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EXHIBIT 4.7
NOTE AND WARRANT PURCHASE,
PAYING AND CONVERSION/EXERCISE AGENCY AGREEMENT
entered into effective as of August 8, 1997
between
BITWISE DESIGNS, INC.
being a corporation existing under the laws of the State of Delaware whose head
office is situated at Xxxxxxxx 00, Xxxxxxxxx Xxxxxxxxxx Xxxx Duanesburg Rd..
Xxxxx 0, Xxxxxxxxxxx, X.X. 00000, X.X.X.
(hereinafter called the "Company") on the one part and
BANCA DEL GOTTARDO
being a corporation duly organized with limited liability and existing under the
laws of Switzerland, whose registered office is situated at Xxxxx Xxxxxxx
Xxxxxxxxx 0, 0000 Xxxxxx, Xxxxxxxxxxx,
on the other part
Some Definitions
The Company's 8% Convertible Notes of 1997 due August 1 1. 2002. are referred to
herein as the "Notes" and the Warrants of 1997 expiring August I 1. 2002 as the
"Warrants". Until the Notes have been printed in definitive form pursuant to
Article IX hereto{ the expression "Notes" herein shall include entitlements
under the Global Note, and the expressions "Noteholder(s)" and
"Couponholder(s)". mutatis mutandis. shall mean and include persons and entities
entitled to the benefits under the Global Note. Each Noteholder possesses a
co-ownership in the Global Note in relation to the principal amount of Notes of
which he is an owner. "Global Note" means a global note for the total principal
amount of USD 4'000'000.-- issued in bearer form and representing 800 single
Notes each in the amount of USD 5'()()().-- and representing the aforementioned
total principal amount.
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The Global Note will be destroyed by Banca del Gottardo when the Notes are
printed. Until the Warrants have been printed in definitive form pursuant to
Article IX hereto{ the expression "Warrants" herein shall include entitlements
under the Global Warrant. and the expressions "Warrantholder(s)" mutatis
mutandis shall mean and include persons and entities entitled to the benefits
under the Global Warrant. Each Warrantholder possesses a co-ownership in the
Global Warrant in relation to the principal number of Warrants he is an owner
of.
"Global Warrant" means a global warrant for the total number of 400'000 Warrants
issued in bearer form. The Global Warrant will be destroyed by Banca del
Gottardo when the Warrants are printed.
Global Note and Global Warrant are hereinafter sometimes collectively referred
to as the "Global Certificates".
I. SUBJECT
Subject to the terms and conditions hereof
- the Company, pursuant to authorization by its Board of Directors,
agrees to issue and sell to Banca del Gottardo USD 4'000'000.-- Notes
at a price of 100% of their principal amount, and 400000 Warrants in a
ratio of one Note and 500 Warrants and
- Banca del Gottardo agrees not later than August 11, 1997
(1) to purchase (i.e. underwriter) on a firm basis for USD
4'000'000.-- Notes at a price of 100% of their principal
amount and 400'000 Warrants, and
(2) to offer the Notes and Warrants in a placement exclusively to
its clients and other financial institutions at a price of
100% of their principal amount.
(i) Notes
with a total principal amount of USD 4'000'000.
(United States Dollars
four million)
maturing on August 11, 2002
bearing interest at the rate of 8% per annum, payable
semi-annually in arrear
each February 11 and
August 11, commencing
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February 11, 1998 until
maturity and
(ii) Warrants
in a total number of 400'000 (four hundred
thousand) expiring
on August 11, 2002
The aggregate amount for which Notes and Warrants are sold are
hereinafter referred to as the "Proceeds".
The net Proceeds of the Notes will be utilized by the Company\ as
follows:
A. 70% to be utilized for marketing and distribution
purposes of the Doc Star-project (to expand areas of
distribution and for general marketing efforts including
advertisement and the possible employment of additional
staff); and
B. the remaining proceeds are at the Company's free disposal
for the financing of acquisitions, working capital and
general corporate purposes.
Banca del Gottardo shall not have any responsibility for or be obliged
to concern itself with the application of the net Proceeds of the
Notes.
II. ANNEXES
The contents of each of the Annexes attached hereto. i.e.
Annex A: Terms of the Notes
Annex B: Form of Definitive Note (face)
Annex C: Form of Interest Coupons
Annex D: Form of Global Note
Annex E: Terms of the Warrants
Annex F: Form of Definite Warrant (face)
Annex G: Form of Global Warrant
Annex H: Conversion Agency Agreement
Annex I: Warrant Agency Agreement
Annex J: Certification of Non U.S. Beneficial
Ownership
Annex K: Form of Certificate of No Material
Adverse Change
Annex L: Specimen signature form
Annex M: Certificate by Banca del Gottardo
shall constitute an integral part of this Agreement.
