.
<TABLE>
<CAPTION>
Served as
Name and Age Positions Director Since
------------ --------- --------------
<S> <C> <C>
William O. Hunt, 62 Chairman of the Board of 1992
Directors, Chief Executive
Officer, and President
B. Michael Adler, 49 Director 1984
Thomas J. Berthel, 44 Director 1995
Lewis E. Brazelton III, 55 Director (1) 1992
Richard B. Curran, 60 Director (2) 1992
Richard E. Hanlon, 48 Director (3) 1994
Hugh E. Humphrey, Jr., 70 Director (4) 1987
- --------------
<FN>
(1) Member of Audit Committee and Chairman of Organization and Compensation
Committee of the Board of Directors.
(2) Chairman of the Audit Committee and member of Organization and
Compensation Committee of the Board of Directors.
(3) Member of Organization and Compensation Committee of the Board of
Directors.
(4) Member of Audit Committee of the Board of Directors.
</FN>
</TABLE>
-5-
<PAGE>
William O. Hunt joined the Company in December 1992 as Chairman of the
Board, Chief Executive Officer and President. From June 1986 to July 1992, he
was Chairman and Chief Executive Officer of Alliance Telecommunications
Corporation, a wireless telecommunications company. Mr. Hunt serves on the
boards of The Allen Group Inc., Dr. Pepper Bottling Company of Texas and
American Homestar Corporation.
B. Michael Adler is a founder of the Company and was Vice Chairman of the
Board of Directors of the Company from December 1992 until November 1993. Prior
to that time he was Chairman of the Board of Directors from the Company's
inception in November 1984. He served as Chief Executive Officer of the Company
from November 1984 to January 1988. From November 1984 to April 1987, he was
also President of the Company. Mr. Adler is Chairman of The Payphone Company
Limited, a Sri Lankan Company, and Chief Executive Officer of WorldQuest
Networks, L.L.C., a Delaware limited liability company.
Thomas J. Berthel is Chief Executive Officer and Chairman of the Board of
Directors of Berthel Fisher & Company, a financial services holding company
based in Cedar Rapids, Iowa. He is also the Chief Executive Officer and Chairman
of the Board of Directors for various subsidiaries of Berthel Fisher and Company
including Berthel Fisher Leasing, Inc.
Lewis E. Brazelton III has been Senior Vice President of Rauscher Pierce
Refsnes, Inc., an investment banking company, for more than the last five years.
Richard B. Curran is an attorney and has been an investor in a number of
privately held companies since 1989 in which he has also served in either
director capacities or senior management positions.
Richard E. Hanlon is Vice-President of Investor Relations of America
Online, Inc. He is also a member of the board of directors of Michael's Stores,
Inc. Prior to joining America Online, Mr. Hanlon was the founder of Hanlon &
Company in 1993, a consultancy to software and technology companies, and venture
capital and investment banking firms. From 1987 to 1993 he was Vice President of
Corporate Communications and Secretary of Legent Corporation. He earlier held
senior management positions at UCCEL Corp. and Docutel Corp. in Dallas, Texas.
Hugh E. Humphrey, Jr. is President and Chief Executive Officer of the
Algiers Homestead Association, a Louisiana savings and loan association. Mr.
Humphrey has been with the Algiers Homestead Association since 1963.
The Board of Directors recommends a vote FOR the election of all seven
nominees to the Board.
Committees and Meetings of the Board of Directors. The Board of Directors
has established two committees, the Organization and Compensation Committee and
the Audit Committee. The Organization and Compensation Committee (the
"Compensation Committee"), currently composed of Messrs. Brazelton, Curran and
Hanlon, met two times (in addition to meetings held as a part of certain Board
of Directors meetings) during the fiscal year ended December 31, 1995. This
committee reviews and approves salaries and bonuses of executive officers and
administers the Company's stock option and
-6-
<PAGE>
purchase plans. The Audit Committee, currently composed of Messrs. Curran,
Humphrey and Brazelton met five times during the fiscal year ended December 31,
1995. This committee recommends to the Board of Directors the appointment of
independent auditors, reviews the plan and scope of audits, reviews the
Company's significant accounting policies and internal controls, and has general
responsibility for related matters. The Company does not have a standing
nominating committee of the Board of Directors; however, the Compensation
Committee has performed services as a nominating committee.
The Board of Directors held nine meetings, either in person or by
telephonic conference, during the fiscal year ended December 31, 1995.
Additionally, the Board of Directors adopted various resolutions during 1995 by
unanimous consent. None of the directors (other than Mr. Hanlon) attended fewer
than 75% of the meetings of (i) the Board of Directors and (ii) the committees
on which they served, during their tenure.
Director Compensation. During 1995 each member of the Board of Directors
who was not an officer or employee of the Company received an annual $13,500
director's retainer for serving on the board. Additionally each director was
paid a fee of $675 for each director's meeting he attended and a $675 fee for
each committee meeting he attended other than committee meetings held on the
same day as a directors meeting. Directors were also reimbursed for expenses
relating to attendance at meetings.
MANAGEMENT
The following table sets forth certain information as of February 28, 1996
with respect to the executive officers of the Company.
<TABLE>
<CAPTION>
Served as
Name and Age Position Officer Since
------------ -------- -------------
<S> <C> <C>
William O. Hunt, 62 Chairman of the Board 1992
of Directors, Chief
Executive Officer and
President
Michael H. Barnes, 53 Senior Vice President, 1993
Corporate Staff, Chief
Financial Officer and
Secretary
Dennis Stoutenburgh, 33 President 1991
Communications Group
John M. Carradine, 37 Vice President of Finance 1994
and Controller
Thomas R. Kessler, 37 Vice President of 1995
Operations
</TABLE>
-7-
<PAGE>
William O. Hunt See "Election of Directors" above.
Michael H. Barnes joined the Company in September 1993 as Senior Vice
President, Corporate Staff, Chief Financial Officer and Secretary. From March
1987 to July 1992, Mr. Barnes was the Chief Financial Officer of Alliance
Telecommunications Corporation.
Dennis Stoutenburgh was appointed President of the Communications Group of
the Company in January 1995. He served as Vice President-Billing Services for
the Company from March 1991 to February 1993. From September 1989 to March 1991
he was Director of Billing Services for the Company. From April 1988 to August
1989 he was Director-Finance for the Company.
John M. Carradine has been Vice President of Finance and Controller of
Intellicall since September 1995. From May 1994 to September 1995 he served as
Treasurer of the Company. From October 1990 to May 1994 he was Director of
Finance and Investor Relations. From February 1983 to October 1990 Mr. Carradine
served in various executive capacities with Computer Language Research, Inc. in
Carrollton, Texas. Mr. Carradine is a CPA licensed in the State of Texas.
Thomas R. Kessler joined the Company in April 1995 as Vice President of
Operations. From July 1989 to September 1995 he was President of Cherokee
Electronica S.A. de C.V. in Guadalajara, Jalisco Mexico. From February 1987 to
July 1989 he was Engineering Manager for American Shizuki Corp., Mexico.
The Company's officers are elected by the Board of Directors and serve at
the discretion of the Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended December 31, 1995, Adtel Communications, Inc.
("ACI") and The Payphone Company, LTD. ("Payphone"), purchased and licensed
equipment from the Company totaling $218,000 and reduced amounts owed to the
Company by $757,000, which included approximately $13,000 in interest related to
license fees and leases. As of December 31, 1995, ACI and Payphone owed the
Company $272,000 for trade receivables. B. Michael Adler is a director of Adtel
Communications, Inc. and of the Company. Mr. Adler and other members of Mr.
Adler's family own the majority of ACI's stock.
Thomas J. Berthel, a director of the Company, is President of Berthel
Fisher Leasing, Inc., a wholly-owned subsidiary of Berthel Fisher & Company.
During 1995 Berthel Fisher Leasing, Inc. purchased equipment from the Company in
the amount of $431,000 and reduced amounts owed the Company by $504,000 to
$13,800. The equipment was purchased by Berthel Fisher Leasing, Inc. in
connection with the provision of equipment lease financing for the Company's
customers.
On February 15, 1994 the Company issued a $1 million, 10% convertible
subordinated note to T.J. Berthel Investments, L.P., an affiliate of Thomas J.
Berthel, a director of the Company. An amended and restated note was issued on
August 9, 1994. Interest is payable quarterly with the entire principal amount
maturing on March 31, 1999. The note may be converted into 160,000 shares of
common stock
-8-
<PAGE>
at any time. See "Proposal to Approve Stock Issuance". During 1995 the
Company paid $100,000 in interest on such note.
