0000926236-01-500178.txt : 20011019
0000926236-01-500178.hdr.sgml : 20011019
ACCESSION NUMBER: 0000926236-01-500178
CONFORMED SUBMISSION TYPE: S-3
PUBLIC DOCUMENT COUNT: 6
FILED AS OF DATE: 20011011
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DIAL THRU INTERNATIONAL CORP
CENTRAL INDEX KEY: 0000913659
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
IRS NUMBER: 752801677
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1031
FILING VALUES:
FORM TYPE: S-3
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-71406
FILM NUMBER: 1756944
BUSINESS ADDRESS:
STREET 1: 700 S. FLOWER
STREET 2: SUITE 2950
CITY: LOS ANGELES
STATE: CA
ZIP: 90017
BUSINESS PHONE: 2136277599
MAIL ADDRESS:
STREET 1: 700 S. FLOWER
STREET 2: SUITE 2950
CITY: LOS ANGELES
STATE: CA
ZIP: 90017
FORMER COMPANY:
FORMER CONFORMED NAME: ARDIS TELECOM & TECHNOLOGIES INC
DATE OF NAME CHANGE: 19990301
FORMER COMPANY:
FORMER CONFORMED NAME: CANMAX INC /WY/
DATE OF NAME CHANGE: 19941215
FORMER COMPANY:
FORMER CONFORMED NAME: INTERNATIONAL RETAIL SYSTEMS INC/BD
DATE OF NAME CHANGE: 19941215
S-3
1
dti2001s3a.txt
REGISTRATION STATEMENT
Registration No. 333-_______
============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
DIAL-THRU INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 75-2461665
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Roger D. Bryant
700 South Flower, Suite 2950 700 South Flower, Suite 2950
Los Angeles, California 90017 Los Angeles, California 90017
(213) 627-7599 (213) 627-7599
(Address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number, including
area code, of registrant's area code, of agent
principal executive offices) for service)
____________
Copy to:
CYNTHIA M. DUNNETT, ESQ.
Riordan & McKinzie
300 South Grand Avenue, Suite 2900
Los Angeles, California 90071
(213) 629-4824
____________
Approximate date of commencement of proposed sale to the public:
From time to time as described in the prospectus included herein after the
effective date of this registration statement.
____________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. [ X ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
_____________
CALCULATION OF REGISTRATION FEE
============================================================================
Title of each class Amount To Proposed Proposed Amount of
of Securites to be Be Maximum Maximum Registration
Registered Registered Offering Price Aggregate Fee
(1) Per Share (2) Offering
Price (2)
----------------------------------------------------------------------------
Common Stock ($.001 2,880,906 $0.96 $2,765,669 $691.41
par value)
============================================================================
1. Shares of common stock that may be offered for resale pursuant to this
registration statement consist of a total of all shares of common stock
issuable upon conversion of a 6% Convertible Debenture issued to Global
Capital Funding Group, L.P. ("Global Capital") on April 11, 2001 (the
"Convertible Debenture") and as payment for accrued interest on the
Convertible Debenture, 100,000 shares of common stock issuable upon the
exercise of a warrant issued in connection with the Convertible
Debenture, and 25,000 shares of common stock issuable upon the exercise
of a warrant issued to DP Securities, Inc. for services rendered in
connection with the Convertible Debenture. For purposes of estimating
the number of shares of common stock to be included in the registration
statement, we included (i) 2,678,380 shares, representing the number of
shares of common stock issuable upon conversion of the Convertible
Debenture, determined as if the Convertible Debenture was converted in
full at the conversion price of $0.3734 as of October 5, 2001, excluding
accrued interest; plus (ii) 77,526 shares, representing the number of
shares of common stock issuable in lieu of cash interest payable on the
Convertible Debenture, assuming an accrued interest conversion price of
$0.3734; plus (iii) 125,000 shares of common stock issuable upon
exercise of the warrants listed above.
2. Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average high and low prices of the
common stock on October 5, 2001 as reported by the NASD OTC Bulletin
Board.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
============================================================================
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this Prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 11, 2001
2,880,906 SHARES
DIAL-THRU INTERNATIONAL CORPORATION
COMMON STOCK
__________
This Prospectus relates to the resale of up to 2,880,906 shares of our
common stock from time to time by the selling shareholders listed on page 7,
or their transferees, pledgees, donees or successors.
The selling shareholders may sell all or any portion of their shares
of common stock in one or more transactions through ordinary brokerage
Transactions, in private, negotiated transactions, or through any other
means described in the section entitled "Plan of Distribution" beginning on
9. The selling holders are selling these shares for their own account at
prices related to the prevailing market prices or at negotiated prices. We
will not receive any of the proceeds from the sale of the shares by the
selling holders, but will pay all registration expenses. The selling
holders will pay all selling expenses, including all selling commissions.
Our Common Stock is traded on the OTC Market and is quoted on the OTC
Bulletin Board under the symbol "DTIX". On October 5, 2001, the last
reported sale price for our common stock was $0.96 per share.
________
INVESTING IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. PLEASE
CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 2.
________
We may amend or supplement this Prospectus from time to time by filing
amendments or supplements as required. You should read this entire
prospectus and any amendments or supplements carefully before you make your
investment decision.
________
Our principal executive offices are located at 700 South Flower, Suite
2950, Los Angeles, California 90017, and our telephone number is (213) 627-
7599.
________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities, or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
________
The Date Of This Prospectus Is _________, 2001
TABLE OF CONTENTS
Page
----
RISK FACTORS 2
FORWARD LOOKING STATEMENTS 6
THE COMPANY 6
USE OF PROCEEDS 7
SELLING SHAREHOLDERS 7
DESCRIPTION OF SECURITIES TO BE REGISTERED 8
PLAN OF DISTRIBUTION 8
LEGAL OPINIION 9
EXPERTS 9
WHERE YOU CAN FIND MORE INFORMATION 9
RISK FACTORS
In addition to the other information in this prospectus or
incorporated herein by reference, the following risk factors should be
considered carefully in evaluating our business before purchasing the shares
offered in this prospectus.
THE CONVERSION OF THE CONVERTIBLE DEBENTURE AND THE EXERCISE OF THE RELATED
WARRANTS COULD RESULT IN SUBSTANTIAL NUMBERS OF ADDITIONAL SHARES BEING
ISSUED.
On April 11, 2001, we issued a Convertible Debenture to Global Capital
Funding Group, L.P. ("Global Capital") in the original principle amount of
$1,000,000 together with a warrant to purchase 100,000 shares of our common
stock with a current exercise price of $.89 per share. The Convertible
Debenture converts at a floating rate based on the lower of (i) $0.8631 and
(ii) a 20% discount to the market price of our common stock. As a result,
the lower the price of our common stock at the time of conversion, the
greater the number of shares that Global Capital will receive.