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III. SALES RESTRICTIONS
a) The Notes and Warrants to be issued pursuant to this Agreement have not
been registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered, sold or
delivered, directly or indirectly. in the United States or to, or for
the account of any U.S. person except in transactions exempt from the
registration requirements of the Securities Act.
b) As to the Company, the Notes and Warrants are intended to be
obligations that are not required to be in registered form for purposes
of United States federal tax laws and the principal (to the extent
characterized as original issue discount) and interest payable on the
Notes are intended to be "portfolio interest" under Sections 871(h) and
881(c) of the United States Internal Revenue Code of 1986 as amended
(the "Code"). Accordingly, the Notes and the Warrants may not, as part
of any part of the initial distribution, be offered for sale or resale,
sold or delivered. directly or indirectly, to a person in the United
States or to a United States person. Banca del Gottardo (i) agrees and
represents that no Notes or Warrants will be offered, sold or delivered
to or on behalf of a person within the United States or a United States
person, (ii) represents and agrees that (a) it will not offer or sell,
and, during the period beginning on August 11. 1997 and ending on the
date forty (40) days after August II. 1997 (the "Restricted Period"),
it will not offer or sell, Notes or Warrants to a person who is within
the United States or to a United States person, (b) it has not
delivered and will not deliver within the United States definitive
Notes or coupons or definitive Warrants that are sold during the
Restricted Period, (c) it has and throughout the Restricted Period will
have in effect procedures reasonably designed to ensure that its
employees or agents who are directly engaged in selling Notes or
Warrants are aware that such Notes or Warrants may not be offered or
sold during the Restricted Period to a person who is within the United
States or to a United States person and (d) it has not entered and will
not enter into any contractual arrangement with respect to the
distribution and delivery of the Notes and the Warrants, except with
its affiliates or with the prior written consent of the Company. (iii)
represents and agrees with respect to each affiliate that acquires from
it Notes or Warrants for the purpose of offering or selling such Notes
or Warrants during the Restricted Period, repeating and confirming the
representations and agreements contained in clauses (ii) (a), (b), (c)
and (d) on each such affiliate's behalf and (iv) represents and agrees
that it will not sell or deliver Notes and Warrants to a holder which
is (a) immediately after the sale or delivery a "10-percent
shareholder" of the Company within the meaning of Section 871(h) (3) of
the Code, (b) a
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bank on an extension of credit made pursuant to a loan agreement
entered into in the ordinary course of its trade or business, (c) a
controlled foreign corporation which is related to the Company under
section 864 (d) (4) of the Code. or (d) within a foreign country which
the United States Secretary of the Treasury has determined under
section 7 I (h) (6) of the Code that the exchange of information with
the foreign country is inadequate to prevent evasion of United States
tax by United States persons. Banca del Gottardo will deliver to the
Company the certificate in the form attached hereto as Annex M within
ten business days of the commencement of the Restricted Period. For
purposes of this Agreement, whether an offer, sale or delivery is made
to a person within the United States or to a United States person will
be determined under the rules set out in the Code, and United States
Treasury Regulation Section 1.163- 5(c)(2)(i)(D). Banca del Gottardo
agrees that it will comply fully with the selling restrictions set out
in this Sub-Section (b) and in particular, Banca del Gottardo hereby
covenants and agrees to the effect set out in clauses (ii) and (iii) of
the second preceding sentence by
c) The Notes will be represented initially - a temporary Global
Convertible Note (the "Global Note"). without interest coupons, and the
Warrants will be represented initially by a temporary Global
Certificate (the "Global Warrant"). the Global Note and Global Warrant
to be deposited by' the Company with Banca del Gottardo, on August 11,
1997. The Global Note may be exchanged. as a whole or in part, for
appropriate definitive Notes, in bearer form in the denominations of
USD 5'000.-- with interest coupons (the "coupons") attached. and the
Global Warrant may be exchanged, as a whole or in part. for appropriate
definitive Warrants. in bearer form not earlier than 40 day's after
August 11, 1997, before which time no Notes represented by the Global
Note or Warrants represented by the Global Warrant or interest therein
may be offered, sold or transferred into the United States or to a U.S.