EXECUTIVE COMPENSATION
Organization and Compensation Committee Report on Executive Compensation
The Company's executive compensation plans have been designed to attract,
retain and reward high caliber executives who will formulate and execute the
business plans of the Company in a manner that will provide the stockholders of
the Company with a higher than average return on the Company's common stock
while ensuring that the Company's compensation levels are fair and appropriate
to both its executives and stockholders. With these goals in mind, the Company's
compensation plans and policies have been designed to have total compensation
linked significantly with the operating performance of the Company. Although the
Compensation Committee recognizes that the improvement of operating performance
of the Company and higher stock prices do not necessarily move in tandem over
the short term, the Compensation Committee believes that the two criteria will
correlate over the long term.
The Compensation Committee does not expect to pay above-average base
salaries to its executive officers, but does expect to utilize
performance-oriented and equity-based compensation to reward positive
performance and results. No bonuses were paid by the Company in 1995 to
executive officers.
For 1996 Mr. Hunt recommended and the Compensation Committee adopted a
discretionary bonus plan for corporate officers (othern than Mr. Hunt). Maximum
bonus levels under the plan range from 40% to 50% of base salary and are based
on the Company achieving $4.8 million of operating income (as defined in the
plan) in 1996. Seventy-five percent of the bonus amount is based on the Company
achieving increasing levels of profitability and twenty-five percent is based on
discretionary factors considered by the Compensation Committee (including Mr.
Hunt's recommendations with respect to such officers and managers), such as
management effectiveness as exhibited through relationships with customers,
vendors, employees and stockholders, new product development, special problem
handling, and planning and execution of operations. No bonus is payable under
the plan if operating income in 1996 is less than $4.0 million.
The Compensation Committee also supports the position that stock ownership
by the Company's executive officers, encouraged by equity-based compensation
plans, aligns the interests of the executive officers with the stockholders of
the Company. By using equity-based compensation over a period of time, the
executive officers of the Company should become larger holders of Company stock.
This is intended to strengthen their identification with the stockholders of the
Company and make increasing stockholder value an even more important focus for
the Company's management group. In addition, the Compensation Committee believes
that the use of equity-based compensation combined with a focus on the operating
performance of the Company will create a balance of these two long-term
objectives.
-9-
<PAGE>
CEO Compensation
William O. Hunt is the Chief Executive Officer, Chairman of the Board and
President of the Company.
Mr. Hunt's compensation package was the result of arm's length negotiations
conducted in 1992 between members of the Board of Directors and Mr. Hunt, and
was approved by the Compensation Committee and the Board of Directors. The
Compensation Committee and the Board were advised by an independent compensation
consulting firm.
In accordance with Mr. Hunt's stated goal of building stockholder value and
consistent with the Compensation Committee's compensation philosophy described
above, a compensation package involving a relatively low base salary,
participation in a performance-based bonus plan and a relatively large stock
option grant was agreed upon.
Mr. Hunt's base salary was set at $225,000 and it was agreed that he would
participate in a bonus plan such as the Company's discretionary plan described
above. Based upon the advice of its independent compensation consultant, the
Compensation Committee concluded that Mr. Hunt's proposed salary and bonus
arrangements were reasonable and were well within the range of similar
arrangements made by comparable companies. On January 1, 1994 Mr. Hunt
voluntarily reduced his base salary to $202,500.
As noted above, in 1992 Mr. Hunt was granted options to purchase 670,000
shares of the Company's common stock under the Company's 1991 Stock Option Plan.
The options were fully vested as of December 31, 1995. Based upon the advice of
its independent consultant, the Compensation Committee determined that, although
the amount of the stock option grant was above average principally in terms of
the percentage of shares involved, a number of comparable grants have been made
by other companies that have recruited senior executives in "turnaround" or
start-up situations. The Compensation Committee concluded that this stock option
grant was justified given Mr. Hunt's qualifications and the Company's need to
install a new chief executive who could build stockholder value.
Respectfully submitted,
Lewis E. Brazelton III, Chairman
Richard B. Curran
Richard E. Hanlon
-10-
<PAGE>
Summary Compensation Table
The following table sets forth information with respect to the
compensation to (i) the Company's chief executive officer at December 31, 1995
and (ii) the other five most highly compensated executive officers of the
Company during 1995, for services rendered during the fiscal years ended
December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Stock
Annual Compensation(1) Options All Other
Name Year Salary Bonus Other (shares) Compensation(2)
---- ---- ------ ----- ----- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
William O. Hunt 1995 $202,500 -- -- -- $981
Chairman of the 1994 $202,500 -- -- -- $970
Board of Directors, 1993 $224,080 -- -- -- --
Chief Executive
Officer, President
Michael H. Barnes 1995 $150,000 -- -- 25,000 $2,250
Senior Vice President 1994 $150,000 -- -- 25,000 $1,922
Corporate Staff, 1993 $63,731 -- -- 75,000 --
Chief Financial
Officer and Secretary
Ray S. Naeini(3) 1995 $180,000 -- -- -- $960
President 1994 $180,000 -- -- 25,000 $975
Global Telecom Group 1993 $196,684 -- -- 55,000 --
Dennis J. Stoutenburgh 1995 $150,000 -- -- 25,000 $1,748
President 1994 $150,000 -- -- 25,500 $1,748
Communications Group 1993 $120,355 -- -- 25,000 $2,249
John M. Carradine 1995 $108,339 -- -- 6,000 $1,217
Vice President of 1994 $107,800 -- -- 11,000 --
Finance and 1993 $107,800 -- -- 5,000 --
Controller
Thomas R. Kessler 1995 $102,288 -- -- 25,000 $1,441
Vice President of 1994 -- -- -- -- --
Operations 1993 -- -- -- -- --
- ---------------------
<FN>
(1) The compensation described in the table does not include the cost to
the Company of benefits furnished to certain officers, including
premiums for life and health insurance, and other personal benefits
provided to such individuals that are extended in connection with the
conduct of the Company's business. No executive officer names above
received other compensation in excess of the lesser of $50,000 or 10%
of such officer's salary and bonus compensation.
(2) All Other Compensation consists of matching payments by the Company
pursuant to its 401(k)Plan.
(3) On July 11, 1995, Mr. Naeini resigned from the Company.
</FN>
</TABLE>
-11-
<PAGE>
1995 Option Grants
The following table sets forth the number, percent of total options
granted to named employees, exercise price and duration of options granted to
the named executive officers, and the hypothetical gain that would result from
assumed annual rates of stock price appreciation over the term of the options.
See "Compensation Plans" below.
<TABLE>
<CAPTION>
Percent
of Total Potential Realizable
Options Value at Assumed
Granted to Annual Rates of
Employees Appreciation
Options in Fiscal Exercise Expiration For Option Term
Name Granted(1) 1995 Price Date 5% 10%
---- ---------- ---- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Michael H. Barnes 25,000 15.1% $4.13 04/03/05 $168,184 $267,804
Dennis J. Stoutenburgh 25,000 15.1% $4.13 04/03/05 $168,184 $267,804
John M. Carradine 6,000 3.6% $4.13 04/03/05 $40,365 $64,275
Thomas R. Kessler 25,000 15.1% $4.13 04/03/05 $168,184 $267,804
<FN>
(1) Options granted are exercisable generally for a period of ten years at
the price of the Company's common stock on the date of grant. The
options vest as follows: 50% on December 31 of the year of grant and
25% on December 31 of each following year.
</FN>
</TABLE>
1995 Year-end Value of Stock Options
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during 1995 and
unexercised options held as of December 31, 1995.
<TABLE>
<CAPTION>
Value of
Number Unexercised
Shares of Unexercised In-the-Money
Acquired Options at Options at
on Value December 31, 1995 December 31, 1995(1)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William O. Hunt -- -- 670,000 -- $ 83,750 $ --
Michael H. Barnes -- -- 106,250 18,750 $ -- $ --
Ray S. Naeini -- -- 75,000 -- $ -- $ --
Dennis J. Stoutenburgh -- -- 81,625 18,875 $ -- $ --
John M. Carradine -- -- 19,250 5,750 $ -- $ --
Thomas R. Kessler -- -- 12,500 12,500 $ -- $ --
- --------------------
-12-
<PAGE>
<FN>
(1) Market value of underlying securities at December 31, 1995 less the exercise
price.
</FN>
</TABLE>
Director Compensation
See "Election of Directors - Director Compensation" for a discussion of
director compensation.
