1.
TERMS OF THE "WARRANTS" OF THE COMPANY
1. General
The Warrants are issuable in bearer form and have the benefit of and
are subject to the provisions for the exercise thereof contained in the
Warrant Agency Agreement to be dated as of December 22, 1995 between
the Company and Banca del Gottardo (the "Warrant Agent" or the
"Standing Agent" as the case may be) which will be available for
inspection at the office in Lugano of the Warrant Agent or its
successor as Warrant Agent. The holders of the Warrants (the "Holders")
are deemed to have knowledge of the provisions of such Agreement, all
of which will be binding on them, provided, however, that the rights of
such Holders hereunder shall be governed by the terms hereof.
The Standing Agent or the Warrant Agent may resign in its duties and be
discharged from all further duties as Agent or Warrant Agent in
accordance with the terms of the Warrant Agency Agreement. In such
event a successor Standing Agent or Warrant Agent, which will have the
same duties as its predecessor and will agree to be bound by the terms
of the Warrant Agency Agreement, will be appointed by the Company, or
if the Company shall fail to appoint such successor Standing Agent or
Warrant Agent, by a court of competent jurisdiction.
The Global Warrant may be exchanged, as a whole or in part, for
appropriate definitive Warrants, in bearer form, not earlier than 40
days after the later of the date on which the Warrants are first
offered or the Payment Date. Such exchange shall be made upon
certification that the beneficial owners of the Warrants are not United
States persons or U.S. persons or are financial institutions (as
defined in United States Treasury Regulation Section 1.165-12(c)(1)(v))
located outside the United States that are not United States persons
and that the beneficial owners have not purchased such Warrants for
resale during the Restricted Period and that the beneficial owners
certify that they have not acquired the Warrants for purposes of resale
directly or indirectly to a United States person or to a person within
the United States. A beneficial owner of Notes must exchange its share
of the Global Warrant for definitive Warrants before such Warrants may
be transferred or shares may be delivered upon exercise of the Warrants
in respect of the Warrants will be made.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered
or the date on which the Notes are issued (the "Payment Date") and
ending on the date forty (40) days after the later of the date upon
which the Notes and Warrants were first offered or the date of closing
of this offering, (ii) the term "United States" means the United States
of America (including the States and the District of Columbia), its
possessions, its territories and other areas subject to its
jurisdiction, (iii) the term "United States person" means a citizen or
resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless
of its source and (iv) the term "U.S. person" has the meaning set forth
in Sections
2.
230.901 through .904 of Title 17 of the United States Code of Federal
Regulations ("Regulation S").
2. Duration
The right to subscribe for and purchase shares of Warrant Stock
represented by the Warrants shall commence Subject to Section 8 hereof
on May 1, 1996 and shall expire December 31, 2000 at 5:00 P.M. US
Eastern Time, provided, however, that if, on such expiration date, the
Company is then required, pursuant to an effective request therefor, to
effect, or is in the process of effecting, a registration under the
Securities Act for an underwritten public offering in which shares of
Warrant Stock are, pursuant to this Warrant, entitled to be included,
or if the Company is in default of any obligations created by this
Warrant, said right to subscribe for and purchase shares of Warrant
Sock shall expire at 5:00 P.M., US Eastern Time, on the 30th day
following the date on which such registration shall have become
effective (but in no event longer than 180 days beyond the date this
Warrant otherwise would have expired) or on the 30th day following the
date all of such defaults have been cured, as the case may be.
3. Warrant Price; Method of Exercise; Payment; Issuance of New Warrant;
Transfer and Exchange
The exercise price will be fixed on March 29, 1996 whereby such
exercise price shall be the equivalent of the average of the closing
prices during the period from March 14 to March 29, 1996, but shall in
any event not be higher than (i) 120% of the average of the closing
prices of the Common during the period from December 19 to 29, 1995 or
(ii) USD 4.75 per Common, whichever is lower (such price hereinafter
called the "Warrant Price").
The purchase right represented by this Warrant may be exercised at any
time and from time to time prior to expiration subject to Section 8
hereof.