person. Such exchange shall be made upon certification, in the form
attached hereto as Annex J- 1. that the beneficial owners of the Notes
or Warrants either (i) are not United States persons or U.S. persons or
(ii) are financial institutions (within the meaning of United States
Treasury' Regulation Section 1.165-1 2(c)( I )(v)) located outside the
United States that are not United States persons and have purchased
such Notes or Warrants for resale during the Restricted Period and
certify they have not acquired the Notes or the Warrants for purposes
of resale directly or indirectly to a United States person or to a
person within the United States. Any certificates provided by' a
clearing organization must be based on statements provided to it by its
members. A beneficial owner of Notes must exchange its share of the
Global Note for definitive Notes before such Notes or
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interests therein may be transferred or as regards the Notes before
interest payments or other payments will be made and a beneficial owner
of Warrants must exchange its position of the Global Warrant for
definitive Warrants before such Warrants will be exercised, Banca del
Gottardo agrees (i) to furnish to the Company a properly completed
certificate with respect to each Note and Warrant, in the form attached
hereto as Annex J-1 and J-2 (and, in the case of clearing
organizations, required statements of members of the clearing
organization), on the earlier of the date of the first actual payment
of interest on the Note or the date of deliver, by the Company of the
Note or Warrant in definitive form, and (ii) to issue definitive Notes
and Warrants within a reasonable time after the end of the Restricted
Period (for this purpose a temporary global security is not a security
in definitive form).
d) In this Agreement, references to "dollars" and "USD" are to United
States dollars, the term "United States" means the United States of
America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction, and the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate the income of which
is subject to United States federal income taxation regardless of its
source or a trust if a court within the United States is able to
exercise primary jurisdiction over the administration of the trust and
one or more United States fiduciaries has the authority to control all
substantial decisions of the trust, "U.S. person" shall have the
meaning set forth in Sections 230.901 through 904 of Title 17 of the
United States Code of Federal Regulations ("Regulation S").
e) The following legends will appear on the Global Note and all Notes and
coupons issued pursuant to the Offer: (i) "Any United States person who
holds this obligation will be subject to limitations under the United
States income tax laws, including the limitations provided in sections
165(I) and 1287(a) of the Internal Revenue Code", and (ii) "This Note
has not been and will not be registered under the United Stated
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered, sold or delivered, directly or indirectly, in the United
States or to, or for the benefit of, any U.S. person (as such terms are
defined in Regulation S under the Securities Act) unless this Note is
registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available." The
sections referred to in the legend provide that, with certain
exceptions, a United States person will not be permitted to deduct any
loss, and will not be eligible for capital gain
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treatment with respect to any gain, realized on a sale, exchange or
redemption of such Notes or coupons.
f) The following legends will appear on the Global Warrant and all
Warrants issued pursuant to the Offer: "This Warrant has not been and
will not be registered under the United Stated Securities Act of 1933,
as amended (the "Securities Act"). and may not be offered, sold or
delivered, directly or indirectly, in the United States or to, or for
the benefit of, any U.S. person (as such terms are defined in
Regulation S under the Securities Act) unless this Warrant is
registered under the Securities Act or an exemption from the
registration requirements of the Securities Act is available."
g) The Company represents, warrants and covenants that the Notes and the
Warrants have not been and shall not be offered or sold except in
accordance with Rule 903 promulgated under the Securities Act or in a
transaction exempt from the registration requirements of the Securities
Act. Each of the Company and Banca del Gottardo represents, warrants
and covenants that (i) none of it, its affiliates or any person acting
on its behalf has engaged or will engage in any directed selling
efforts (as defined in Rule 902 promulgated under the Securities Act)
in the United States and it has complied and will comply with the
offering restrictions of Regulation S under the Securities Act in
connection with the offer of the Notes and the Warrants, (ii) none of
it, its affiliates or any person acting on its behalf has made or will
make an offer of the Notes in circumstances that would require the
registration of the Notes or Warrants under the Securities Act and
(iii) requests to purchase Notes and/or Warrants shall be accepted only
from persons who are not within the United States.
h) Banca del Gottardo has been advised by the Company and acknowledges and
confirms that it is aware (a) that a violation or breach of any of the
terms and conditions of Article III of this Agreement could directly
cause the Company to become subject to damages and liabilities
(including, but not limited to, excise taxes, a loss of the interest
deduction and assumption of withholding taxes) under various United
States securities and tax laws, and (b) that, as a consequence, Banca
del Gottardo could be held liable for such damages and liabilities, in
the event Banca del Gottardo violated or breached such terms and
conditions.
IV. COMMISSION AND EXPENSES
a) The Company will pay on August 11, 0000 Xxxxxx time (the
"Closing Date") to Banca del Gottardo
(1) a managing and underwriting commission of 7% calculated
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on the principal amount of the Notes
(2) USD 50'000.-- for out-of-pocket expenses incurred by
Banca del Gottardo, which shall include all its legal
fees and expenses.