Indemnification Arrangements
The Company's Bylaws provide for the indemnification of its executive
officers and directors, and the advancement to them of expenses in connection
with proceedings and claims, to the fullest extent permitted by the Delaware
General Corporation Law. The Company has also entered into indemnification
agreements with its executive officers and directors that contractually provide
for indemnification and expense advancement and include related provisions meant
to facilitate the indemnitees' receipt of such benefits.
Stock Option Plans
Prior to 1991 the stock option plans described below were administered
as separate plans. In 1991 the plans were restated in their entirety in a single
document and are known as the "Intellicall, Inc. 1991 Stock Option Plan". Each
separate plan was previously approved by the Company's stockholders.
Incentive Stock Option Plan. The Board of Directors of the Company
adopted the Incentive Stock Option Plan for key employees of the Company and its
subsidiaries. The Incentive Stock Option Plan has been approved by the
stockholders of the Company. Up to 1,525,000 shares of common stock are
authorized to be issued under the Incentive Stock Option Plan. The purpose of
the Incentive Stock Option Plan is to provide a means whereby the Company may,
through the grant of options, attract and retain persons of ability as
employees. The Incentive Stock Option Plan is also intended to motivate such
persons to exert their best efforts on behalf of the Company.
The Incentive Stock Option Plan is administered by the Compensation
Committee. Options for the purchase of common stock under the Incentive Stock
Option Plan may be granted to key employees selected from time to time by the
Compensation Committee. Only directors who are employees are eligible to receive
options under the Incentive Stock Option Plan. The Compensation Committee
determines the exercise price of such options at the time of grant. The exercise
price of any options granted pursuant to the Incentive Stock Option Plan will be
at least equal to the fair market value of the common stock on the date the
options are granted. Each option has a term of up to 10 years and is exercisable
only at such times as the Compensation Committee determines at the time of
grant. The option period automatically terminates three months following the
date the holder ceases to be an employee of the Company for any reason. No cash
consideration is paid by the employee upon the grant of an option to him. To
exercise the options, grantees must pay the exercise price in cash or common
stock, or any combination of cash or common stock.
Options granted under the Incentive Stock Option Plan may be "Incentive
Stock Options" within the meaning of Section 422 of the Internal Revenue Code of
1986 (the "Code"), non-qualified options (options
-13-
<PAGE>
which do not meet the requirements of Section 422 of the Code), or both. The
Incentive Stock Option Plan contains various provisions to ensure that Incentive
Stock Options comply with Section 422.
At February 29, 1996, the Company and its subsidiaries had
approximately 238 employees who were eligible to participate in the Incentive
Stock Option Plan. At present, such persons hold options granted under the
Incentive Stock Option Plan to purchase an aggregate of 1,176,880 shares of
common stock.
Non-Qualified Stock Option Plan. The Board of Directors of the Company
adopted the Non-Qualified Stock Option Plan for officers, directors and key
employees of the Company and its subsidiaries. The Non-Qualified Stock Option
Plan has been approved by the stockholders of the Company. Up to 600,000 shares
of common stock are authorized to be issued under the Non-Qualified Stock Option
Plan. The purpose of the Non-Qualified Stock Option Plan is to provide a means
whereby the Company may, through the grant of options, attract and retain
persons of ability as officers, directors and employees. The Non-Qualified Stock
Option Plan is also intended to motivate such persons to exert their best
efforts on behalf of the Company.
The Non-Qualified Stock Option Plan is administered by the Compensation
Committee of the Board of Directors. Options for the purchase of common stock
under the Non-Qualified Stock Option Plan may be granted to key individuals
selected from time to time by the Compensation Committee. No director is
eligible to receive options under the Non-Qualified Stock Option Plan while such
director is a member of the Compensation Committee. Furthermore, only directors
who are employees are eligible to receive options under the Non-Qualified Stock
Option Plan. The exercise price for any options granted pursuant to the
Non-Qualified Stock Option Plan is determined by the Compensation Committee on
the date the options are granted and must be at least equal to 85% of the fair
market value of the common stock on the date of grant. Each option has a term of
up to 10 years and is exercisable only at such times as the Compensation
Committee determines at the time of grant. The option period automatically
terminates three months following the date the holder ceases to be an employee
of the Company for any reason. No cash consideration is paid by the employee
upon the grant of an option to him. To exercise the options, grantees must pay
the exercise price in cash, common stock, a promissory note or any combination
of the foregoing.
At February 29, 1996 the Company and its subsidiaries had approximately
238 employees who were eligible to participate in the Non-Qualified Stock Option
Plan. At present, William O. Hunt holds options granted under the Non-Qualified
Stock Option Plan to purchase an aggregate of 430,000 shares of common stock,
and B. Michael Adler holds options granted under the Non-Qualified Stock Option
Plan to purchase an aggregate of 170,000 shares of common stock.
Directors' Stock Option Plan. The Board of Directors of the Company
adopted the Directors' Stock Option Plan for non-employee directors of the
Company. Up to 350,000 shares are authorized to be issued under the Director's
Stock Option Plan. The purpose of the Directors' Stock Option Plan is to provide
a means whereby the Company may, through the grant of options, attract, motivate
and retain qualified, non-employee directors.
The Directors' Stock Option Plan is administered by the Compensation
Committee of the Board of Directors. Options for the purchase of common stock
under the Directors' Stock Option Plan are
-14-
<PAGE>
automatically granted to each non-employee director. In December 1992, the Board
of Directors amended the Directors' Stock Option Plan to provide the automatic
grant as follows:
(i) each non-employee director as of February 1, 1993, who had not
previously received Director Options was granted an option to purchase 20,000
shares of common stock on February 1, 1993, and was automatically entitled to
receive a grant of an option to purchase 10,000 shares of common stock as of
February 1, 1994; and
(ii) each person who becomes a non-employee director subsequent to
February 1, 1993 will receive an option to purchase 20,000 shares of common
stock on the first business day of February after he becomes a director and an
option to purchase 10,000 shares of common stock on the first business day of
the next succeeding February.
The exercise price for all options granted pursuant to the Directors'
Stock Option Plan will be at least equal to the fair market value of the common
stock on the date the options are granted. Each option has a term of up to ten
years. The options granted under the first installment vest immediately upon
grant and the options granted under the second installment vest on December 31
of the calendar year in which they are granted. No cash consideration is paid by
the grantee upon the grant of an option to him. To exercise the options,
grantees must pay the exercise price in cash or common stock of the Company.
At December 31, 1995, the Company and its subsidiaries had four
directors who were eligible to participate in the Directors' Stock Option Plan.
At present, such persons hold options granted under the Directors' Stock Option
Plan to purchase an aggregate of 140,000 shares of common stock.
Employee Stock Purchase Plan
The Board of Directors of the Company adopted the 1995 Employee Stock
Purchase Plan for employees of the Company and its subsidiaries. See "Proposal
to Approve the Company's 1995 Employee Stock Purchase Plan" regarding a proposal
by the stockholders of the Company to approve the plan. Up to 300,000 shares of
common stock are authorized to be issued under the Employee Stock Purchase Plan.
The purpose of the Employee Stock Purchase Plan is to provide employees of the
Company and its designated subsidiaries with an opportunity to purchase common
stock of the Company at a discount through accumulated payroll deductions. The
Employee Stock Purchase Plan is also intended to motivate such persons to exert
their best efforts on behalf of the Company.
The Employee Stock Purchase Plan is administered by the Compensation
Committee of the Board of Directors. Participating employees are entitled to
enroll during one or both of two six month offering periods during each calendar
year. Eligible employees may elect to have payroll deductions made on each
payday during each offering period in an amount not exceeding ten percent (10%)
of the compensation which he or she receives on each such payday. At the end of
each offering period the accumulated payroll deductions are utilized to purchase
shares of common stock from the Company pursuant to the exercise of options
granted at the beginning of each offering period. The purchase price for the
shares purchased with the payroll deductions is equal to eighty-five percent
(85%) of the fair market value of a share of common stock on the first trading
day or the last trading day of each offering period, whichever is lower.
-15-
<PAGE>
At February 29, 1996, the Company and its subsidiaries had
approximately 237 employees who are eligible to participate in the Employee
Stock Purchase Plan, of which 17 employees are actually participating in the
Employee Stock Purchase Plan. See "Proposal to Adopt the Company's 1995 Employee
Purchase Plan."