In order to exercise the Warrants and receive certificates for Shares
legally issuable on such exercise, the Holder shall deposit 2'000
Warrants or more with the Warrant Agent at its office in Lugano and
accompanied by a written notice (which notice must contain a
certification of non-U.S. beneficial ownership) signed by or on behalf
of the Holder to the effect that such Holder elects to exercise the
Warrants and payment of the Warrant Price (the "Warrant Consideration
Amount"). As a further condition precedent to the exercise of the
Warrants, the Holder must pay all stamp, issue, registration or other
taxes and duties arising upon exercise in Switzerland or payable in any
jurisdiction upon the issue or delivery of Shares, if any, to the
exercising Holder or to the order of a person other than the exercising
Holder.
The date on which these conditions precedent to exercise as stated
above have been verified and recognized by the Warrant Agent as being
fulfilled in hereafter called the "Deposit Date". The Common Stock
Warrant shall be treated as exercised at the close of business in New
York on the Exercise Date. The "Exercise Date" for the Warrant means
the business days in New York immediately following the Deposit Date.
The "Exercise Date" for the Common Stock Warrant shall not be later
than the Termination Date.
The Company shall not be obligated to issue any fraction of a Share
upon the exercise of any Warrant or make any payment for a fraction of
a Share. If more than one Warrant shall be exercised at one time by the
same Holder, the number of full Shares which shall be issuable upon
3.
exercise thereof shall be computed on the basis of the aggregate number
of shares issuable upon the exercise of all the Warrants exercised by
such Holder. Any Shares issued upon the exercise of the Common Stock
Warrants shall be delivered in accordance with the instructions of the
Holder.
In the event of any exercise of the rights represented by this Warrant
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding five Business Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be
the Holder of the shares of Warrant Stock so purchased as of the date
of such exercise.
Neither this Warrant nor any Warrant Stock has been registered under
the Securities Act. Accordingly, neither this Warrant nor any Warrant
Stock is transferable except as permitted under various exemptions
contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities
Act.
4. Stock Fully Paid; Reservation of Shares
The Company covenants and agrees that all shares of Warrant Stock which
may be issued upon the exercise of this Warrant will, upon issuance, be
fully paid and non-assessable and free from all taxes, liens and
charges with respect to issuance. The Company further covenants and
agrees that during the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved
for the purpose of the issue upon exercise of the subscription rights
evidenced by this Warrant a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant. If the Warrant Price is at
any time less than the par value of the Warrant Stock or if the Warrant
at any time is exercisable by its delivery alone and without payment of
any additional consideration, the Company also covenants and agrees to
cause to be taken such action (whether by decreasing the par value of
the Warrant Stock, the conversion of the Warrant Stock from par value
to no par value, or otherwise) as will permit the exercise of this
Warrant without any additional payment by the Holder hereof (other than
payment of the Warrant Price, if any, and applicable transfer taxes, if
any), and the issuance of the Warrant Stock, which Warrant Stock, upon
such issuance, will be fully paid and non-assessable.
The Company shall not by any action including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking if all such actions as may be
necessary or appropriate to protect the rights of the Holders hereof
against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase
in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock, free and clear of
any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (c) use its
best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Warrant.
4.
5. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this
Warrant and the payment of the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events as
follows:
a) Recapitalization, Reorganization, Reclassification,
Consolidation Merger or Sale
In case of any recapitalization or reorganization of the
Company or any reclassification or change of outstanding
Securities issuable upon exercise of this Warrant (other than
a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of
the Company with or into another corporation (other than a
merger with another corporation in which the Company is the
surviving corporation and which does not result in any
reclassification or change - other than a change in par value,
or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination - of
outstanding Securities issuable upon exercise of this
Warrant), or in case of any sale or transfer to another
corporation of the Property of the Company as an entirety or
substantially as an entirety in connection with a liquidation
or dissolution of the Company, the Company or such successor
or purchasing corporation therefor, issue a new Warrant,
providing that the Holder(s) of this Warrant shall have the
right to exercise such new Warrant and procure upon such
exercise in lieu of each share of Warrant Stock theretofore
issuable upon exercise of this Warrant the kind and the
highest amount of shares of Stock, other securities, money and
property receivable upon such recapitalization,
reorganization, reclassification, change, consolidation,
merger, sale or transfer by a Holder of one share of Common
Stock issuable upon exercise of this Warrant had it been
exercised immediately prior to such recapitalization,
reorganization, reclassification, change, consolidation,
merger sale or transfer. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this subsection (a) shall similarly apply to
successive recapitalizations, reorganizations,
reclassifications, changes, consolidations, mergers, sales and
transfers.