To the extent the Convertible Debenture is converted or accrued interest
is paid in shares of common stock, a significant number of shares of common
stock may be sold into the market, which could decrease the price of our
common stock and encourage shorts sales by selling securityholders or
others. Short sales could place further downward pressure on the price of
our common stock. In that case, we could be required to issue an
increasingly greater number of shares of our common stock upon future
conversions of the Convertible Debenture, sales of which could further
depress the price of our common stock.
WE HAVE HAD A HISTORY OF OPERATIONAL LOSSES AND EXPECT OUR LOSSES TO
CONTINUE.
We commenced our telecommunications business in early 1998. For the
years ended October 31, 2000 and 1999, we recorded net losses from
continuing operations of approximately $11.1 million and $3.8 million,
respectively, on revenues from continuing operations of approximately $8.6
million and $3.1 million, respectively. For the nine months ended July 31,
2001, we recorded a net loss before extraordinary items of $1.7 million on
revenues of approximately $3.4 million. The loss for 2000 was primarily
attributable to startup cost associated with establishing our facilities
based operations both domestically and internationally, and costs associated
with the relocation of our corporate headquarters from Dallas, Texas to Los
Angeles, California. The loss in fiscal 1999 was primarily attributable to
the marketing costs associated with establishing our distribution channels,
and research and development costs associated with development of our VIP
Card(TM) product.
As we continue to substantially increase our distribution network and
customer base, and develop our private VoIP network, we may continue to
experience losses.
OUR SUCCESS IS DEPENDANT ON OUR ABILITY TO RECRUIT AND RETAIN KEY MANAGEMENT
AND TECHNICAL PERSONNEL.
Our success depends to a significant extent on our ability to attract
and retain key personnel. In particular, we are dependent on our senior
management team and personnel with experience in the telecommunications
industry and experience in developing and implementing new products and
services within the industry. Our future success will depend, in part, upon
our ability to attract and retain key personnel.
IF WE ARE UNABLE TO OVERCOME THE RISKS INHERENT IN EXPANSION, OUR BUSINESS
WILL FAIL.
On November 2, 1999, we acquired substantially all of the assets of
Dial-Thru International Corporation, a California corporation, and
subsequently assumed the name for our corporation. Following the
acquisition, the focus of our business changed away from the prepaid
telecommunications market toward being a global IP communications company
providing connectivity to international markets experiencing significant
demand for IP enabled services. Accordingly, we have a limited operating
history upon which an evaluation of our prospects in this industry can be
based. We intend to expand our VoIP network and the range of enhanced
telecommunications services that we provide. Our expansion prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in new and rapidly evolving markets. To address
these risks, we must, among other things:
- respond to competitive developments;
- succeed in our marketing efforts; and
- upgrade our products, services and technologies.
We cannot assure you that we will be successful in addressing the
risks we face or that we will be successful in our proposed expansion
activities. The failure to do so would have a material adverse effect on our
business and financial condition.
WE WILL NEED ADDITIONAL CAPITAL TO PURSUE OUR BUSINESS OBJECTIVES.
To fully implement our business plan, we will need to raise additional
funds within the next twelve months for capital expenditures and working
capital. Because of our limited operating history and the nature of the
Internet telephony industry, our future capital needs are difficult to
predict. Our growth models are scaleable (meaning that growth targets may
be generally adjusted in proportion to the availability of capital
resources), but the rate of growth is dependent on the availability of
future financing. Additional capital funding may be required for any of the
following activities: capital expenditures; advertising, maintenance and
expansion; sales, marketing, research and development; operating losses from
unanticipated competitive pressures or start-up operations; and strategic
partnerships and alliances. There is no assurance that adequate levels of
additional financing will be available at all or on acceptable terms. Any
additional financing could result in significant dilution to our existing
stockholders. If we are unable to raise additional capital, we would not be
able to implement our business plan which could have a material adverse
effect on our business, operating results and financial condition.
OUR STOCKHOLDERS MAY FACE LIQUIDITY PROBLEMS WHEN THEY SEEK TO SELL THEIR
SHARES.
We currently do not meet the requirements to list our common stock on
a national securities exchange or on either the Nasdaq National Market
or SmallCap Market. The common stock trades only in the over-the-counter
market with certain such trades reported on the NASD's OTC Bulletin Board.
As a result, selling our shares may be more difficult because smaller
quantities of shares may be bought and sold, transactions may be delayed and
security analysts' coverage of us may be reduced. These factors may make it
difficult or impossible for you to sell shares in a timely manner, if at
all.
In addition, the Securities and Exchange Commission defines our stock
as a "penny stock" because it has a market price of less than $5.00 per
share. Consequently, a broker/dealer must make a special suitability
determination for the prospective purchaser and have received the
purchaser's written consent to the transaction prior to the sale. The "penny
stock" rules may adversely affect the ability of broker/dealers to sell our
shares and may adversely affect your ability to sell the shares in the
secondary market.
WE MUST COMPLY WITH SIGNIFICANT GOVERNMENT REGULATION IF OUR BUSINESS IS TO
SUCCEED.
The legal and regulatory environment pertaining to the Internet is
uncertain and changing rapidly as the use of the Internet increases. For
example, in the United States, the FCC is considering imposing surcharges or
additional regulations upon certain providers of Internet telephony.
In addition, the regulatory treatment of Internet telephony outside of
the United States varies from country to country. There can be no assurance
that there will not be interruptions in Internet telephony in these and
other foreign countries. Interruptions or restrictions on the provision of
Internet telephony in foreign countries may adversely affect our ability to
continue to offer services in those countries, resulting in a loss of
customers and revenues.
New regulations could increase the cost of doing business over the
Internet or restrict or prohibit the delivery of our product or service
using the Internet. In addition to new regulations being adopted, existing
laws may be applied to the Internet. Newly existing laws may cover issues
that include sales and other taxes; access charges; user privacy; pricing
controls; characteristics and quality of products and services; consumer
protection; contributions to the Universal Service Fund, an FCC-administered
fund for the support of local telephone service in rural and high-cost
areas; cross-border commerce; copyright, trademark and patent infringement;
and other claims based on the nature and content of Internet materials.
OUR MARKET IS EXTREMELY COMPETITIVE.