Change in Control Arrangements. Pursuant to the Company's 1991 Stock
Option Plan, in the event of an impending merger, liquidation, sale of all or
substantially all of the Company's assets, or if at any time, two-thirds of the
Company's directors are not "Continuing Directors" as defined in the Plan, 100%
of the options granted pursuant to the Incentive, Non-Qualified and Directors'
Stock Option Plans automatically become immediately and fully exercisable.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, directors and 10% stockholders are
required by regulations promulgated by the Securities and Exchange Commission to
furnish the Company copies of all Section 16(a) reports they file.
Based solely on a review of the copies of Forms 3, 4 and 5, and all
amendments thereto, furnished to the Company, or written representations that no
Forms 5 were required, the Company believes all Section 16(a) filing
requirements applicable to its officers, directors and 10% beneficial owners
were complied with during 1995 except the following: a Form 3 Initial Report for
Richard E. Hanlon was filed delinquently and a Form 3 Initial Report for Thomas
J. Berthel was filed delinquently.
-16-
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the
cumulative total stockholder return on the Company's common stock during the
five years ended December 31, 1995, with the cumulative total return of (i)
Standard & Poors--500 Stock Index, (ii) the Standard & Poors High Tech Composite
Index and (iii) the Standard & Poors Telephone Manufacturers Index. The
comparison assumes $100 was invested on December 31, 1989 in the Company's
common stock and in each of the other indices and assumes reinvestment of
dividends. The Company paid no dividends during the five year period.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG INTELLICALL,
S&P 500 INDEX, S&P TELEPHONE MANUFACTURER'S INDEX, AND
S&P HIGH TECHNOLOGY COMPOSITE INDEX.
<CAPTION>
Telephone S&P
Measurement Period S&P Manufacturer's High Technology
(Fiscal Year Covered) Intellciall 500 Index Index Composite Index
- --------------------- ----------- --------- ----- ---------------
<S> <C> <C> <C> <C>
Measurement Pt-12/31/90 $100 $100 $100 $100
FYE 12/31/91 $ 54 $130 $108 $114
FYE 12/31/92 $ 55 $140 $118 $119
FYE 12/31/93 $ 79 $155 $136 $146
FYE 12/31/94 $ 39 $156 $131 $170
FYE 12/31/95 $ 39 $215 $197 $245
</TABLE>
-17-
<PAGE>
PROPOSAL TO ADOPT THE COMPANY'S 1995 EMPLOYEE STOCK PURCHASE PLAN
General
In July 1995 the Board of Directors of the Company adopted the 1995
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan"). The
description in this proxy statement of the Employee Stock Purchase Plan is
included solely as a summary, does not purport to be complete and is qualified
in its entirety by the Employee Stock Purchase Plan attached hereto as Exhibit
"A".
The Employee Stock Purchase Plan is an arrangement under which the
employees of the Company and its subsidiaries may purchase shares of common
stock of the Company at a discounted price through accumulated payroll
deductions. The purpose of the Employee Stock Purchase Plan is to provide
incentives to employees of the Company and its subsidiaries, to attract
individuals with a high degree of training, experience, expertise and ability,
to provide an opportunity to such individuals to acquire a proprietary interest
in the success of the Company, to increase their interest in the Company's
welfare, to align their interests with those of the Company stockholders and to
encourage them to remain with the Company.
Administration of the 1995 Employee Stock Purchase Plan.
The Employee Stock Purchase Plan is administered by the Compensation
Committee composed of non-employee directors of the Company who meet the
requirements of "disinterested person" in Section 16(b) of the Securities and
Exchange Act of 1934.
Eligibility
Any individual (i) who is an employee of the Company for purposes of
tax withholding under the Internal Revenue Code of 1986, as amended, (ii) whose
customary employment with the Company or any approved subsidiary is at least
twenty (20) hours per week and more than five (5) months in any calendar year
and (iii) who has been continuously employed by the Company for at least three
(3) months on any given Enrollment Date (as hereinafter defined) is eligible to
participate in the Employee Stock Purchase Plan. The number of individuals who
are eligible employees of the Company as of February 29, 1996 is approximately
237.
Notwithstanding the eligibility provisions described above, no employee
shall be granted an option to purchase common stock under the Employee Stock
Purchase Plan (i) if, immediately after the grant, such employee would own
capital stock of the Company and/or hold outstanding options to purchase such
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of the capital stock of the Company or (ii) which permits
his or her rights to purchase stock under all employee stock purchase plans of
the Company and its subsidiaries to accrue at rate which exceeds $25,000 worth
of stock (determined at the fair market value of the shares as described under
the Employee Stock Purchase Plan) for each calendar year in which such option is
outstanding at any time.
-18-
<PAGE>
Offering Periods
Eligible employees are entitled to participate in one or both of the
offering periods (herein so called) conducted under the Employee Stock Purchase
Plan during each calendar year. The Offering Periods commence on the first
trading day (defined under the Employee Stock Purchase Plan to mean a day on
which national stock exchanges and the NASDAQ system are open for trading) on or
after January 1 and July 1 of each year and ending on the last trading day in
the period ending the following June 30 or December 31, respectively. During
each Offering Period, eligible employees may direct and authorize the Company to
have payroll deductions made on each payday during the Offering Period in an
amount not exceeding ten percent (10%) of such employee's compensation which he
or she receives on each payday during the Offering Period. All payroll
deductions made for a participant are credited to his or her account under the
Employee Stock Purchase Plan. A participant may not make additional payments
into such account.
On the first day of each Offering Period each eligible employee
participating in such Offering Period is granted an option to purchase on the
last day of each Offering Period (at the applicable purchase price) up to a
number of shares of the Company's common stock determined by dividing such
employee's payroll deductions accumulated during the Offering Period by the
applicable purchase price; provided that, in no event shall an employee be
permitted to purchase during each Offering Period more than a number of shares
of common stock determined by dividing $12,500 by the fair market value of a
share of the Company's common stock on the first day of each Offering Period.
The Company does not receive any consideration for the grant of any options.
On the last day of each Offering Period, each participating employee
purchases shares of common stock from the Company at a purchase price per share
in amount equal to eighty-five percent (85%) of the fair market value of a share
of common stock on the first trading day of each Offering Period or on the last
trading day of each Offering Period, whichever is lower.
A participant in the Employee Stock Purchase Plan may discontinue his or
her participation in the plan or may decrease the rate of his or her payroll
deductions during the Offering Period by so notifying the Company. In addition
the Board of Directors, in its discretion, may limit the number of participation
rate changes during any Offering Period. A participant may not increase the rate
of his or her payroll deduction during an Offering Period.
Number of Shares under the Employee Stock Purchase Plan
The maximum number of shares of the Company's common stock which will be
issued pursuant to the Employee Stock Purchase Plan shall be 300,000 shares
subject to adjustment in the event of any change in the number of outstanding
shares of common stock of the Company or any change in the character or rights
of the common stock which occurs as a result of a stock split, reserve stock
split, stock dividend, combination or reclassification of the common stock. In
any such event, appropriate adjustments will be made in the maximum number of
shares which may be issued under the Employee Stock Purchase Plan.
-19-
<PAGE>
In addition, in the case of dissolution or liquidation of the Company,
the Offering Period then in progress will terminate immediately prior to the
consummation of such proposed action. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option outstanding under the Employee
Stock Purchase Plan shall be assumed or an equivalent shall be substituted by
such parent or subsidiary of such successor corporation unless the Board of
Directors determines to shorten the Offering Period then in progress by setting
a new exercise date.
Amendments
The Board of Directors may at any time and for any reason terminate or
amend the Employee Stock Purchase Plan provided no such termination can affect
options previously granted. However, an Offering Period may be terminated by the
Board of Directors on any exercise date if the Board of Directors determines
that termination of the Employee Stock Purchase Plan is in the best interest of
the Company and its shareholders. Furthermore, the Board of Directors shall be
entitled to change Offering Periods, limit their frequency and/or number of
changes in the amount withheld during an Offering Period, and establish other
requirements relating to the operations and workings of the Employee Stock
Purchase Plan without shareholder consent.
Actual Employee Participation in 1995
The following table sets forth certain information regarding
participation in the Employee Stock Purchase Plan by executive officers of the
Company and employees of the Company.
<TABLE>
<CAPTION>
Number of Shares
Name(1) Dollar Value Purchased
------- ------------ ----------------
<S> <C> <C>
Michael H. Barnes $2,999.15 1,045
John M. Carradine $ 815.08 284
Thomas R. Kessler $1,868.37 651
Executive Group $5,682.60 1,980
Non-Executive Director Group $3,619.07 1,261
Non-Executive Officer Employee Group $7,823.62 2,726
- ---------------
<FN>
(1) Due to his ownership position in the common stock of the Company, Mr.