The payment by the Company of (1) and (2) above will be made by
deduction from the payment by Banca del Gottardo to the Company of the
Proceeds, resulting in the Net Proceeds as per Article VI.
b) The Company shall further bear when ascertainable and due
- all present or future taxes, duties or other charges levied by
or within the United States of America in connection with the
execution and deliver, of this Agreement, the Global Note and
the Global Warrant (excluding tax on interest or principal on
the Notes which is addressed in Annex A); and
- the commissions and expenses for the servicing and the
conversion of the Notes as per Article X and the exercise of
the Warrants as set forth in the Warrant Agency Agreement.
c) The Company will reimburse Banca del Gottardo on first demand for all
reasonable bank charges, legal fees and other reasonable costs and
expenses incurred or to be incurred by Banca del Gottardo in case of or
in connection with reorganization, merger, restructuring or default,
actual or threatened of the Company as well as in connection with the
convening of a Noteholders' meeting and the preservation and
enforcement of any of the rights under this Agreement, the Global
Warrant or the Warrants, the Global Note or the Notes.
d) Banca del Gottardo shall bear
- all costs and expenses in connection with the initial offering
and placement of the Notes and the Warrants incurred by it.
Banca del Gottardo shall further bear the cost for the
printing and deliver to the holders of the definitive Notes or
of the definitive Warrants incurred by Banca del Gottardo on
behalf of the Company.
- all costs incurred by it in connection with the offering,
including the printing in Switzerland of the Information
Memorandum relating to the Notes and the Warrants.
V. WARRANTIES
A) The Company warrants to and for the benefit of Banca del
Gottardo that:
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1. Status: it is a corporation duly incorporated and
existing in good standing under the laws of the
State of Delaware capable of suing and being sued
and has the power and authority to own its assets
and to conduct the business which it presently
conducts.
2. Powers: it has the power to enter into, exercise
its rights and perform and comply with its
obligations under this Agreement;
3. Authorization and Consents: except as to the
registration requirements provided for herein all
actions conditions and things required by the laws
of the State of Delaware and the United States of
America have been taken, fulfilled and done
(including the obtaining of any necessary Consents)
in order
a) to enable it lawfully to enter into exercise its
rights and perform and comply with its obligations
under this Agreement; and
b) to ensure that those obligations are legally
binding and enforceable in accordance with their
terms subject to general equity principles, to
applicable bankruptcy, insolvency, conservatorship,
reorganization and other similar debtor relief
laws and to other laws establishing liens and
priorities or otherwise relating to or affecting
creditors-rights
4. Non-Violation of Laws, etc: its entry into, and exercise
of its rights and/or performance of or compliance with
its obligations under this Agreement, the terms of the
Global Note and the Notes and the terms of the Global
Warrant and the Warrants do not and will not violate in
any material way
a) any law to which it is subject or
b) its Certificate of Incorporation or
c) except for matters for which the Company has
received a waiver, any agreement to which it is a
party or which is binding on it or its assets, and
does not and will not result in the existence of,
or obligate it to increase, any securities interest
in those assets, except to the extent that such
violations in the aggregate would not have a
material adverse effect on the financial
conditions of the Company.
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5. Obligations Binding: its obligations under this Agreement, the
Global Note and the Notes, the Global Warrant and the Warrants
when duly executed are valid, binding and enforceable in
accordance with their terms subject to general equity
principles, to applicable bankruptcy, insolvency,
conservatorship, reorganization and other similar debtor
relief laws, and to other laws establishing liens and
priorities or otherwise relating to or affecting creditors'
rights.
6. Information Memorandum: the information pertaining to the
Company and its subsidiaries which is contained in the
Information Memorandum (defined in Article VIII) is accurate
in all material respects and there are no other facts the
omission of which makes any statement therein materially
misleading.
7. Accounts: the audited and unaudited consolidated financial
statements included as contained in the Information Memorandum
present fairly the results and financial condition of the
Company as a whole for the periods and as of the dates
thereof, and are in accordance with generally accepted
accounting principles in the United States of America;
8. No Material Adverse Change: (i) save as disclosed in the
Information Memorandum and the Company's filings with the
Securities and Exchange Commission in the U.S. and (ii)
provided that the Company has agreed to change its auditors
from KPMG Peat Marwick to Coopers & Xxxxxxx, there has been no
material adverse change in the consolidated financial
condition of the Company' since March 31, 1997;
9. Litigation: except as disclosed in the Information Memorandum,
no litigation, arbitration or administrative proceedings or
judgment or award is current or, so far as the Company is
aware, threatened or pending
a) to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or
compliance with its obligations under this Agreement;
or
b) which either individually or collectively are
material in the context of the issue and sale of the
Notes or the Warrants or the making and performance
of this Agreement;
10. No Breach or Default: neither failure by the Company to comply
with Article III nor any event described in Sections 8.9 or 10
of the Terms of the Notes has
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occurred and is continuing. The Company is not in breach or in
default under any agreement to an extent or in a manner which
has had or could have a material adverse effect on the
financial condition of the Company and its consolidated
affiliates taken as a whole.