The market for our products and services is highly competitive. We
face competition from multiple sources, many of which have greater financial
resources and a substantial presence in our market and offer products or
services similar to the services of ours. Therefore, we may not be able to
successfully compete in our markets, which could result in a failure to
implement our business strategy or adversely affect our ability to attract
and retain new customers. In addition, competition within the industries in
which we operate are characterized by, among other factors, price and
ability to offer enhanced service capabilities. Significant price
competition would reduce the margins realized by us in our
telecommunications operations and could have a material adverse effect on
us. In addition, many competitors have greater financial resources to devote
to research, development and marketing, and may be able to respond more
quickly to new or emerging technologies and changes in customer
requirements. If we are unable to provide cutting-edge technology and value-
added Internet products and services, we will be unable to compete in
certain segments of the market, which could have a material adverse effect
on our business, results of operations and financial condition.
TECHNOLOGICAL CHANGES MAY HAVE AN ADVERSE EFFECT ON US.
The industries in which we compete is characterized, in part, by rapid
growth, evolving industry standards, significant technological changes and
frequent product enhancements. These characteristics could render existing
systems and strategies obsolete, and require us to continue to develop and
implement new products and services, anticipate changing consumer demands
and respond to emerging industry standards and technological changes. No
assurance can be given that we will be able to keep pace with the rapidly
changing consumer demands, technological trends and evolving industry
standards.
WE ARE DEPENDANT ON CERTAIN STRATEGIC RELATIONSHIPS.
Our international business, in part, is dependent upon relationships
with distributors, governments or providers of telecommunications services
in foreign markets. The failure to develop or maintain these relationships
could result in a material adverse effect on the financial condition and
results of our operations.
THE LOSS OF A SIGNIFICANT CUSTOMER COULD CAUSE A REDUCTION IN OUR REVENUE
AND STOCK PRICE
While our significant customers vary from quarter to quarter, a
single customer accounted for approximately 15% of our revenues for the
quarter ended July 31, 2001. The loss of one or more of our significant
customers could result in a reduction of our overall revenue for a given
period, which could result in a decrease to our stock price. We could lose
this customer or other significant customers for any number of reasons
including:
- the entrance into the market of significant new competitors with
lower rates than us;
- changes in U.S. or foreign regulations; or
- unexpected increases in our cost structure.
WE HAVE NOT DECLARED DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid any cash dividends on our common stock
and do not presently intend to pay cash dividends on our common stock in the
foreseeable future.
THE PRICE OF OUR COMMON STOCK MAY BE SUBJECT TO VOLATILE CHANGES.
The price at which the shares of common stock trade is likely to be
subject to significant volatility. The market for the common stock may be
influenced by many factors, including the depth and liquidity of the market
for our common stock, investor perceptions of us, and general economic and
similar conditions.
FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference,
contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. You
can identify these statements by forward-looking words such as "may,"
"will," "expect," "anticipates," "believe," "estimate" and "continue" or
similar words. Actual results could differ materially from those projected
in the forward-looking statements as a result of the risk factors beginning
on page 2 and other uncertainties, certain of which may be detailed from
time to time in our periodic reports filed with the SEC.
As used in this Prospectus, unless the context requires otherwise, "we"
means Dial-Thru International Corporation.
THE COMPANY
Dial-Thru is a facilities-based, global Internet Protocol (IP)
communications company providing connectivity to international markets
experiencing significant demand for IP enabled services. We provide a
variety of international telecommunications services targeted to small and
medium sized enterprises (SME's) that include the transmission of voice and
data traffic and the provision of Web-based and other communications
services. We utilize Voice over Internet Protocol (VoIP) packetized voice
technology (and other compression techniques) to improve both cost and
efficiencies of telecommunication transmissions, and are developing a
private VoIP network. We utilize state-of-the-art digital fiber optic cable,
oceanic cable transmission facilities, international satellites and the
Internet to transport our communications.
VoIP is voice communication that has been converted into digital
packets and is then addressed, prioritized, and transmitted over any form of
broadband network utilizing the technology that makes the Internet possible.
These technologies allow us to transmit voice communications with the same
high-density compression as networks initially designed for data
transmission, and at the same time utilize a common network for providing
customers with data and enhanced Web-based services.
We primarily focus on markets where competition is not as keen,
thereby giving us opportunities for greater profit margins. These markets
include regions where the deregulation of telecommunications services has
not been completed and smaller markets that have not attracted large multi-
national providers. South Africa, Asia, and parts of South America offer
the greatest abundance of these target markets.
Cooperating with overseas carriers and the incumbent, usually
government owned, telephone companies, gives us better opportunities to
engage in the co-branding of jointly marketed products, including IP-based
enhancements that they have developed, rather than simply basing a strategy
on pricing arbitrage. As a result, we are proactively invited to
participate in, rather than reactively prevented from entering into, new
markets.
Unlike many new VoIP carriers in the market today, we are focused on
retail telecommunications sales to business customers, including enhanced
product offerings, not just wholesale voice traffic. A portfolio of
enhanced offerings provides us with the opportunity for higher profit
margins and better customer loyalty.
In tandem with overseas partners, we are deploying a "book-end"
strategy by targeting markets at both ends of international circuits. As an
example, while cooperating with our partners to target the SME market in a
selected foreign region, we also target corresponding expatriates and
foreign owned businesses back in the US.
Cooperating with incumbent carriers in emerging markets also gives us
the added benefit of being able to develop and exploit labor cost advantages
not found in mature markets. For example, we plan to develop new and
extremely low-cost call center applications that will tie into and enhance
our new Web and VoIP applications. By relying on VoIP and IP, rather than
traditional voice technology, we ensure that our network infrastructure is
extremely cost-effective and state-of-the-art.
Our principal executive offices are located at 700 South Flower, Suite
2950, Los Angeles, California 90017, and our telephone number is (213) 627-
7599.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of common
stock by the selling shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares of common stock
owned by the selling shareholders.
Shares Beneficially Owned Shares Beneficially Owned
Name of Selling Before Offering After Offering (5)
Shareholder Number (1) Percent (4) Number (1) Percent (4)
----------------------------------------------------------------------------
Global Capital Funding
Group, L.P. 2,855,906(2) 18.05% 0 0
D.P. Securities, Inc. 25,000(3) 0.16% 0 0
1. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock that
the selling shareholders have the right to acquire pursuant to the exercise
of warrants and options exercisable within 60 days are deemed to be
outstanding and beneficially owned by the person holding the warrants for
the purpose of computing the number of shares beneficially owned.
2. Represents the number of shares of common stock issuable upon conversion
of our 6% Convertible Debenture issued on April 11, 2001 to Global Capital;
plus, the number of shares of Common Stock issuable as payment for the
accrued interest on that Convertible Debenture; plus, the number of shares
of common stock issuable upon the exercise of the Warrant issued on April
11, 2001 to Global Capital.