Hunt is not eligible to participate in the Employee Stock Purchase
Plan. Additionally, directors are not eligible participants under the
Employee Stock Purchase Plan.
</FN>
</TABLE>
Federal Income Tax Consequences
Options granted under the Employee Stock Purchase Plan are intended to
constitute qualified stock options in an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986 (the "Code"). In general, no
taxable income will be realized at the time an option is granted pursuant to the
-20-
<PAGE>
Employee Stock Purchase Plan (i.e., the Enrollment Date) or at the time of
purchase of shares pursuant to the Employee Stock Purchase Plan. Upon
disposition of shares (other than a transfer by a decedent to his or her estate)
two years or more after the date of the grant of the option and at least one
year after acquiring such shares, a participant will recognize as ordinary
income (and not as gain upon the sale or exchange of a capital asset) an amount
equal to the lesser of:
(i) The excess of the fair market value of the shares on the date of
disposition over the amount paid for such shares, or
(ii) 15% of the fair market value of the shares at the time of grant
of the option.
In addition, a participant may incur a capital gain in an amount equal
to the difference between the sale price of the shares and the basis in the
shares (i.e., purchase price plus the amount, if any, taxed to the participant
as ordinary income described above).
Upon disposition of the shares (including any gifts of shares) within
two years after the date when a participant is granted an option or within one
year after the date a participant acquires such shares, the participant
generally will have ordinary income equal to the excess of the fair market value
of the shares on the date of purchase over the amount paid for the shares. In
addition, the participant may incur a capital gain or loss in an amount equal to
the difference between the amount realized upon the sale of the shares and basis
in the shares (i.e., purchase price plus the amount, if any, taxed to the
participant as ordinary income as described above).
In the event that the sale of shares acquired upon the exercise of an
option could subject a participant to liability under Section 16(b) of the
Securities Exchange Act of 1934, the time for determining the amount of ordinary
income, for reporting such income, and for commencing the holding period for
capital gains purposes is postponed until the restrictions of Section 16(b) no
longer apply. The amount of ordinary income reportable and the amount of the
Company's corresponding deduction will be measured by the excess of the fair
market value per share on such later date over the exercise price paid for the
shares. However, by making an appropriate election under Section 83(b) of the
Code within 30 days of the exercise date of an option, a participant may treat
the acquired shares for income tax purposes as if they were not restricted under
said Section 16(b).
Upon a disposition of any shares of common stock received pursuant to
the exercise of any option under the Employee Stock Purchase Plan or any event
resulting in taxable compensation to a participant, the Company will have the
right to require the participant to remit to the Company an amount sufficient to
satisfy all federal, state and local requirements as to income tax withholding
and employee contributions to employment taxes or, alternatively, in the
Compensation Committee's sole discretion, the Company may withhold all such
amounts from other cash compensation then being paid to the participant by the
Company.
-21-
<PAGE>
Vote Required and Recommendation for Approval of
the Proposed Adoption of the 1995 Employee Stock Purchase Plan
To be approved by the stockholders, the Employee Stock Purchase Plan
must receive the approval of stockholders holding at least a majority of the
outstanding shares of common stock. The enclosed form of proxy provides a means
for stockholders to vote for the Employee Stock Purchase Plan, to vote against
the Employee Stock Purchase Plan, or to abstain from voting with respect to the
Employee Stock Purchase Plan. Each properly executed proxy received in time for
the meeting will be voted as specified therein.
The board of directors recommends that you vote FOR the approval of the
Employee Stock Purchase Plan.
PROPOSAL TO APPROVE STOCK ISSUANCE
On February 15, 1994, the Company issued a $1,000,000, 10% Convertible
Subordinated Note (the "Original Note") to T.J. Berthel Investments, L.P.
Interest on the Original Note was payable quarterly with the entire principal
amount maturing on March 31, 1999. The Original Note was convertible into
160,000 shares of common stock at any time. In conjunction with the financing
obtained by the Company on August 9, 1994 from Nomura Holding America, Inc., the
Original Note was amended and restated pursuant to the terms of an Amended and
Restated 10% Convertible Subordinated Note due 1999 (the "Amended Note").
Interest on the Amended Note is payable quarterly with the entire principal
maturing on March 31, 1999. The Amended Note may be converted into 160,000
shares of common stock at any time subject to standard adjustments of the
conversion price for stock dividends, stock splits, reverse stock splits and
other similar corporate actions. A copy of the Amended Note is attached hereto
as Exhibit "B".
At the time of issuing the Original Note, T.J. Berthel Enterprises,
Inc., an affiliate of T.J. Berthel Investments, L.P. (the "Holder") beneficially
owned in excess of five percent (5%) of the outstanding common stock of the
Company. Furthermore, subsequent to issuance of the Original Note and the
Amended Note, Thomas J. Berthel was appointed a director of the Company on
October 16, 1995.
The guidelines of the New York Stock Exchange, Inc. (on whose exchange
the Company's common stock is traded) requires that the Company seek shareholder
approval prior to the listing of any shares of common stock on such exchange
which are issued or are to be issued to any party who is a greater than five
percent (5%) shareholder of the Company. For such reason and in order to obtain
the appropriate listing for the common stock underlying the conversion feature
of the Amended Note, the Company is seeking the approval of the stockholders
herein.
Adoption of such proposal will require the affirmative vote of the
holders of the majority of the outstanding shares of the common stock entitled
to vote thereon.
The Board of Directors recommends a vote FOR the approval of the
proposal to approve the issuance of common stock to T.J. Berthel Enterprises,
L.P. upon conversion of the Amended Note.
-22-
<PAGE>
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has selected the firm of Price
Waterhouse LLP as the independent accountants and auditors to examine the
financial statements and books and records of the Company for the year ending
December 31, 1996 and recommends to the shareholders that such selection be
ratified and approved at the meeting. The firm of Price Waterhouse LLP examined
the financial statements of the Company for the year ended December 31, 1995 and
is considered by the Board of Directors to be well qualified.
Representatives of Price Waterhouse LLP will be present at the meeting
with the opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the
selection of Price Waterhouse LLP as independent public accountants of the
Company.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for
inclusion in the Company's 1995 Proxy Statement, such proposals must be received
at the Company's offices at 2155 Chenault, Suite 410, Carrollton, Texas
75006-5023, Attention: Secretary, by December 15, 1996.
SOLICITATION OF PROXIES
The Company will pay the expense of this proxy solicitation. In
addition to solicitation by mail, some of the officers and regular employees of
the Company may solicit proxies personally or by telephone, if deemed necessary.
The Company will request brokers and other fiduciaries to forward proxy
soliciting material to the beneficial owners of shares which are held of record
by the brokers and fiduciaries, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith. The
Company has retained Chemical Bank to solicit proxies for the meeting from
brokers, banks and nominees. For such services the Company has agreed to pay
Chemical Shareholder Services a fee of $4,500.
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<PAGE>
OTHER BUSINESS
The Board of Directors is not aware of any matter, other than the
matters described above, to be presented for action at the meeting. However, if
other proper items of business should come before the meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
Michael H. Barnes
Secretary
Carrollton, Texas
April 25, 1996
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EXHIBIT
THE INDEBTEDNESS EVIDENCED BY THIS NOTE (AND ANY RENEWALS, REFINANCINGS,
MODIFICATIONS OR EXTENSIONS THEREOF), INCLUDING THE PRINCIPAL OF AND ANY
INTEREST THEREON AND ANY INTEREST PAYABLE ON SUCH INTEREST, AND ALL REQUIREMENTS
OF THE COMPANY CONTAINED IN THIS NOTE ARE SUBORDINATE AND JUNIOR IN RIGHT OF
PAYMENT, TO THE EXTENT AND IN THE MANNER HEREIN SET FORTH, TO THE PRIOR PAYMENT
IN FULL OF ALL SENIOR INDEBTEDNESS, AS HEREIN DEFINED.
INTELLICALL, INC.