(B) Since the commitment of Banca del Gottardo to purchase the
Notes and the Warrants is made on the basis of the aforesaid
representations and warranties, the Company hereby undertakes
with Banca del Gottardo that it will hold Banca del Gottardo
harmless against all losses, liabilities, costs, charges and
expenses which it may incur as a noteholder as a result of or
in relation to any material misrepresentation or any material
breach of said representations and warranties by the Company,
and as long as any of the Notes and the Warrants are
outstanding Banca del Gottardo shall be given prompt notice by
the Company of any claim, action or proceeding which might
give rise to an obligation under this clause (B) of Article V.
This indemnification by the Company shall be in addition to
any other remedy available to Banca del Gottardo under
applicable law.
VI. PAYMENT TO THE COMPANY
On the Closing Date, Banca del Gottardo will pay to the Company the net
proceeds (the "Net Proceeds") of the offering - after compensation with
the commissions and expenses mentioned in Article IV against the Global
Note and the Global Warrant being delivered to Banca del Gottardo
pursuant to Article VII.
Such net proceeds will be placed by Banca del Gottardo in US Dollars to
the credit of the Company in a US Dollar denominated account designated
by the Company. Such net proceeds will be at the free disposal of the
Company subject to any Swiss National Bank regulations or other
regulations that may be in force on the Closing Date.
VII. CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO
Banca del Gottardo shall have received from the Company at the latest
on August 8, 1997 the following documents:
(1) a copy of the Certificate of Incorporation. together with all
amendments thereto, of the by the Company certified secretary
or the Assistant Secretary of the Company and a copy of a
Certificate of the Secretary of State of the State of Delaware
as to the good standing of the Company, each dated as of a
recent date;
(2) a certified copy of a resolution or resolutions duly adopted
by the Board of Directors of the Company signed
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by a duly authorized officer of the Company, conferring the
necessary authority upon the person(s) signing this Agreement,
the Information Memorandum, the Global Note. the Notes, the
Global Warrant, the Warrants and any related documents; and a
certificate of the Secretary, or Assistant Secretary of the
Company as to the incumbency and signatures of the officer(s)
of the Company signing the documents provided for in this
clause (2) on behalf of the Company and the approval of this
Agreement and the Information Memorandum:
(3) Global Note (in the form of Annex D, without interest coupons
and without reproduction of the Terms of the Notes) and the
Global Warrant (in the form of Annex G) both duly issued and
signed by an authorized officer of the Company to be held in
escrow by Banca del Gottardo pending payment of the Net
Proceeds pursuant to Article VI;
(4) an executed copy of the Conversion Agency Agreement as set
forth in Annex H hereto;
(5) an executed copy of the Warrant Agency Agreement as set forth
in Annex I hereto;
(6) specimen signatures for the printing of the Notes;
(7) Certificate of No Material Adverse Change dated as of the
Closing Date and signed by an authorized officer of the
Company, substantially in the form of Annex K hereto;
(8) a legal opinion of Xxxxxxxxx & XxXxxxx, LLP, external U.S.
counsel to the Company on the laws of the United States of
America, dated as of the Closing Date;
(9) an opinion of Guy P Novo, Tax Counsel to the Company, with
respect to the status of the Notes in respect of United States
taxes, dated as of the Closing Date;
(10) a certificate of two officers of the Company approving
the terms of the Notes and of the Warrants and the issue
and sale thereof by the Company;
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(11) 2 copies of the Information Memorandum duly signed by an
authorized officer of the Company; and
Each of documents 5,6,7,8,9 and II shall be substantially as agreed by
the Company and Banca del Gottardo prior to the Closing Date.
VIII. INFORMATION MEMORANDUM
The Company will supply Banca del Gottardo on behalf of the holders of
the Notes in due time with information and documentation for the
preparation by Banca del Gottardo of the Information Memorandum (the
"Information Memorandum") relating to the Issue, in compliance with
Swiss law.
The Information Memorandum shall be reviewed by the Company and Banca
del Gottardo.