3. Represents the number of shares of common stock issuable upon the
exercise of a Warrant issued on April 6, 2001 to DP Securities, Inc. for
services rendered in connection with the Convertible Debenture.
4. Calculation based on 11,547,925 shares issued and outstanding as of
October 5, 2001.
5. Assumes the sale of all shares of common stock offered hereby.
This Registration Statement will also cover any additional shares of
common stock which become issuable in connection with the shares registered
for sale hereby by reason of any stock dividend, stock split, merger,
consolidation, recapitalization or other similar transaction effected
without the receipt of consideration that results in an increase in the
number of outstanding shares of common stock.
DESCRIPTION OF SECURITIES TO BE REGISTERED
As of the date of this prospectus, we are authorized to issue up to
44,169,100 shares of common stock. As of October 5, 2001, we had 11,547,925
shares of common stock issued and outstanding.
Dividends
The holders of common stock are entitled to receive dividends when,
as and if declared by our board of directors, out of funds legally available
for their payment.
Rights Upon Liquidation
In the event of our voluntary or involuntary liquidation, dissolution
or winding up, the holders of common stock will be entitled to share equally
in any of our assets available for distribution after the payment in full of
all debts and distributions and after the holders of all series of
outstanding preferred stock, in any, have received their liquidation
preferences in full.
Voting Rights
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders.
Miscellaneous
The holders of common stock are not entitled to redemption rights.
Shares of common stock are not convertible into shares of any other class of
capital stock. Our common stock is traded on the OTC Market under the
symbol "DTIX."
PLAN OF DISTRIBUTION
We are registering this offering of shares on behalf of the selling
shareholders, and we will pay all costs, expenses and fees related to such
registration, including all registration and filing fees, printing expenses,
fees and disbursements of our counsel, blue sky fees and expenses and the
expenses of any special audits or "cold comfort" letters. The selling
shareholders will pay all selling expenses, all fees and disbursements of
their counsel and all other marketing expenses.
The selling shareholders may sell their shares from time to time in
one or more transactions through ordinary brokerage transactions or in
private, negotiated transactions. The selling shareholders will determine
the prices at which they sell their shares. Such transactions may or may not
involve brokers or dealers.
If the selling shareholders use a broker-dealer to complete their sale
of the shares, such broker-dealer may receive compensation in the form of
discounts, concessions or commissions from such selling shareholders or from
you, as purchaser (which compensation might exceed customary commissions).
The selling shareholders may indemnify any agent, dealer or broker-
dealer that participates in sales of the shares against similar liabilities.
LEGAL OPINION
The validity of the common stock offered hereby will be passed on for
us by Riordan and McKinzie, 300 South Grand Avenue, Suite 2900, Los Angeles,
CA 90071.
EXPERTS
Our consolidated financial statements as of and for the Fiscal Year
Ended October 31, 2000 appearing in our Amended and Restated Annual Report
on Form 10-K and incorporated herein by reference have been audited by King
Griffin & Adamson P.C. in reliance upon the report of such firm as experts
in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file
at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the
public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
have filed with it, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that
we file later with the SEC will automatically update and supersede this
information. We incorporate by reference into this prospectus the following
documents listed below and any future filings that we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:
(1) Our Amended and Restated Annual Report on Form 10-K for the year
ended October 31, 2000 filed on August 3, 2001;
(2) Our Amended and Restated Quarterly Report on Form 10-Q for the
quarter ended January 31, 2001 filed on August 3, 2001;
(3) Our Amended and Restated Quarterly Report on Form 10-Q for the
quarter ended April 30, 2001 filed on August 3, 2001;
(4) Our Quarterly Report on Form 10-Q for the quarter ended July 31,
2001 filed on September 14, 2001
(5) The description of our Common Stock included in our registration
statement on Form 10 filed with the SEC on January 6, 1994,
including any other amendment or report filed for the purpose of
updating such information.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Dial-Thru International Corporation
700 South Flower, Suite 2950
Los Angeles, California 90017
Attn: Corporate Secretary
Telephone: (213) 627-7599
www.dialthru.com
You should rely only on information incorporated by reference or
provided in this Prospectus and any prospectus supplement. No one (including
any salesman or broker) is authorized to provide oral or written information
about this offering that is not included in this Prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated costs and expenses in
connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions. All of the
amounts shown are estimates except the Securities and Exchange Commission
registration fee. The selling shareholders will not be responsible for the
payment of any of these costs and expenses.
To Be Paid
By The
Registrant
----------
SEC registration fee $ 691
Accounting fees and expenses $ 2,500
Legal fees and expenses $ 10,000
Miscellaneous $ 2,000
----------
$ 15,191
==========
Item 15. Indemnification of Directors and Officers.
Article 10 of our Certificate of Incorporation and Section 11.1 of our
Bylaws provide for indemnification of our directors, officers, employees and
agents (including the advancement of expenses) to the fullest extent
permitted by Delaware law.
Item 16. Exhibits.
The following exhibits are incorporated by reference into this
registration statement:
Exhibit
No. Description of Documents
------- ------------------------
2.1 Agreement and Plan of Merger dated as of January 30, 1998, among
Canmax Inc., CNMX MergerSub, Inc. and USCommunications Services,
Inc. (filed as Exhibit 2.1 to USCommunications Services' Form 8-K
dated January 30, 1998 (the "USC 8-K"), and incorporated herein by
reference)
2.2 Rescission Agreement dated June 15, 1998 among Canmax Inc., USC
and former principals of USC (filed as Exhibit 10.1 to
USCommunications Services' Form 8-K dated January 15, 1998 (the
"USC Rescission 8-K"), and incorporated herein by reference)
2.3 Asset Purchase Agreement by and among Affiliated Computer
Services, Inc., Canmax and Canmax Retail Systems, Inc. dated
September 3, 1998 (filed as Exhibit 10.1 to the Registrant's Form
8-K dated December 7, 1998 and incorporated herein by reference)
2.4 Asset Purchase Agreement dated November 2, 1999 among ARDIS
Telecom & Technologies, Inc., Dial-Thru International
Corporation, a Delaware corporation, Dial-Thru International
Corporation, a California corporation, and John Jenkins (filed
as Exhibit 2.1 to the Registrant's Current Report on Form 8-K
dated November 2, 1999 and incorporated herein by reference)
3.1 Certificate of Incorporation, as amended (filed as Exhibit 3.1
to the Registrant's Annual Report on Form 10-K dated January 31,
2000 and incorporated herein by reference)
3.2 Amended and Restated Bylaws (filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K dated January 31, 2000
and incorporated herein by reference)
4.1 Securities Purchase Agreement issued April 11, 2001 (filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for
the period ended April 30, 2001 and incorporated herein by
reference)
4.2 Registration Rights Agreement dated April 6, 2001 between Dial Thru
International Corporation and Global Capital Funding Group, L.P.