b) Subdivision or Combination of Shares
If the Company, at any time while this Warrant is outstanding,
shall subdivide or combine any class or classes of its Common,
(i) in case of subdivision of shares, the Warrant Price shall
be proportionately reduced (as at the effective date of such
subdivision of, if the Company shall take a record of Holders
of its Common for the purpose of so subdividing, as at the
applicable record date, whichever is earlier) to reflect the
increase in the total number of shares of Common outstanding
as a result of such subdivision, or (ii) in the case of a
combination of shares, the Warrant Price shall be
proportionately increased (as at the effective date of such
combination, or, if the Company shall take a record of Holders
of its Common for the purpose of so combining, as at the
applicable record date, whichever is earlier) to reflect the
reduction in the total number of shares of Common outstanding
as a result of such combination.
5.
c) Certain Dividends and Distributions
If the Company, at any time while this Warrant is outstanding,
shall:
(ii) Stock Dividends
Pay a dividend in, or make any other distribution of,
shares of any class or classes of Common, the Warrant
Price Shall be adjusted, as at the date the Company
shall take a record of the holders of such class or
classes of Common, for the purpose of receiving such
dividend or other distribution (or if no such record
is taken, as at the date of such payment or other
distribution), to that price determined by
multiplying the Warrant Price in effect immediately
prior to such record date (or if no such record is
taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator
of which shall be the total number of shares of
Common outstanding immediately prior to such dividend
or distribution, and (2) the denominator of which
shall be the total number of shares of Common
outstanding immediately after such dividend or
distribution (plus in the event that the Company paid
cash for fractional shares, the number of additional
shares which would have been outstanding had the
Corporation issued fractional shares in connection
with said dividends); or
(ii) Liquidating Dividends, etc.
Make a distribution of its Property to the holders of
its Common as a dividend in liquidation or partial
liquidation or by way of return of capital other than
as a dividend payable out of funds legally available
for dividends under the laws of the State of
Delaware, the Holder of this Warrant shall, upon
exercise and payment of the Warrant Price, be
entitled to receive, in addition to the number of
shares of Warrant Stock receivable thereupon, and
without payment of any additional consideration
therefor, a sum equal to the amount of such Property
as would have been payable to such Holder as owner of
that number of shares of Warrant Stock of the
receivable by exercise of this Warrant, had such
Holder been the holder of record of such Warrant
Stock on the record date for such distribution; and
an appropriate provision therefor shall be made a
part of any such distribution.
d) Issuance of Additional Shares of Common
If the Company, at any time while this Warrant is outstanding,
shall issue any Additional Shares of Common (otherwise than as
provided in the foregoing subsections (a) through (c) of this
Section 4), at a price per share less than the Warrant Price
then in effect or less than (i) the Current Market Price then
in effect is such issue is pursuant to a public offering, or
(ii) ninety five percent (95%) of the Current Market Price
then in effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate, or
without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price determined by
multiplying the Warrant Price by a fraction:
6.
(A) If issued for a consideration per share less than (i)
the Current Market Price then in effect if such issue
is pursuant to a public offering, or (ii) ninety five
percent (95%) of the Current Market Price then in
effect if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the aggregate,
or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
(i) the Current Market Price then in effect
if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%)
of the Current Market Price then in effect
if such issue is pursuant to a private
placement in excess of $ 3'500'000 in the
aggregate, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
(B) If issued for a consideration per share less than the
Warrant Price or for no consideration:
1) the numerator of which shall be the number
of shares of Common outstanding immediately
prior to the issuance of such Additional
Shares of Common plus the number of shares
of Common which the aggregate consideration
for the total number of such Additional
Shares of Common so issued would purchase at
the Warrant Price, and
2) the denominator of which shall be the number
of shares of Common outstanding immediately
after the issuance of such Additional Shares
of Common.