IX. PRINTING OF THE NOTES AND WARRANTS
Banca del Gottardo shall provide for the printing of all, but not some
only, of the Notes or of the Warrants, at its cost on behalf of the
Company. A proof of the Notes and of the Warrants shall be approved by
the Company, unless the Company is then in default, prior to the
printing thereof.
(1) The Notes shall
- be in the form of Annex B.
- have the Terms of the Notes (as per Annex A)
reproduced in English on the reverse side.
- be dated the Closing Date, and
- bear in facsimile the signature(s) of one or more
duly authorized officer(s) of the Company
- have Coupons attached, whereas
(2) the Coupons shall
- be in the form of Annex C, and
(3) The Warrants shall
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- be in the form of Annex F
- have the Terms of the Warrants (as per Annex E)
reproduced in English on the reverse side
- to be dated the Closing Date, and
- bear in facsimile the signature(s) of one or more
duly authorized officer(s) of the Company.
(4) The Notes with Coupons attached shall be exchanged against the
Global Note delivered to Banca del Gottardo pursuant to
Article VII of this Agreement.
The Global Certificates so exchanged shall thereafter be cancelled and
returned to the Company.
The Company hereby irrevocably authorizes Banca del Gottardo to
reproduce on the Notes, the coupons and the Warrants the signature of
the President of the Company set forth in the specimen signature form
of Annex L attached hereto with the same binding effect upon the
Company as if the Notes and the coupons or the Warrants had been issued
and signed by the Company on the Closing Date. Notes and/or Coupons or
Warrants which are mutilated, lost or destroyed may be replaced by
Banca del Gottardo in accordance with the respective provisions of the
Terms of the Notes and the Terms of the Warrants respectively. The
Company may at any time send a representative to count the securities
before they are delivered to investors.
X. SERVICING OF THE NOTES
(1) Transfer of funds
The Company will effect transfer of the funds in freely
disposable United States Dollars required to make any payment
of principal or interest on the Notes including the
commissions referred to in paragraph (2) hereafter, to Banca
del Gottardo, Lugano, as Paying Agent for value the respective
due date provided that, if such due date does not fall on a
Business Day the Company shall be obliged to effect transfer
of such payments for value the Business day immediately
preceding such due date. Any transfer risk shall be borne by
the Company.
"Business Day" means a day on which commercial banks are open
for domestic business and foreign exchange (including dealings
in US Dollars) in Lugano and New York. Banca del Gottardo will
supply the Company, by facsimile or otherwise in writing
received by the Company not less than five Business Days prior
to each due date
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for any payment under the Notes with any necessary,
information including reference numbers and the name of a
contact person for the receipt of funds. Further information
regarding the transfer may be obtained by Banca del Gottardo
from the Company at the address set out in Article XIV below.
Banca del Gottardo shall credit the funds received to separate
non-interest bearing accounts with Banca del Gottardo for each
Coupon due date and/or redemption date. The receipt by Banca
del Gottardo of the due and punctual payment of the funds in
Lugano shall release the Company of its obligations under the
Global Note or under the Notes for the interest and principal
to the extent of such payment.
Any funds held by Banca del Gottardo which will not be used as
a consequence of Coupons and Notes not having been collected
within the relevant period described by the Statute of
Limitations. shall be held by Banca del Gottardo at the
disposal of the Company. Banca del Gottardo shall promptly
after the expiry of the relevant period inform the Company
about the respective amount.
(2) Commissions and Expenses
The Company will pay to Banca del Gottardo for the
servicing of the Notes a commission of
- 0.25% on the face amount of Coupons to be paid and
- 0.125% on the principal amount of Notes redeemed.
(3) Modalities
Except as provided in paragraph (I) of Article XI or in
Section 5 of the Terms of the Notes, any transfer by the
Company as per (1) and (2) above, shall be made in US Dollars
freely disposable, without any restrictions, and whatever the
circumstances may be, irrespective of the nationality or
domicile of the holder of Notes and/or Coupons, and without
requiring any affidavit. or the fulfilment of any other
formality.
(4) Paying Agency
The Company hereby appoints Banca del Gottardo as sole Paying
Agent (the "Paying Agent") and Banca del Gottardo agrees to
pay to the Noteholders all amounts to become due under the
Notes. The Company undertakes in connection with the Issue,
not to appoint any institutions as paying agent without the
consent of Banca del Gottardo. which
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consent shall not be unreasonably withheld and not to pay to
other banks any commission or remuneration for the payment of
interest or principal on the Notes.