4.3 6% Convertible Debenture of Dial Thru International Corporation and
Global Capital Funding Group, L.P.
4.4 Form of Common Stock Purchase Warrant dated April 11, 2001 between
Global Capital Funding Group, L.P. and Dial Thru International
Corporation
4.5 Form of Common Stock Purchase Warrant dated April 6, 2001 between
D.P. Securities, Inc. and Dial Thru International Corporation
5.1 Opinion of Riordan & McKinzie.*
23.1 Consent of Riordan & McKinzie (included in the opinion filed
as Exhibit 5.1).
23.2 Consent of King Griffin & Adamson P.C.
24.1 Power of Attorney (set forth on signature page of the
registration statement).
*To be filed by amendment.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective
amendment to this registration statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the
prospectus any facts or events arising after the effective date of this
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in
the information set forth in this registration statement; and (iii) to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement; (2) that, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at the time shall be deemed to be the initial bona fide
offering thereof; and (3) to remove from registration by means of a post-
effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on October 11,
2001.
DIAL-THRU INTERNATIONAL CORPORATION
By: /s/ John Jenkins
------------------------------------
John Jenkins
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Roger D. Bryant his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in
his name, in any and all capacities, to sign all amendments (including post-
effective amendments) to registration statement to which this power of
attorney is attached, and to file all those amendments and all exhibits to
them and other documents to be filed in connection with them, including any
registration statement pursuant to Rule 462 under Securities Act, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ John Jenkins Chairman of the Board, Chief October 11, 2001
John Jenkins Executive Officer, President
and Director
/s/ Allen Sciarillo Chief Financial Officer, October 11, 2001
Allen Sciarillo Secretary, (Principal
Financial Officer)
/s/ Robert M. Fidler Director October 11, 2001
Robert M. Fidler
/s/ Larry Vierra Executive Vice President October 11, 2001
Lawrence Vierra and Director
INDEX TO EXHIBITS
Exhibit
No. Description of Documents
------- ------------------------
4.2 Registration Rights Agreement dated April 6, 2001 between Dial Thru
International Corporation and Global Capital Funding Group, L.P.
4.3 6% Convertible Debenture of Dial Thru International Corporation and
Global Capital Funding Group, L.P.
4.4 Form of Common Stock Purchase Warrant dated April 11, 2001 between
Global Capital Funding Group, L.P. and Dial Thru International
Corporation
4.5 Form of Common Stock Purchase Warrant dated April 6, 2001 between
D.P. Securities, Inc. and Dial Thru International Corporation
5.1 Opinion of Riordan & McKinzie.*
23.1 Consent of Riordan & McKinzie (included in the opinion filed
as Exhibit 5.1).
23.2 Consent of King Griffin & Adamson P.C.
24.1 Power of Attorney (set forth on signature page of the
Registration Statement).
*To be filed by amendment
EX-4.2
3
exh04-2.txt
REGISTRATION RIGHTS AGREEMENT
EXHIBIT 4.2
Registration Rights Agreement
dated as of
April 6, 2001
by and between
Dial-Thru International Corporation
and
Global Capital Funding Group, L.P.
Registration Rights Agreement
TABLE OF CONTENTS
1. Introduction...............................................2
1.1 Securities Purchase Agreement.........................2
1.2 Definition of Securities..............................2
2. Registration under Securities Act, etc.....................2
2.1 Mandatory Registration................................2
(a) Registration of Registrable Securities...........2
(b) Registration Statement Form......................2
(c) Expenses.........................................2
(d) Effective Registration Statement.................2
(e) Plan of Distribution.............................2
2.2 Incidental Registration...............................2
(a) Right to Include Registrable Securities..........2
(b) Priority in Incidental Registrations.............3
2.3 Registration Procedures...............................3
2.4 Underwritten Offerings................................7
(a) Incidental Underwritten Offerings................7
(b) Holdback Agreements..............................7
(c) Participation in Underwritten Offerings..........7
2.5 Preparation; Reasonable Investigation.................8
2.6 Registration Default Fee..............................8
2.7 Indemnification.......................................8
(a) Indemnification by the Company...................8
(b) Indemnification by the Sellers...................9
(c) Notices of Claims, etc...........................9
(d) Other Indemnification...........................10
(e) Indemnification Payments........................10
(f) Contribution....................................10
3. Definitions...............................................11
4. Rule 144..................................................13
5. Amendments and Waivers....................................13
6. Nominees for Beneficial Owners............................14
7. Notices...................................................14
8. Assignment................................................14
9. Descriptive Headings......................................14
10. Governing Law.............................................15
11. Counterparts..............................................15
12. Entire Agreement..........................................15
13. Severability..............................................15
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 11,
2001, between Dial-Thru International Corporation, a Delaware corporation
(the "Company") and Global Capital Funding Group, L.P. (the "Fund"), a
Delaware limited partnership.
1 Introduction.
1.1 Securities Purchase Agreement. The Company and the Fund
has today executed that certain Securities Purchase Agreement
(the "Securities Purchase Agreement"), pursuant to which the
Company has agreed, among other things, to issue One Million
Dollars ($1,000,000.00) (U.S.) principal amount of 6%
Convertible Debentures of the Company (the "Debentures") to
the Fund or its successors, assigns or transferees
(collectively, the "Holders"). The Debentures are
convertible into an indeterminable number of shares (the
"Debenture Conversion Shares") of the Company's common stock,
$.001 par value per share (the "Common Stock") pursuant to
the terms of the Debentures. In addition, pursuant to the
terms of the Securities Purchase Agreement and the
transactions contemplated thereby, the Company has agreed to
issue to the Fund, Common Stock Purchase Warrants exercisable
for 100,000 shares of the Company's Common Stock, (the
"Warrant Shares"). The number of Debenture Conversion Shares
and Warrant Shares is subject to adjustment upon the
occurrence of stock splits, recapitalizations and similar
events occurring after the date hereof.
1.2 Definition of Securities. The Debenture Conversion
Shares and the Warrant Shares are herein referred to as the
"Securities."