If such Additional Shares of Common shall be issued
at a price per share less than both the Warrant Price
and the Current Market Price, the Warrant Price shall
be adjusted in the manner provided in clauses (i) or
(ii) of this subsection (d) which will result in the
greater reduction in the amount of the Warrant Price.
The provisions of this subsection (d) shall not apply
under any of the circumstances for which an
adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price
shall be made under this subsection (d) upon the
issuance of any Additional Shares of Common which are
issued pursuant to any Common Stock Equivalent if
upon the issuance of such Common Stock Equivalent (1)
any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (2) no adjustment
was required pursuant to subsection (e) of this
Section 5.
7.
e) Issuance of Common Stock Equivalents
In case the Company shall at any time while this
Warrant is outstanding, issue any Common Stock
Equivalent and the price per share for which
Additional Shares of Common may be issuable
thereafter pursuant to such Common Stock Equivalent
shall be less than the Warrant Price then in effect
on the date of issuance of such Common Stock
Equivalent or less than (i) the Current Market Price
then in effect if such issue is pursuant to a public
offering, or (ii) ninety five percent (95%) of the
Current Market Price then in effect if such issue is
pursuant to a private placement in excess of $
3'500'000 in the aggregate, or if, after any such
issuance of Common Stock Equivalents, the price per
share for which Additional Shares of Common may be
issuable thereafter is amended (other than as a
result of the operation of anti-dilution provisions
of or relating to Common Stock Equivalents
outstanding as of the date hereof pursuant to events
or circumstances which would also result in an
adjustment in the Warrant Price), and such price as
so amended shall be less than the Warrant Price or
the Current Market Price in effect at the time of
such amendment, then the Warrant Price upon each such
issuance or amendment shall be adjusted as provided
in the first sentence of subsection (d) of this
Section 4 on the basis that (1) the maximum number of
Additional Shares of Common issuable pursuant to all
such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock
Equivalents are actually then exercisable,
convertible or exchangeable in whole or in part) as
of the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of
such Common Stock Equivalent, or (B) the date of
actual issuance of such Common Stock Equivalent, and
(2) the aggregate consideration for such maximum
number of Additional Shares of Common shall be deemed
to be the minimum consideration received and
receivable by the Company for the issuance of such
Additional Shares of Common pursuant to such Common
Stock Equivalent. No adjustment of the Warrant Price
shall be made under this subsection (e) upon the
issuance of any Convertible Security which is issued
pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any
adjustment shall previously have been made in the
Warrant Price then in effect upon the issuance of
such warrants or other rights pursuant to this
subsection (e).
f) Other Provisions Applicable to Adjustments Under this
Section A
The following provisions shall be applicable to the
making of adjustments in the Warrant Price
hereinbefore provided in this Section 5:
(i) Computation of Consideration
The consideration received by the Company
shall be deemed to be the following: (a) to
the extent that any Additional Shares of
Common or any Common Stock Equivalents shall
be issued for a cash consideration, the
consideration received by the Company
therefor, or, (b) if such Additional Shares
of Common or Common Stock Equivalents are
offered by the Company for subscription, the
subscription price, or, (c) if such
8.
Additional Shares of Common or Common Stock
Equivalents are sold to underwriters or
dealers for public offering without a
subscription offering, the initial public
offering price, in any such case excluding
any amounts paid or receivable for accrued
interest or accrued dividends and without
deduction of any compensation, discounts,
commissions, or expenses paid or incurred by
the Company for or in connection with the
underwriting thereof or otherwise in
connection with the issue thereof; (d) to
the extent that such issuance shall be for a
consideration other than cash, then, except
as herein otherwise expressly provided, the
fair market value of such consideration at
the time of such issuance as determined in
good faith by the Board. The consideration
for any Additional Shares of Common issuable
pursuant to any Common Stock Equivalents
shall be the consideration received by the
Corporation for issuing such Common Stock
Equivalents, plus the additional
consideration payable to the Corporation
upon the exercise, conversion or exchange of
such Common Stock Equivalents. In case of
the issuance at any time of any Additional
Shares of Common or Common Stock Equivalents
in payment or satisfaction of any dividend
upon any class of Stock other than Common,
the Corporation shall be deemed to have
received for such Additional Shares of
Common or Common Stock Equivalents a
consideration equal to the mount of such
dividend so paid or satisfied. In any case
in which the consideration to be received or
paid shall be other than cash, the Board
shall notify the Holder of this Warrant
through Banca del Gottardo of its
determination of the fair market value of
such consideration prior to payment or
accepting receipt thereof. If within thirty
days after receipt of said notice, the
Holders of Warrants exercisable for at least
a majority of Warrant Stock then unissued
shall notify the Board in writing of their
objection to such determination, a
determination of fair market value of such
consideration shall be made by arbitration
in accordance with the Rules of the American
Arbitration Association, by an arbitrator in
the Borough of Manhattan, City of New York,
State of New York.