AMENDED AND RESTATED
10% CONVERTIBLE SUBORDINATED NOTE DUE 1999
$1,000,000.00
Intellicall, Inc., a Delaware corporation (the "Company"), for value
received, hereby promises to pay to T.J. Berthel Investments, L.P., an Iowa
limited partnership, or registered assigned permitted hereby (the "Holder"), the
principal sum of One Million and 00/100 Dollars on March 31, 1999, and to pay
interest thereon from July 1, 1994, quarterly, on January 31, April 30, July 31
and October 31 in each year (each an "Interest Payment Date") commencing October
31, 1994, at the rate of 10% per annum, until the principal hereof is paid. The
interest so payable on any Interest Payment Date will be paid to the person in
whose name this Note is registered at the close of business on the date
immediately preceding each Interest Payment Date (whether or not a Business
Day).
All principal and accrued but unpaid interest shall be due and payable
in full on March 31, 1999 (the "Maturity Date").
RECITALS
WHEREAS, the Company is entering into that certain Note Purchase
Agreement dated as of August 11, 1994 among the Company and Nomura Holding
America Inc. (together with its successors and assigns, the "Purchaser"), as
heretofore or hereafter modified, amended or supplemented (the "Purchase
Agreement");
WHEREAS, the Purchase Agreement provides that the currently outstanding
10% Convertible Subordinated Note Due 1999 be amended and restated;
WHEREAS, the Company and Holder agree to amend and restate in its
entirety the 10% Convertible Subordinated Note Due 1999 as follows:
For purposes of this Note, the term "Business Day" shall mean any day
on which banking institutions in Dallas, Texas or New York City are open for
business.
<PAGE>
I.
CONVERSION
1. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions contained in this
Note, at the option of the Holder thereof, this Note may be converted at the
principal amount hereof into fully paid and nonassessable shares (calculated as
to such conversion to the nearest share) of common stock $.01 par value (the
"Common Stock") of the Company, at the Conversion Price, determined as
hereinafter provided, in effect on the Conversion Date. Such conversion right
shall expire at the close of business on March 31, 1999. In case this Note is
called for early prepayment, such conversion right shall expire at the close of
business on the third Business Day preceding the date set for prepayment, unless
the Company defaults in making the payment then due.
The per share price at which shares of Common Stock shall be delivered
upon conversion (herein called the "Conversion Price") shall initially equal
$6.25. The Conversion Price shall be adjusted in certain instances as provided
below.
2. Exercise of Conversion Privilege
In order to exercise the conversion privilege, the Holder of this Note
shall surrender the Note, duly endorsed or assigned to the Company or in blank,
at the Company's principal executive offices accompanied by written notice to
the Company that the Holder elects to convert this Note.
This Note shall be deemed to have been converted immediately prior to
the close of business on the date of surrender of this Note for conversion in
accordance with the foregoing provisions (the "Conversion Date"), and at such
time the rights of the Holder in this Note for repayment of the principal amount
of this obligation shall cease, and the Holder shall be entitled to receive the
Common Stock issuable upon conversion and shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, the Company shall issue and shall
deliver to the Holder a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in cash
in lieu of any fraction of a share.
3. Unpaid Interest.
Any interest due and owing on this Note through the Conversion Date
shall be paid on the next succeeding Interest Payment Date as though this Note
had not been converted. Interest shall cease to accrue on this Note as of the
Conversion Date.
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<PAGE>
4. Fraction of Shares.
No fractional shares of Common Stock shall be issued upon conversion of
this Note. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon conversion of this Note, the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
multiplied by the closing price per share of the Common Stock at the close of
business on the Conversion Date (or, if such day is not a trading day, on the
trading day immediately preceding such day).
5. Adjustment of Conversion Price.
(A) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend of distribution includes Common Stock or Common Stock
equivalents, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares including any Common Stock equivalents
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this subparagraph
I(5)(A), the number of shares of Common stock at any time outstanding shall not
include shares held in the treasury of the Company. The Company shall not pay
any dividend or make any distribution on shares of Common stock held in the
treasury of the Company.
(B) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(C) The Company may make such reductions in the Conversion Price, in
addition to those required by subparagraphs (A) and (B) of this Paragraph 5, as
it considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(D) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any
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<PAGE>
adjustments which by reason of this subparagraph (D) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(E) Notwithstanding any other provision of this Paragraph 5, no
adjustment to the Conversion Price shall reduce the Conversion Price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the Conversion Price to such par value. The Company hereby
covenants not to take any action to increase the par value per share of the
Common Stock.
6. Notice of Adjustments of Conversion Price.
The Company shall compute the adjusted Conversion Price in accordance
with Paragraph I(5) and shall prepare a certificate signed by the Chief
Financial Officer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be sent to the Holder.
7. Notice of Certain Corporate Action.
In case:
(A) the Company shall declare a dividend (or any other distribution)
on its Common Stock; or
(B) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock or any class or of any other rights (excluding employee stock
options); or
(C) any reclassification of the Common Stock of the Company (other than
a subdivision or combination of its outstanding shares of Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or the sale or transfer of all
or substantially all of the assets of the Company shall occur; or
(D) the voluntary or involuntary dissolution, liquidation or winding
up of the Company shall occur; or
(E) the Company or any subsidiary of the Company shall commence a
tender offer for all or a portion of the Company's outstanding shares of Common
Stock (or shall amend any such tender offer); then the Company shall cause to be
mailed to the Holder at its last known address, at least 10 days prior to the
applicable record, effective or expiration date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights or warrants, or, if a record is not
to be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities,
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cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, or (z) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto).
8. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of affecting the conversion of this Note, the full number of shares of
Common Stock then issuable upon the conversion of the entire principal amount of
this Note.
9. Taxes on Conversions.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of this Note.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the Holder of this Note, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid.
10. Legend.
Unless the shares of Common Stock to be issued on conversion of this
Note have been registered under the Securities Act of 1933, as amended, pursuant
to that certain Registration Rights Agreement dated as of February 14, 1994, or
otherwise, the certificates representing such shares shall bear a restrictive
legend regarding the transfer thereof in form and substance satisfactory to
counsel to the Company.
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<PAGE>
II.
PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS
In case the Company shall consolidate with or merge with or into any
other Person (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or shall convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall execute and deliver to the Holder an undertaking
providing that the Holder shall have the right thereafter, during the period
this Note shall be convertible as specified in Section I, to convert the
principal amount of this Note only into the kind and amount of securities, cash
and other property receivable, if any, upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company into
which this Note might have been converted immediately prior to such
consolidation, merger, conveyance, transfer or lease, assuming such holder of
Common Stock of the Company (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such conveyance, transfer or lease was made, as the case may be
("constituent Person"), or an Affiliate of a constituent Person and (ii) failed
to exercise its rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer or lease is not the same for each share of Common Stock of
the Company held immediately prior to such consolidation, merger, conveyance,
transfer or lease by other than a constituent Person or an Affiliate thereof and
in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section II the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, transfer or lease by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the non-electing shares). Such undertaking shall provide for adjustments
which, for events subsequent to the effective date of such undertaking, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Note. The above provisions of this Section II shall similarly apply to
successive consolidations, mergers, conveyances, transfers or leases.
For purposes of this Note, the term "Person" shall mean any individual,
partnership, corporation, association or other legal entity and the term
"Affiliate" shall mean a Person controlling, controlled by or under common
control with another Person.
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<PAGE>
III.
SUBORDINATION
1. Note Subordinated to Senior Indebtedness.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of this Note, 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
assignment or otherwise, absolute or contingent, joint or several, liquidated or
unliquidated, due or not due, contractual or tortious, secured or unsecured, in
respect of (A) the indebtedness, obligations and liabilities of the Company
pursuant to the Purchase Agreement (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
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
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<PAGE>
(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 Notes 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 Dis-
solution, 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 marshalling 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 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 preceding paragraph, including but not limited to a proceeding to
confirm a plan or 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 the 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
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<PAGE>
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 co-proponent of a plan or
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.
Should any payment of 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
endorsement or assignment of the Holder where necessary), for application to the
Senior Indebtedness held by such holders, and, until so delivered, the same 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
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<PAGE>
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 clauses
(H) and (I) as they relate to clauses (A) through (D) of the definition of
"Senior Indebtedness" contained in Article III, Section 1, 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
its successors and assigns, have expired, the restrictions set forth in Article
III of this Note shall not thereafter be applicable to the Holder of this Note.
IV.