2 Registration under Securities Act, etc.
2.1 Mandatory Registration.
2.1.1 Registration of Registrable Securities. The
Company shall prepare and file within sixty (60) days
following the date hereof a registration statement (the
"Registration Statement") covering the resale of the
Registrable Securities. The Company shall use its best
efforts to cause the Registration Statement to be
declared effective by the Commission on the earlier of
(i) 180 days following the date hereof with respect to
the Registration Statement, (ii) ten (10) days following
the receipt of a "No Review" or similar letter from the
Commission or (iii) the first day following the day the
Commission determines the Registration Statement
eligible to be declared effective (the "Required
Effectiveness Date"). Nothing contained herein shall be
deemed to limit the number of Registrable Securities to
be registered by the Company hereunder. As a result,
should the Registration Statement not relate to the
maximum number of Registrable Securities acquired by (or
potentially acquirable by) the holders thereof upon
conversion of the Debentures, or exercise of the Common
Stock Purchase Warrants described in Section 1 above,
the Company shall be required to promptly file a
separate registration statement (utilizing Rule 462
promulgated under the Exchange Act, where applicable)
relating to such Registrable Securities which then
remain unregistered. The provisions of this Agreement
shall relate to any such separate registration statement
as if it were an amendment to the Registration
Statement.
2.1.2 Registration Statement Form. Registrations
under this Section 2.1 shall be on Form S-3 or such
other appropriate registration form of the Commission as
shall permit the disposition of such Registrable
Securities in accordance with the intended method or
methods of disposition specified by the Fund; provided,
however, such intended method of disposition shall not
include an underwritten offering of the Registrable
Securities.
2.1.3 Expenses. The Company will pay all
Registration Expenses in connection with any
registration required by this Section 2.1.
2.1.4 Effective Registration Statement. A
registration requested pursuant to this Section 2.1
shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become
effective within the time period specified herein,
provided that a registration which does not become
effective after the Company filed a registration
statement with respect thereto solely by reason of the
refusal to proceed of any holder of Registrable
Securities (other than a refusal to proceed based upon
the advice of counsel in the form of a letter signed by
such counsel and provided to the Company relating to a
disclosure matter unrelated to such holder) shall be
deemed to have been effected by the Company unless the
holders of the Registrable Securities shall have elected
to pay all Registration Expenses in connection with such
registration, (ii) if, after it has become effective,
such registration becomes subject to any stop order,
injunction or other order or extraordinary requirement
of the Commission or other governmental agency or court
for any reason or (iii) if, after it has become
effective, such registration ceases to be effective for
more than an aggregate of twenty (20) days.
2.1.5 Plan of Distribution. The Company hereby
agrees that the Registration Statement shall include a
plan of distribution section reasonably acceptable to
the Fund; provided, however, such plan of distribution
section shall be modified by the Company so as to not
provide for the disposition of the Registrable
Securities on the basis of an underwritten offering.
2.2 Incidental Registration.
2.2.1 Right to Include Registrable Securities. If
at any time after the date hereof but before the third
anniversary of the date hereof, the Company proposes to
register any of its securities under the Securities Act
(other than by a registration in connection with an
acquisition in a manner which would not permit
registration of Registrable Securities for sale to the
public, on Form S-8, or any successor form thereto, on
Form S-4, or any successor form thereto and other than
pursuant to Section 2.1), on an underwritten basis
(either best-efforts or firm-commitment), then, the
Company will each such time give prompt written notice
to all Holders of its intention to do so and of such
Holders' rights under this Section 2.2. Upon the
written request of any such Holder made within twenty
(20) days after the receipt of any such notice (which
request shall specify the Registrable Securities
intended to be disposed of by such Holder and the
intended method of disposition thereof), the Company
will, subject to the terms of this Agreement, use its
commercially reasonable best efforts to effect the
registration under the Securities Act of the Registrable
Securities, to the extent requisite to permit the
disposition (in accordance with the intended methods
thereof as aforesaid) of such Registrable Securities so
to be registered, by inclusion of such Registrable
Securities in the registration statement which covers
the securities which the Company proposes to register,
provided that if, at any time after written notice of
its intention to register any securities and prior to
the effective date of the registration statement filed
in connection with such registration, the Company shall
determine for any reason either not to register or to
delay registration of such securities, the Company may,
at its election, give written notice of such
determination to each Holder and, thereupon, (i) in the
case of a determination not to register, shall be
relieved of this obligation to register any Registrable
Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to
the rights of any holder or holders of Registrable
Securities entitled to do so to request that such
registration be effected as a registration under Section
2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay
in registering such other securities. No registration
effected under this Section 2.2 shall relieve the
Company of its obligation to effect any registration
upon request under Section 2.1, nor shall any such
registration hereunder be deemed to have been effected
pursuant to Section 2.1. The Company will pay all
Registration Expenses in connection with each
registration of Registrable Securities requested
pursuant to this Section 2.2. The right provided the
Holders of the Registrable Securities pursuant to this
Section shall be exercisable at their sole discretion
and will in no way limit any of the Company's
obligations to pay the Securities according to their
terms.
2.2.2 Priority in Incidental Registrations. If the
managing underwriter of the underwritten offering
contemplated by this Section 2.2 shall inform the
Company and holders of the Registrable Securities
requesting such registration by letter of its belief
that the number of securities requested to be included
in such registration exceeds the number which can be
sold in such offering, then the Company will include in
such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (i)
first securities proposed by the Company to be sold for
its own account, and (ii) second Registrable Securities
and securities of other selling security holders
requested to be included in such registration pro rata
on the basis of the number of shares of such securities
so proposed to be sold and so requested to be included;
provided, however, the holders of Registrable Securities
shall have priority to all shares sought to be included
by officers and directors of the Company as well as
holders of ten percent (10%) or more of the Company's
Common Stock.