(ii) Readjustment of Warrant Price
Upon the expiration of the right to convert,
exchange or exercise any Common Stock
Equivalent the issuance of which effected an
adjustment in the Warrant Price, if such
Common Stock Equivalent shall not have been
converted, exercised or exchanged, the
number of shares of Common Stock deemed to
be issued and outstanding by reason of the
fact that they were issuable upon
conversion, exchange or exercise of any such
Common Stock Equivalent shall no longer be
computed as set forth above, and the Warrant
Price shall forthwith be readjusted and
thereafter be the price which it would have
been (but reflecting any other adjustments
in the Warrant Price made pursuant to the
provisions of this Section 5 after the
issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been
made in accordance with the issuance or sale
of the number of Additional Shares of Common
actually issued upon conversion, exchange or
issuance of such Common Stock
9.
Equivalent and thereupon only the number of
Additional Shares of Common actually so
issued shall be deemed to have been issued
and only the consideration actually received
by the Company (computed as in clause (i) of
this subsection (g)) shall be deemed to have
been received by the Company.
(iii) Treasury Shares
The number of shares of Common at any time
outstanding shall not include any shares
thereof then directly or indirectly owned or
held by or for the account of the Company or
any of its Subsidiaries.
g) Other Action Affecting Common
In case after the date hereof the Company shall take
any action affecting its common, other than an action
described in any of the foregoing subsections (a)
through (f) of this Section 5, inclusive, and the
failure to make any adjustment would not failure
protect the purchase rights represented by this
Warrant in accordance with the essential intent and
principle of this Section 5, then the Warrant Price
shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable
in the circumstances.
h) Adjustment of Number of Shares
Upon each adjustment in the Warrant Price pursuant to
any provision of this Section 5, the number of shares
of Warrant Stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product
obtained by multiplying such number of shares
purchasable immediately prior to such adjustment in
the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to
such adjustment and the denominator of which shall be
the Warrant Price immediately thereafter. If the
Company shall be in default under any provision
contained in the last sentence of Section 5 of this
Warrant so that shares issued at the Warrant price
adjusted in accordance with this Section 5 would not
be validly issued, the adjustment of number of shares
provided for in the foregoing sentence shall
nonetheless be made and the Holder of this Warrant
shall be entitled to purchase such greater number of
shares at the lowest price at which such shares may
then be validly issued under applicable law. Such
exercise shall not constitute a waiver of any claim
arising against the Company by reason of its default
under Section 5 of this Warrant.
i) Notwithstanding anything in this Section 5 to the
contrary, neither the number of shares of Warrant
Stock purchasable hereunder nor the Warrant Price
shall be adjusted with respect to any Common Stock
Equivalents issued and outstanding as of the date of
the issuance of this Warrant, or the issuance of any
Securities upon exercise or conversion of any such
Common Stock Equivalent, including, without
limitation, any Securities issued from time to time
pursuant to (i) the exercise of options outstanding
as of the date of issuance of the Warrant and held by
present or former directors, officers or employees of
the Company, (ii) the
10.
exercise of the Stock Purchase Warrant, dated July
31, 1992 (the "Prudential Warrant"), purchased by The
Prudential Insurance Company of America
("Prudential"), (iii) the conversion features of that
certain Amended and Restated 10% Convertible
Subordinated Note Due 1999 issued to X.X. Xxxxxxx
Investment L.P. (the "Xxxxxxx Securities"), (iv) the
exercise of the Warrant dated August 11, 1994 (the
"Nomura Warrant") issued to Nomura Holding Company,
Inc. ("Nomura"), (v) the effect of any antidilution
provisions contained in the Prudential Warrant, the
Xxxxxxx Securities and the Nomura Warrant and (vi)
the issuance of up to 150'000 stock options per
calendar year pursuant to the Company's stock option
or stock purchase plan.