PREPAYMENT
The Company shall not have the right to prepay any portion of this Note
in whole or in part during the period commencing on the date hereof and expiring
on January 31, 1997. Thereafter, and after the Senior Indebtedness has been paid
and satisfied in full, the Company shall have the right to prepay the unpaid
balance of, and accrued interest upon, this Note in whole at any time, or in
part from time to time. In order to accomplish such prepayment, the Company
shall provide a written notice to the Holder setting forth (i) the Company's
election of its right of prepayment hereunder and (ii) the date (which shall not
be less than forty (40) Business Days from the date the notice is sent)
established by the Company for prepayment. In the event the Company defaults in
making the prepayment, Holder's rights under this Note shall continue as though
the notice of prepayment had not been sent.
V.
EVENTS OF DEFAULT
Upon the happening of any of the following events ("Events of
Default"), Holder may, at its option, but only after the Senior Indebtedness has
been paid and satisfied in full, declare immediately due and payable the entire
principal balance of this Note together with all interest accrued and owing
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hereon, plus any other sums payable at the time of such declaration pursuant to
this Note. Events of default shall include the following:
(A) If the Company shall fail to pay any installment of principal
and/or interest under this Note within ten (10) days after the
same becomes due and payable in accordance with the terms
hereof;
(B) If the Company shall default in the observance or performance of
any of the terms or conditions, not involving the payment of
money, set forth herein and the default is not cured within
twenty (20) days after the Company receives written notice
thereof from Holder; provided that, if such default is not
susceptible of cure within such 20-day period and provided the
Company has commenced to cure such default within such 20-day
period and thereafter diligently prosecutes the same to
completion, the Company shall have an additional twenty-five
(25) days in which to complete such cure;
(C) The liquidation, termination or dissolution of the Company or
any other parties obligated hereunder; or
(D) The bankruptcy or insolvency of, the general assignment for the
benefit of creditors by, or the appointment of a receiver for
any property of the Company or any other parties obligated
hereunder.
The failure to exercise the foregoing option upon the happening of one
or more Events of Default shall not constitute a waiver of the right to exercise
the same or any other option at any subsequent time prior to the Event of
Default being cured or corrected, and no such failure shall nullify any prior
exercise of any such option without the express written consent of Holder.
At such time as the holders of Senior Indebtedness, and their
respective successors and assigns, have been repaid in full all the Senior
Indebtedness as described in clauses (A) through (D), inclusive, and clauses (H)
and (I) as they relate to clauses (A) through (D) of the definition of "Senior
Indebtedness" contained in Article III, Section 1, and all obligations by the
holders of Nomura Debt to purchase Series A Notes has terminated, and all
preference periods under any bankruptcy laws as they might apply to the holders
of Senior Indebtedness and their respective successors and assigns, have
expired, the limitation of the Holder to declare immediately due and payable the
principle amount and accrued interest on this Note upon the happening of an
Event of Default shall expire and be of no further force and effect.
VI.
WAIVER
Except for notices specifically provided for herein, the Company and
all sureties, endorsers, accommodation parties, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally: (i) waive demand, notice of demand, presentment for
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payment, notice of nonpayment, notice of default, protest, notice of protest,
notice of intent to accelerate, notice of acceleration, notice of dishonor and
all other notices, and further waive diligence in collecting this Note, in
taking action to collect this Note, in bringing suit to collect this Note, or in
enforcing this Note or any of the security for this Note; (ii) agree to the
release of any party primarily or secondarily liable for the payment of this
Note; (iii) agree that Holder shall not be required to first institute suit to
exhaust its remedies hereon against the Company or others liable or to become
liable for the payment of this Note or to enforce its rights against any
security for the payment of this Note, unless otherwise specifically provided in
the document creating such liability; and (iv) consent to any extension of time
for the payment of this Note, or any installment hereof, made by agreement by
payee with any person now or hereafter liable for the payment of this Note, even
if the Company is not a party to such agreement.
VII.
COMPLIANCE WITH LAW
All Agreements between the Company and Holder, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the Maturity Date or
otherwise, shall the interest contracted for, charged, received, paid or agreed
to be paid to Holder exceed the maximum amount permissible under any applicable
law. If, from any circumstance whatsoever, interest would otherwise be payable
to Holder in excess of the maximum amount permissible under applicable law; and
if from any circumstance Holder shall ever receive anything of value deemed
interest by applicable law in excess of the maximum amount permissible under
such law, an amount equal to the excessive interest shall be applied to the
reduction of the principal hereof and not to the payment of interest, or if such
excessive amount of interest exceeds the unpaid balance of principal hereof,
such excess shall be refunded to the Company. All interest paid or agreed to be
paid to Holder shall, to the extent permitted by any applicable law, be
amortized, prorated, allocated, and spread throughout the full period (including
any renewal or extension) until payment in full of the principal so that the
interest hereon for such full period shall not exceed the maximum amount
permissible under such law. Holder expressly disavows any intent to contract
for, charge or receive interest in an amount which exceeds the maximum amount
permissible under any applicable law. This Section VII shall control all
agreements between the Company and Holder.
VIII.
ATTORNEYS' FEES AND COSTS
If an Event of Default shall occur, and in the event that thereafter
this Note is placed in the hands of an attorney for collection, or in the event
this Note is collected in whole or in part through legal proceedings of any
nature, then and in any such case the Company promises to pay, and there shall
be added to the unpaid principal balance hereof, all reasonable costs of
collection, including but not limited to reasonable attorneys' fees incurred by
the Holder hereof, on account of such collection, whether or not suit is filed.
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<PAGE>
IX.
HEADINGS
The Section and paragraph headings used in this Note are for
convenience of reference only, and shall not affect the meaning or
interpretation of this Note.
X.
NOTICES AND DEMANDS
(A) Any notice or demand to be given or to be served upon the Company
in connection with this Note must be in writing and shall be given by certified
or registered mail, properly addressed, with postage repaid, addressed to the
Company as follows:
Intellicall, Inc.
2155 Chenault, Suite 410
Carrollton, TX 75006
Attention: Chief Financial Officer
or at such other address as the Company may designate from time to time by
written notice given to the Holder hereof. Any notice or demand will be deemed
given when notice or demand is deposited in an authorized depository under the
care and custody of the United States Postal Service.
(B) Any notice or demand to be given or to be served upon the Holder in
connection with this Note must be in writing and shall be given by certified or
registered mail, properly addressed, with postage prepaid, addressed to the
Holder as follows:
T.J. Berthel Investments, L.P.
100 Second Street, S.E.
P. O. Box 74250
Cedar Rapids, IA 52407
Attention: James D. Thorp
or at such other address as the Holder may designate from time to time by
written notice given to the Company hereof. Any notice or demand will be deemed
given when notice or demand is deposited in an authorized depository under the
care and custody of the United States Postal Service.
(C) In the event the Company has been notified it is in default, or
reasonably believes it is in default, with respect to any payment of principal,
premium, if any, or interest on any Senior Indebtedness or a default or event of
default exists and is continuing under the terms and provisions of the documents
relating to any of the Senior Indebtedness, then the Company agrees to provide
notice thereof to Holder immediately by facsimile with a copy thereof to follow
in accordance with the provisions of this Article X.
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<PAGE>
XI.
GOVERNING LAW
This Note shall be governed by and construed in accordance with the
laws of the State of New York (without regard to principles of conflicts of law)
and applicable federal law.
XII.
SUCCESSORS AND ASSIGNS
The term "Holder" shall include all of Holder's successors and assigns
to whom the benefits of this Note shall inure, provided that this Note shall not
be transferred, assigned, conveyed or negotiated to any person or entity without
the prior written consent of the Purchaser. The holders of the Senior
Indebtedness and their respective successors and assigns are third party
beneficiaries of this Note.
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<PAGE>
XIII.
AMENDMENTS
Until such time as the Senior Indebtedness has been repaid in full,
none of the terms and provisions of this Note may be modified or amended without
the prior written consent of the Majority Holders.
XIV.
ENFORCEABILITY AND SEVERABILITY
All terms, conditions and provisions of this Note are severable, and
this Note shall be interpreted and enforced as if all completely invalid or
unenforceable terms, conditions and/or provisions, as the case may be, were not
contained herein and partially valid and enforceable terms, conditions and/or
provisions shall be enforced to the extent valid and enforceable.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated this the 9th day of August, 1994.
INTELLICALL, INC.
03/09/94 By: /s/ Michael H. Barnes
Date
Its: Chief Financial Officer
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INTELLICALL, INC
1995 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1995 Employee Stock
Purchase Plan of Intellicall, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the common stock, $.01 par value, of the
Company.
(d) "Company" shall mean Intellicall, Inc., a Delaware corporation.