2.3 Registration Procedures. If and whenever the Company is
required to effect the registration of any Registrable
Securities under the Securities Act as provided in Section
2.1 and, as applicable, 2.2, the Company shall, as
expeditiously as possible:
2.3.0.1 prepare and file with the Commission the Registration
Statement, or amendments thereto, to effect such registration
(including such audited financial statements as may be required by the
Securities Act or the rules and regulations promulgated thereunder) and
thereafter use its commercially reasonable best efforts to cause such
registration statement to be declared effective by the Commission, as
soon as practicable, but in any event no later than the Required
Effectiveness Date (with respect to a registration pursuant to Section
2.1); provided, however, that before filing such registration statement
or any amendments thereto, the Company will furnish to the counsel
selected by the holders of Registrable Securities which are to be
included in such registration, copies of all such documents proposed to
be filed;
2.3.0.2 with respect to any registration statement pursuant to
Section 2.1, prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities
covered by such registration statement until the earlier to occur of
six (6) years after the date of this Agreement(subject to the right of
the Company to suspend the effectiveness thereof for not more than 10
consecutive days or an aggregate of 30 days in such six (6) years
period) or such time as all of the securities which are the subject of
such registration statement cease to be Registrable Securities (such
period, in each case, the "Registration Maintenance Period");
2.3.0.3 furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller and underwriter, if any, may reasonably request in order
to facilitate the public sale or other disposition of the Registrable
Securities owned by such seller;
2.3.0.4 use its commercially reasonable best efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws as any seller thereof shall reasonably request, to keep such
registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other action
which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
2.3.0.5 use its commercially reasonable best efforts to cause all
Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
2.3.0.6 furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller, and the underwriters, if any,
of:
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement),reasonably satisfactory in form
and substance to such seller) including that the prospectus and any
prospectus supplement forming a part of the Registration Statement does not
contain an untrue statement of a material fact or omits a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and
(B) a "comfort" letter (or, in the case of any Person
which does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a
letter of like kind dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have certified
the Company's financial statement included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities (with, in the case of an "agreed
upon procedures" letter, such modifications or deletions as may be required
under Statement on Auditing Standards No. 35) and, in the case of the
accountants' letter, such other financial matters, and, in the case of the
legal opinion, such other legal matters, as such seller (or the
underwriters, if any) may reasonably request;
2.3.0.7 notify the Sellers' Representative and its counsel promptly
and confirm such advice in writing promptly after the Company has
knowledge thereof:
2.3.0.7.1 when the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the Registration Statement has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto, when
the same has become effective;
2.3.0.7.2 of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus or for
additional information;
2.3.0.7.3 of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings by any Person for that purpose; and
2.3.0.7.4 of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
2.3.0.8 notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material facts required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and at the request of any such seller promptly prepare
and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
2.3.0.9 use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the
earliest possible moment;
2.3.0.10 otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
2.3.0.11 enter into such agreements and take such other actions as the
Sellers' Representative shall reasonably request in writing (at the
expense of the requesting or benefiting sellers) in order to expedite
or facilitate the disposition of such Registrable Securities; and
2.3.0.12 use its commercially reasonable best efforts to list all
Registrable Securities covered by such registration statement on any
securities exchange on which any of the Registrable Securities are then
listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities as
the Company may from time to time reasonably request in writing.
The Company will not file any registration statement pursuant to
Section 2.1, or amendment thereto or any prospectus or any supplement
thereto (including such documents incorporated by reference and proposed to
be filed after the initial filing of the Registration Statement) to which
the Sellers' Representative shall reasonably object, provided that the
Company may file such documents in a form required by law or upon the advice
of its counsel.
The Company represents and warrants to each holder of Registrable
Securities that it has obtained all necessary waivers, consents and
authorizations necessary to execute this Agreement and consummate the
transactions contemplated hereby other than such waivers, consents and/or
authorizations specifically contemplated by the Securities Purchase
Agreement.
Each Fund agrees that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in subdivision (viii) of
this Section 2.3, such Fund will forthwith discontinue such Fund's
disposition of Registrable Securities pursuant to the Registration Statement
relating to such Registrable Securities until such Fund's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(viii) of this Section 2.3 and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than permanent
file copies, then in such Fund's possession of the prospectus relating to
such Registrable Securities current at the time of receipt of such notice.
2.4 Underwritten Offerings.
2.4.1 Incidental Underwritten Offerings. If the
Company at any time proposes to register any of its
securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by
or through one or more underwriters, the Company will,
if requested by any holder of Registrable Securities as
provided in Section 2.2 and subject to the provisions of
Section 2.2(a), use its commercially reasonable best
efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by
such underwriters.
2.4.2 Holdback Agreements. Subject to such other
reasonable requirements as may be imposed by the
underwriter as a condition of inclusion of the Fund's
Registrable Securities in the registration statement,
the Fund agrees by acquisition of Registrable
Securities, if so required by the managing underwriter,
not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or
distribution of or otherwise dispose of, except as part
of such underwritten registration, any equity securities
of the Company, during such reasonable period of time
requested by the underwriter; provided however, such
period shall not exceed the 120 day period commencing 30
days prior to the commencement of such underwritten
offering and ending 90 days following the completion of
such underwritten offering.
2.4.3 Participation in Underwritten Offerings. No
holder of Registrable Securities may participate in any
underwritten offering under Section 2.2 unless such
holder of Registrable Securities (i) agrees to sell such
Person's securities on the basis provided in any
underwriting arrangements approved, subject to the terms
and conditions hereof, by the holders of a majority of
Registrable Securities to be included in such
underwritten offering and (ii) completes and executes
all questionnaires, indemnities, underwriting agreements
and other documents (other than powers of attorney)
required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no
underwriting agreement (or other agreement in connection
with such offering) shall require any holder of
Registrable Securities to make an representations or
warranties to or agreements with the Company or the
underwriters other than representations and warranties
contained in a writing furnished by such holder
expressly for use in the related registration statement
or representations, warranties or agreements regarding
such holder, such holder's Registrable Securities and
such holder's intended method of distribution and any
other representation required by law.
2.5 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration
statement under the Securities Act pursuant to this
Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, and
their respective counsel and accountants, the opportunity to
participate in the preparation of such registration
statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and
records and such opportunities to discuss the business of the
Company with its officers and the independent public
accountants who have certified its financial statements as
shall be necessary, in the reasonable opinion of such
holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the
Securities Act.
2.6 Registration Default Fee. If the Registration Statement
contemplated in Section 2.1 is (x) not filed with the
Commission by the Filing Date, (y) not declared effective by
the Required Effectiveness Date or (z) such effectiveness is
not maintained for the Registration Maintenance Period, then
the Company shall pay to the Fund the fees specified in
Section 10.4 of the Securities Purchase Agreement.
2.7 Indemnification.
2.7.1 Indemnification by the Company. In the event
of any registration of any securities of the Company
under the Securities Act, the Company will, and hereby
does agree to indemnify and hold harmless the holder of
any Registrable Securities covered by such registration
statement, its directors and officers, each other Person
who participates as an underwriter in the offering or
sale of such securities and each other Person, if any,
who controls such holder or any such underwriter within
the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or
underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material
fact contained in any registration statement under which
such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment
or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse
such holder and each such director, officer, underwriter
and controlling person for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim,
liability, action or proceeding, provided that the
Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability, (or
action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in such registration statement, any such
preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the
Company by such holder or underwriter stating that it is
for use in the preparation thereof and, provided further
that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale
of Registrable Securities or to any other Person, if
any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that
any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of
such Person's failure to send or give a copy of the
final prospectus, as the same may be then supplemented
or amended, within the time required by the Securities
Act to the Person asserting the existence of an untrue
statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation
of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final
prospectus or an amendment or supplement thereto. Such
indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of
such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of
such securities by such holder.