6. Notice of Adjustments
Whenever the Warrant Price or number of Warrant Shares
purchasable upon exercise of this Warrant shall be adjusted
pursuant to Section 5 hereof, the Company shall deliver to
Banca del Gottardo for certification to the Holder(s) of the
Warrant a certificate (the "Adjustment Certificate") setting
forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which
such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder),
and the Warrant Price and number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, and shall
cause copies of such certificate to be mailed (by first class
mail postage prepaid) to the Holder(s) of this Warrant
promptly after each adjustment; provided, however, that in the
event that any Holder disagrees with the calculations, amounts
or other information with respect to the adjustments set forth
in the Adjustment Certificate, such Holder shall within 10
Business Days after receipt of such Adjustment Certificate
request that the Company cause the independent accounting firm
then regularly engaged by it to audit its financial statements
to propose and execute and promptly deliver to the Holder(s) a
certificate with respect to each of the items set forth in the
Adjustment Certificate. Such determination as to adjustments
of the accounting firm shall be final and binding in the
absence of manifest error.
7. Fractional Shares
No fractional shares of Warrant Stock will be issued in
connection with any exercise hereof, but in lieu of such
fractional shares, the Company shall cause the payment
therefor equal in amount to the product of the applicable
fraction multiplied by the Warrant Price then in effect.
8. Definitions
For the purposes of this Warrant, the following terms have the
following meanings:
"Additional Shares of Common" shall mean all shares of Common
issued by the Corporation after the date hereof except Warrant
Stock.
"Board" shall mean the Board of Directors of the Corporation.
11.
"Business Day" shall mean any day except a Saturday, a Sunday
or a legal holiday in New York City.
"Closing Date" shall mean the date of the closing of the sale
and delivery of the Notes.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the
Securities Act.
"Common" shall mean the Common Stock and any capital stock of
the Company of any class which shall be authorized at any time
after the date of this Warrant and which shall have the right
to participate in the distribution of earnings and assets of
the Company without limitation as to amount.
"Common Stock Equivalent" shall mean any Convertible Security
or warrant, option or other right to subscribe for or purchase
any Additional Shares of Common or any Convertible Security.
"Company" shall mean Intellicall, Inc., a Delaware
corporation, and its successors and assigns.
"Convertible Securities" shall mean evidences of Indebtedness,
shares of Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of
Common. The term "Convertible Security" shall mean one of the
Convertible Securities.
"Current Market Price" means with respect to any Trading Day
the last sale price (regular way) of the Common on such day as
reported on the New York Stock Exchange Consolidated Tape (as
published in the Wall Street Journal), or, if such Common is
not listed on the New York Stock Exchange, Inc. or reported on
such Consolidated Tape, then the last sale price on such day
on the principal domestic stock exchange on which such stock
is then listed or admitted to trading, or, if no sale takes
place on such day on such exchange, the average of the closing
bid and asked prices on such day as officially quoted on such
exchange, or, if such Common is not then listed or admitted to
trading on any domestic stock exchange but is quoted in the
National Market System ("NMS/NASDAQ") of the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ"), then the Current Market Price for each such
Trading Day shall be the last sale price on such day as quoted
by NMS/NASDAQ, or, if no sale takes place on such day or if
such Common is neither listed or admitted to trading on any
domestic stock exchange nor quoted on such National Market
System, then the Current Market Price for each such Trading
Day shall be the average of the reported closing bid and asked
price quotations on such day in the over-the-counter market,
as reported by NASDAQ, or, if not so reported, as furnished by
the National Quotation Bureau, Inc., or, if such firm at the
time is not engaged in the business of reporting such prices,
as furnished by any similar firm then engaged in such business
as selected by the Company, or if there is no such firm, as
furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company with the
written approval of the Holders of Warrants execrable for a
majority of the shares of Warrant Stock usable under then
outstanding Warrants. If at any time such Common is not listed
on any domestic exchange or quoted
12.