XI. CANCELLATION OF NOTES AND COUPONS OR WARRANTS
The Company requests and authorizes Banca del Gottardo and Banca del
Gottardo undertakes to cancel and destroy all Coupons paid and Notes
redeemed, converted or replaced and Warrants exercised or replaced,
after the period prescribed by law, and to certify to the Company in
writing the serial numbers of Notes or Warrants, as the case may be,
destroyed, the dates when such destruction took place and the names of
the persons witnessing such destruction. Banca del Gottardo reserves
the right to record cashed Coupons as well as redeemed, repaid,
converted or replaced Notes and exercised or replaced Warrants on video
tape or other data cameras and to store them in this way instead of
keeping them physically during the period prescribed by law and to
destroy them subsequently. This reproduction of Coupons and/or Notes or
Warrants will remain in safekeeping at Banca del Gottardo during the
statutory limitation.
XII. COVENANTS
As long as any of the Notes or Warrants remain outstanding the
Company undertakes
(1) To send to Banca del Gottardo
a) Annual Reports on Form 10-K as filed with the United
States Securities and Exchange Commission (the
"SEC"), which report shall include or be accompanied
by a copy of the report of the Company's independent
auditor, and
b) such regular and periodic reports on Form l0-Q and
Form 8-K (deemed material) as the Company files with
the SEC.
Banca del Gottardo is authorized to hold these documents at the
disposal of the Noteholders and/or holders of Coupons and/or
Warrantholders for inspection.
(2) To provide Banca del Gottardo forthwith upon becoming aware
thereof with
- any change of its Certificate of Incorporation
By-laws (if any) and without waiting for Banca del
Gottardo to take any of the actions mentioned in
Section 8, 9 or 10 of the Terms of the Notes with
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- a notice in writing of any event provided for in
Section 8, 9 or 10 of the Terms of the Notes.
(3) To hold meetings of the Board of Directors on a at least
quarterly basis, i.e. at least one meeting each quarter.
(4) To provide Banca del Gottardo with quarterly financial
statements of the Company by no later than the 45th day of the
month following the quarter covered by such statements. Such
statements shall provide Banca del Gottardo with a summary of
all of the Company's operation, in addition to a brief summary
of how the Net Proceeds of this issue have been used by
Company.
(5) To appoint two members, as reasonably acceptable to the
Company, of its Board of Directors upon request of Banca del
Gottardo as long as more than 25% of the Notes initially
issued are outstanding, unless Banca del Gottardo has
exercised any similar right under any other agreement, and
thereafter to nominate such appointee for election by the
Company's stockholders and use its best efforts to assure
their election until any Note or Notes shall be redeemed by
the Company.
(6) (a) So long as any Notes are outstanding, to keep
available authorized shares of Common Stock
sufficient to permit all Notes or Warrants
outstanding and unconverted or unexercised to be
converted or exercised in accordance with the
Provisions (Exhibit I to Annex H of the Agreement)
and the terms of the Warrants respectively.
(b) to assure that all shares of Common Stock delivered
upon conversion of Notes or exercise of Warrants will
be validly issued, fully-paid and non-assessable.
XIII. RIGHT OF TERMINATION
Notwithstanding anything contained in this Agreement. Banca del
Gottardo may by notice to the Company terminate this Agreement at any
time before the time on the Closing Date when payment would otherwise
be due under this Agreement to the Company in respect of the Notes and
Warrants if:
(1) in the reasonable opinion of Banca del Gottardo,
circumstances shall be such as:
a) to prevent or to a material extent restrict payment
for the Notes and the Warrants in the manner
contemplated in this Agreement; or
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b) to a material extent prevent or restrict settlement
of transactions in the Notes or Warrants in the
market or otherwise; or
(2) in the reasonable opinion of Banca del Gottardo, there
shall have been:
a) any change in national or international political,
legal, tax or regulatory conditions; or
b) any calamity or emergency which has in the view of
Banca del Gottardo caused a substantial deterioration
in the price and/or value of the Notes or the
Warrants. Any such termination of this Agreement
shall be without liability on the part of Banca del
Gottardo or on the part of the Company.
Upon any such termination of this Agreement pursuant to Article XIII
(i), the parties hereto shall (except for the liability of the Company
in relation to expenses as provided in Article IV (a) (2) hereof and
except for any liability arising before or in relation to such
termination) be released and discharged from their respective
obligations under this Agreement.
XIV. COMMUNICATIONS
All communications among Banca del Gottardo and the Company regarding
this Agreement shall be made in the English language by telex or
facsimile followed by registered letter, and shall be transmitted by
the Company to: by Banca del Gottardo to:
Banca del Gottardo Bitwise Designs, Inc.