(e) "Compensation" shall mean all base straight time gross earnings,
including payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an employee of the Company
for purposes of tax withholding under the Code whose customary employment with
the Company or any Designated Subsidiary is at least twenty (20) hours per week
and more than five (5) months in any calendar year. For purposes of the Plan,
the employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the Company.
Where the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship will be deemed to have terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering Period.
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(i) "Exercise Date" shall mean the last day of each Offering Period.
(j) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:
(1) If the common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market System
of the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, its Fair Market Value shall be the closing sale price for the
Common Stock (or the mean of the closing bid and asked prices, if no sales were
reported), as quoted on such exchange (or the exchange with the greatest volume
of trading in Common Stock) or system on the date of such determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable or;
(2) If the Common Stock is quoted on the NASDAQ System (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable or;
(3) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.
(k) "Offering Period" shall mean a period of approximately six (6) months,
commencing on the first Trading Day on or after January 1 and terminating on the
last Trading Day in the period ending the following June 30, or commencing on
the first Trading Day on or after July 1 and terminating on the last Trading Day
in the period ending the following December 31 during which an option granted
pursuant to the Plan may be exercised.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock on the first Trading Day on or after the
Enrollment Date or on the last Trading Day ending on the following Exercise
Date, whichever is lower.
(n) "Reserves" shall mean the sum of the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(o) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
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(p) "Trading Day" shall mean a day on which national stock exchanges and
the NASDAQ System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who has been continuously
employed by the Company for at least three (3) consecutive months and who shall
be employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own capital stock of the
Company and/or hold outstanding options to purchase such stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of the capital stock of the Company or of any Subsidiary, or (ii) which permits
his or her rights to purchase stock under all employee stock purchase plans of
the Company and its Subsidiaries to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000.00) worth of stock (determined at the Fair Market
Value of the shares at the time such option is granted) for each calendar year
in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after January 1 and July 1 of each year, or on such other date as the Board
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by completing
a subscription agreement authorizing payroll deductions in the form of Exhibit
"A" to this Plan and filing it with the Company's payroll office at least five
(5) business days prior to the applicable Enrollment Date, unless a later time
for filing the subscription agreement is set by the Board for all eligible
Employees with respect to a given Offering Period.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
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<PAGE>
6. Payroll Deductions.
(a) At the time a participant files his or her subscription agreement, he
or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each pay day during the Offering Period, and the
aggregate of such payroll deductions during the Offering Period shall not exceed
ten percent (10%) of the participant's Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be credited to his
or her account under the Plan and will be withheld in whole percentages only. A
participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may decrease the rate of his or her payroll
deductions during the Offering Period by completing or filing with the Company a
new subscription agreement authorizing a change in payroll deduction rate. The
Board may, in its discretion, limit the number of participation rate changes
during any Offering Period. The change in rate shall be effective with the first
full payroll period following five (5) business days after the Company's receipt
of the new subscription agreement unless the Company elects to process a given
change in participation more quickly. A participant may not increase the rate of
his or her payroll deductions during the Offering Period. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll
deductions may be decreased to 0% at such time during any Offering Period which
is scheduled to end during the current calendar year (the "Current Offering
Period") that the aggregate of all payroll deductions which were previously used
to purchase stock under the Plan in a prior Offering Period which ended during
that calendar year plus all payroll deductions accumulated with respect to the
Current Offering Period equal $21,250. Payroll deductions shall recommence at
the rate provided in such participant's subscription agreement at the beginning
of the first Offering Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at the
time some or all of the Company's Common Stock issued under the Plan is disposed
of, the participant must make adequate provision for the Company's federal,
state, or other tax withholding obligations, if any, which arise upon the
exercise of the option or the disposition of the Common Stock. At any time, the
Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
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<PAGE>
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to section 10 hereof. The
option shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a Certificate representing the shares purchased
upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit "B" to this Plan. All of the participant's payroll
deductions credited to his or her account will be paid to such participant
promptly after receipt of notice of withdrawal, and such participant's option
for the Offering Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Offering Period.
If a participant withdraws from an Offering Period, payroll deductions will not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in Section
2(g) hereof), for any reason, including by virtue of his or her having failed to
remain an Employee of the Company for at least twenty (20) hours per week during
an Offering Period in which the Employee is a participant, he or she will be
deemed to have elected to withdraw from the Plan, and the payroll deductions
credited to such participant's account during the Offering Period but
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<PAGE>
not yet used to exercise the option will be returned to such participant
or, in the case of his or her death, to the person or persons entitled thereto
under Section 14 hereof, and such participant's option will be automatically
terminated.
(c) A participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 300,000 shares, subject to
adjustment upon changes in capitalization of the Company as provided in Section
18 hereof. If on a given Exercise Date the number of shares with respect to
which options are to be exercised exceeds the number of shares then available
under the Plan, the Board shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.
(b) A participant will have no interest or voting right in shares covered
by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Plan shall be
initially administered by the Organization and Compensation Committee of the
Board. The Board or its committee shall have full and exclusive discretionary
authority to construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the Plan. Every
finding, decision and determination made by the Board or its committee shall, to
the full extent permitted by law, be final and binding upon all parties. Members
of the Board who are eligible Employees are permitted to participate in the
Plan, provided that:
(1) Members of the Board who are eligible to participate in the Plan may
not vote on any matter affecting the administration of the Plan or the grant of
any option pursuant to the Plan.
(2) If a committee is established to administer the Plan, no member of the
Board who is eligible to participate in the Plan may be a member of the
committee.
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(b) Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection
(a) of this Section 13, in the event that Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be only administered by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such participant of such
shares and cash. In addition, a participant may file for written designation of
a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
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18. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves as well as the prices per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately prior
to the consummation of such proposed action, unless otherwise provided by the
Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period then in progress by setting a new
Exercise Date (the "New Exercise Date"). If the Board shortens the Offering
Period then in progress in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for his option has been changed to the New Exercise Date and that his
option will be exercised automatically on the New Exercise Date, unless prior to
such date he has withdrawn from the Offering Period as provided in Section 10
hereof. For purposes of this paragraph, an option granted under the Plan shall
be deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock held
on the effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation and the participant, provide for the consideration to be received
upon exercise of the option to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock and the sale of assets or
merger.
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19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 18 hereof, no such termination can affect
options previously granted, provided that an Offering Period may be terminated
by the Board of Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
shareholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Rule 16b-3 or under
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain shareholder approval in
such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or Directors or its approval by the shareholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 19 hereof.
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23. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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EXHIBIT "A"
INTELLICALL,INC
1995 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ______________________________________________ hereby elects to
participate in the Intellicall, Inc. 1995 Employee Stock Purchase Plan
(the "Employee Stock Purchase Plan") and subscribes to purchase shares
of the Company's Common Stock in accordance with this Subscription
Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ______% of my Compensation on each payday (not to exceed 10%) during
the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Intellicall, Inc. l995 Employee
Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms of
the Plan. I understand that the grant of the option by the Company
under this Subscription Agreement is subject to obtaining shareholder
approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (employee or employee and spouse only):
.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day
of the Offering Period during which I purchased such shares), I will
be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time
such shares were delivered to me over the price which I paid for
the shares. I hereby agree to notify the Company in writing within
30 days after the date of any disposition of my shares and I will
make adequate provision for Federal, state or other tax withholding
obligations, if any,
Page A-1
<PAGE>
which arise upon the disposition of the Common Stock. The Company may,
but will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of
Common Stock by me. If I dispose of such shares at any time after the
expiration of the 2-year holding period, I understand that I will be
treated for federal income tax purposes as having received income only
at the time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(1) the excess of the fair market value of the shares at the time of
such disposition over the purchase price which I paid for the shares,
or (2) 15% of the fair market value of the shares on the first day of
the Offering Period. The remainder of the gain, if any, recognized on
such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness or this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
Name: (Please print)
(First) (Middle) (Last)
Relationship
(Address)
Name: (Please print)
(First) (Middle) (Last)
Relationship
(Address)
Employee's Social Security No.:
Employee's Address:
Page A-2
<PAGE>
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN
EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED
BY ME.
Dated:
Signature of Employee
Signature of Spouse (If beneficiary is someone
other than spouse)
Page A-3
<PAGE>
EXHIBIT "B"
INTELLICALL, INC
1995 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Intellicall,
Inc. 1995 Employee Stock Purchase Plan which began on _______________________,
19_____ (the "Enrollment Date") hereby notifies the Company that he or she
hereby withdraws from the Offering Period. He or she hereby directs the Company
to pay to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
Signature
Date:
Page B-1