in the domestic over-the-counter market, the Current Market
Price shall be deemed to be an amount mutually agreed upon in
writing between the Corporation and the Holder of this Warrant
within fifteen days immediately following the date on which
the Current Market Price is to be determined. If no agreement
as to Current Market Price is determined as stated herein, (i)
the Holder of this Warrant shall select an independent
appraiser who shall determine the fair market value per share
of the Common which shall be the Current Market Price,
provided the Company shall agree to such Current Market Price.
If the Company shall not agree to the Current Market Price as
determined in the preceding sentence then (ii) the Company and
Banca del Gottardo shall each select an independent appraiser
who shall, independently of the other appraiser, determine the
fair market value of the Common of the Company. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does not exceed by more than ten percent
(10%) the average of the values determined by each appraiser,
then the Current Market Price shall be the average of the
values determined by the two appraisers. If the value
determined by the appraiser whose determination is the higher
of the two appraisals does exceed by more than ten percent
(10%) the average of the value determined by each appraiser,
then the two appraisers shall select a third independent
appraiser who shall, independently of the other appraisals,
determine the fair market value of the Common. The value
determined by the appraiser whose determination is the most
discrepant from the average of the three appraisals shall be
discarded, and the Current Market Price shall equal the
average of the remaining two appraisals; except that in the
event that the highest and lowest appraisals are equally
discrepant from the average of the three appraisals, the
Current Market Price shall be such average. The Company shall
bear the expenses of all appraisals.
"Governmental Body" shall mean any federal, state, county,
city, town, village, municipal or other governmental
department, commission, board, bureau, agency, authority or
instrumentality, domestic or foreign.
"Holders" shall mean the Persons who shall from time to time
own of record any Warrant. The term "Holder" shall mean one of
the Holders.
"Initiating Holders" shall mean the holder or holders of any
of the Registrable Securities outstanding and entitled to
registration rights under Section 8 hereof.
"Material Adverse Effect" means any change or changes or
effect or effects that individually or in the aggregate are or
are likely to be materially adverse to (i) the assets,
business, operations, income, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole, (ii) the legality, validity or
enforceability of the Warrants, and (iii) the ability of the
Corporation to fulfill its obligations under the Warrants.
"Note Purchase Agreement" shall mean the Note and Warrant
Purchase, Paying and Conversion/Warrant Agency Agreement,
dated as of December 22, 1995, by and between the Company and
Banca del Gottardo as such Agreement may hereafter from time
to time be amended, modified or supplemented in accordance
with the terms thereof.
13.
"Notes" shall mean collectively the Subordinated Convertible
Notes (each as defined in the Note Purchase Agreement).
"Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
"Property" with respect to any Person, shall mean any interest
in any kind of property or asset, whether real, personal or
mixed, tangible or intangible, of such Person.
"Registrable Securities" shall mean (a) any Warrant Stock or
other Securities issued or issuable upon exercise of any
Warrants, and (b) any Securities issued or issuable with
respect to any such Warrant Stock or other Securities by way
of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such shares or securities
shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such
Securities shall have become effective under the Securities
Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall
have been distributed to the public pursuant to Rule 144 (or
any successor provision) under the Securities Act, (iii) they
shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall
have been delivered by the Corporation and subsequent
disposition of them shall not require registration or
qualification of them under the Securities act or any similar
state law then in force, (iv) they shall have cased to be
outstanding or (v) the Company agrees to remove the legend
restricting transferability in accordance with applicable law
on the certificates evidencing such Securities.
"Registration Expenses" shall mean all expenses incident to
the Company's performance of or compliance with Section 7,
including, without limitation, all registration, filing and
National Association of Securities Dealers fees, all fees and
expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants,
including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of not more
than one firm of attorneys retained by the holders of the
Registrable Securities being registered, premiums and other
costs of policies of insurance against liabilities arising out
of the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but
excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration
Expenses are not to be borne by the Company, such expenses
shall not include salaries of Company personnel or general
overhead expenses of the Company, auditing fees, premiums or
other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the
preparation of financial statements or other data normally
prepared by the Corporation in the ordinary course of its
business or which the Company would have incurred in any
event.