Xxxxx Xxxxxxx Xxxxxxxxx 0 Xxxxxxxx 00
0000 Xxxxxx, Xxxxxxxxxxx Rotterdam Industrial Park
Duanesburg Rd. Xxxxx 0
Xxxxxxxxxxx, X.X. 00000, X.X.X.
Attn: Capital Market Department Attn: Chief Financial Officer
Telex No.: 841 052
Facsimile: 0114191 808 1843 Facsimile: 000-000-0000
with copy to:
Xxxxxxxxx & Xx Xxxxx, LLP
Attn. Xxxxxx X. Xx Xxxxx, Esq.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000, X.X.X.
Facsimile: 000-000-0000
XV. APPLICABLE LAW AND JURISDICTION
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The Terms of this Agreement shall be governed by Swiss law, save and
except that paragraph of the terms of the Notes shall be governed by
the laws of the State of New York.
Any dispute which might arise between Banca del Gottardo on the one
hand and the Company on the other hand regarding this Agreement shall
fall within the jurisdiction of the ordinary Courts of Justice of the
Canton of Ticino, the place of jurisdiction being Lugano, with the
right of appeal to the Swiss Federal Court of Justice in Lausanne where
the law permits.
Solely for purposes of the preceding paragraph and for the purpose of
execution of a judgment in Switzerland, the Company elects legal and
special domicile at Banca del Gottardo's office in Lugano, and Banca
del Gottardo shall send to the Company with copy to Xxxxxxxxx & Xx
Xxxxx, LLP, attn. Xxxxxx X. Xx Xxxxx, Esq., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, U.S.A. within two business days in Lugano any documents
received by it in this connection.
Banca del Gottardo shall also be at liberty to enforce its rights and
to take legal action before the competent courts of the United States
of America, in which case Swiss law shall be applicable with respect to
the construction and interpretation of this Agreement.
XVI. EFFECTIVENESS
The effectiveness of this Agreement is subject to:
(a) the receipt by Banca del Gottardo of all documents as
requested in Article VII of this Agreement in a form
acceptable to Banca del Gottardo,
(b) no exercise of the Right of Termination as per Article
XIII.
XVII. CURRENCY INDEMNITY
If any sum due from the Company in favour of the Paying Agent has to be
converted from United States Dollars (the "first currency") into
another currency (the "second currency") for the purpose of (i) making
or filing a claim or proof against the Company, (ii) obtaining an order
or judgment in any court or other tribunal or (iii) enforcing any order
or judgment given or made in relation hereto, the Company shall
indemnity, and hold harmless Banca del Gottardo from and against any
loss suffered as a result of any discrepancy between (a) the rate of
exchange used for such purpose to convert the sum in question from the
first currency into the second currency and (b) the rate or rates of
exchange at which Xxxxx xxx Xxxxxxxx
00
00
may in the ordinary course of business purchase the first currency with
the second currency upon receipt of a sum paid to them in the second
currency in satisfaction in whole or in part of any such order
judgment, claim or proof.
This indemnity shall constitute a separate and independent obligation
from the other obligations contained herein, shall give rise to a
separate and independent cause of action and shall apply, irrespective
of any waiver granted by Banca del Gottardo from time to time and shall
continue in full force and effect notwithstanding any judgment or order
for a liquidated sum or sums in respect of amounts due hereunder or
under any such judgment or order. Any such loss or damage aforesaid
shall be deemed to constitute a loss suffered by Banca del Gottardo and
no further proof or evidence of any actual loss shall be required by
the Company.
XVIII. ENTIRE AGREEMENT
This Agreement together with the Annexes hereto and other agreements
and documents delivered pursuant hereto set forth the entire agreement
and understanding of the parties in respect of the subject matter
hereof and thereof and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof and thereof.
XIX. AMENDMENT, CANCELLATION AND WAIVER
This Agreement and the Annexes hereto may be amended modified,
superseded or cancelled, and any of the terms hereof or thereof may be
waived, only by a written instrument executed by the Company and Banca
del Gottardo hereto or thereto, as the case may be, or, in the case of
a waiver, by the party or parties waiving compliance. The failure of
any party at any time or times to require performance of any provision
hereof or of any Annex hereto shall in no manner affect the rights at a
later time to enforce the same. No waiver by any party of any condition
or of the breach of any term contained in this Agreement or in any
Annex hereto, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be construed as a further or continuing
waiver of any such breach or the breach of any other term of this
Agreement or of the Annexes hereto.
THUS DONE AND SIGNED in 2 originals of which one is for the Company,
in Schenectady effective as of August 8, 1997
BITWISE DESIGNS, INC. BANCA DEL GOTTARDO
By ___________________________ By: _________________________
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