14.
"Securities" shall mean any debt or equity securities of the
Company whether now or hereafter authorized, and any
instrument convertible into or exchangeable for Securities or
a Security. "Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date the Securities Act
of 1933, as amended, or any similar Federal statute then in
effect.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participations in the
capital stock of a corporation of any class.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which at least a majority of
the outstanding Voting Stock is at the time directly or
indirectly owned or controlled by such Person or by one or
more of any entities directly or indirectly owned or
controlled by such Person.
"Trading Day" shall mean any day on which equity securities
are traded on any national securities exchange or on NASDAQ.
"Voting Stock", as applied to the Stock of any corporation,
shall mean Stock of any class or classes (however designated)
having ordinary voting power for the election of a majority of
the members of the Board of Directors (or other governing
body) of such corporation, other than Stock having such power
only by reason of the happening of a contingency.
"Warrant Price" shall mean the price specified in the first
paragraph of this Warrant and such other prices as shall
result form the adjustments specified in Section 4 hereof.
"Warrant Stock" shall mean the Common Stock issuable upon
exercise of any Warrant or Warrants.
"Warrants" shall mean the Warrants issued and sold pursuant to
the Note Purchase Agreement, including, without limitation,
this Warrant.
9. Amendment and Waiver; Assignees
Any term, covenant, agreement or condition in this Warrant may
be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively
or prospectively), by a written instrument or written
instruments executed by the Company and Banca del Gottardo;
provided, however, that no such amendment or waiver shall
reduce the number of shares of Warrant Stock issuable under
the Warrants, increase the Warrant Price, shorten the period
during which the Warrants may be exercised or modify any
provision of this Section 10 without the consent of the
Holders of all Warrants then outstanding.
10. Loss or Mutilation
Upon receipt by the Warrant Agent of evidence satisfactory to
it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant and (in the case of loss, theft or
15.
destruction) of indemnity satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation thereof, the
Warrant Agent shall execute and deliver in lieu thereof a new
Warrant entitling the Holder to acquire without further
consideration the same number of Shares upon the same terms as
the Warrant so lost, stolen or destroyed or so surrendered and
canceled. Any such substitute Warrant shall constitute an
original contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant shall be at
any time enforceable by anyone. Applicants for a substitute
Warrant shall also comply with such other reasonable
regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
11. Notices and Publications
All notices to the Holders shall be deemed to have been duly
given if published in the Feuille Officielle Suisse du
Commerce and in a daily newspaper in Lugano and Zurich.
12. Governing Law
The terms, conditions and form of the Warrants and the Warrant
Agency Agreement shall be governed by and construed in
accordance with Swiss law. The issuance of the Common Stock
upon exercise of the Warrants shall be governed by and
construed in accordance with the laws of the State of
Delaware.
Any action or proceedings against the Company relating to the
Warrants may be brought and enforced in the ordinary courts of
the Canton of Ticino, venue being in the City of Lugano, or if
such courts fail to grant jurisdiction in the ordinary courts
of the Canton of Basle-City, venue being in the city of Basle,
and the Company hereby irrevocably submits to the jurisdiction
of such courts in respect of any such action or proceeding in
either case, with the right to appeal, as provided by law, to
the Swiss Federal Court in Lausanne, the judgment of which
shall be final. Solely for that purpose, the Company hereby
elects legal and special domicile at the principal office of
Banca del Gottardo, Xxxxx Xxxxxxx Xxxxxxxxx 0, 0000 Xxxxxx,
Xxxxxxxxxxx. The Company covenants that so long as any
Warrants are outstanding it will maintain an agent for service
of process in Switzerland. The aforementioned jurisdiction
shall also be valid for the cancellation and replacement of
lost, stolen, defaced, mutilated or destroyed Warrants.
Issuance of Common Stock to a Holder who has been identified
as the legitimate Holder by a final judgment of a Swiss Court
shall release the Company from its obligations under such
Warrants.