2.7.2 Indemnification by the Sellers. The Company
may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant
to this Agreement, that the Company shall have received
an undertaking satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and
hold harmless (in the same manner and to the same extent
as set forth in subdivision (a) of this Section 2.7) the
Company, each director of the Company, each officer of
the Company and each other Person, if any, who controls
the Company within the meaning of the Securities Act,
with respect to any statement or alleged statement in or
omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written
information furnished to the Company through an
instrument duly executed by such seller specifically
stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement.
Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or
controlling person and shall survive the transfer of
such securities by such seller.
2.7.3 Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this
Section 2.7, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying
party, give written notice to the latter of the
commencement of such action, provided that the failure
of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this
Section 2.7, except to the extent that the indemnifying
party is actually prejudiced by such failure to give
notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party
similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the
indemnifying party to such indemnified party of its
election so to assume the defense thereof, the
indemnifying party shall not be liable to such
indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any such
action which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability, or a
covenant not to sue, in respect to such claim or
litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any such
action the defense of which has been assumed by an
indemnifying party without the consent of such
indemnifying party.
2.7.4 Other Indemnification. Indemnification
similar to that specified in the preceding subdivisions
of this Section 2.7 (with appropriate modifications)
shall be given by the Company and each seller of
Registrable Securities (but only if and to the extent
required pursuant to the terms of Section 2.7(b)) with
respect to any required registration or other
qualification of securities under any Federal or state
law or regulation of any governmental authority, other
than the Securities Act.
2.7.5 Indemnification Payments. The indemnification
required by this Section 2.7 shall be made by periodic
payments of the amount thereof during the course of the
investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
2.7.6 Contribution. If the indemnification provided
for in the preceding subdivision of this Section 2.7 is
unavailable to an indemnified party in respect of any
expense, loss, claim, damage or liability referred to
therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as
a result of such expense, loss, claim, damage or
liability (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on
the one hand and the holder or underwriter, as the case
may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation
provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the
Company on the one hand and of the holder or
underwriter, as the case may be, on the other in
connection with the statements or omissions which
resulted in such expense, loss, damage or liability, as
well as any other relevant equitable considerations.
The relative benefits received by the Company on the one
hand and the holder or underwriter, as the case may be,
on the other in connection with the distribution of the
Registrable Securities shall be deemed to be in the same
proportion as the total net proceeds received by the
Company from the initial sale of the Registrable
Securities by the Company to the purchasers bear to the
gain, if any, realized by all selling holders
participating in such offering or the underwriting
discounts and commissions received by the underwriter,
as the case may be. The relative fault of the Company
on the one hand and of the holder or underwriter, as the
case may be, on the other shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission
to state a material fact relates to information supplied
by the Company, by the holder or by the underwriter and
the parties' relative intent, knowledge, access to
information supplied by the Company, by the holder or by
the underwriter and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such statement or omission, provided
that the foregoing contribution agreement shall not
inure to the benefit of any indemnified party if
indemnification would be unavailable to such indemnified
party by reason of the provisions contained in the first
sentence of subdivision (a) of this Section 2.7, and in
no event shall the obligation of any indemnifying party
to contribute under this subdivision (f) exceed the
amount that such indemnifying party would have been
obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (b) of
this Section 2.7 had been available under the
circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subdivision
(f) were determined by pro rata allocation (even if the holders and any
underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
in the preceding sentence and subdivision (c) of this Section 2.7, any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
3 Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective
meanings:
"Agreement": As defined in Section 1.
"Commission": The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock": As defined in Section 1.
"Company": As defined in the introductory paragraph of this
Agreement.
"Conversion Shares": As defined in Section 1.
"Debentures": As defined in Section 1, such term to include any
securities issued in substitution of or in addition to such Debentures.
"Exchange Act": The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"OTC Bulletin Board": As defined in Section 1.
"Person": A corporation, association, partnership, organization,
business, individual, governmental or political subdivision thereof or a
governmental agency.
"Registrable Securities": The Securities and any securities
issued or issuable with respect to such 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. Once issued such securities shall cease to be Registrable
Securities when (a) 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, (b) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been delivered
by the Company 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, (d) they shall have ceased to be
outstanding, (e) on the expiration of the applicable Registration
Maintenance Period or (f) any and all legends restricting transfer thereof
have been removed in accordance with the provisions of Rule 144(k) (or any
successor provision) under the Securities Act.
"Registration Expenses": All expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, all registration, filing and NASD fees, all stock exchange and
OTC Bulletin Board or other NASD or stock exchange listing 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, premiums and other costs of policies of insurance of the Company
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 Company in the ordinary course of its
business or which the Company would have incurred in any event.
"Registration Maintenance Period": As defined in Section 2.3.
"Required Effectiveness Date": As defined in Section 2.1.
"Securities Act": The Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Securities Purchase Agreement": As defined in Section 1.
"Sellers' Representative": Global Capital Advisors Ltd. or such
Person designated by Global Capital Advisors Ltd. as of the time of
disposition of the last of the Debentures held by the Fund (or subsequent
Sellers' Representative).
"Warrant Shares": As defined in Section 1.
4 Rule 144. The Company shall timely file the reports required
to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c) of Rule
144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder (or, if
the Company is not required to file such reports, will, upon the
request of any holder of Registrable Securities, make publicly
available other information) and will take such further action as
any holder of Registrable Securities may reasonably request, all
to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with the
requirements of this Section 4.
5 Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder or holders of the sum of
the 51% or more of the shares of (i) Registrable Securities issued
at such time, plus (ii) Registrable Securities issuable upon
exercise or conversion of the Securities then constituting
derivative securities (if such Securities were not fully exchanged
or converted in full as of the date such consent if sought). Each
holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this
Section 5, whether or not such Registrable Securities shall have
been marked to indicate such consent.
6 Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election,
be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any
determination of any number of percentage of shares of Registrable
Securities held by a holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's
beneficial ownership or such Registrable Securities.
7 Notices. Except as otherwise provided in this Agreement, all
notices, requests and other communications to any Person provided
for hereunder shall be in writing and shall be given to such
Person (a) in the case of a party hereto other than the Company,
addressed to such party in the manner set forth in the Securities
Purchase Agreement or at such other address as such party shall
have furnished to the Company in writing, or (b) in the case of
any other holder of Registrable Securities, at the address that
such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an
address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the
Company, or (c) in the case of the Company, at the address set
forth on the signature page hereto, to the attention of its
President, or at such other address, or to the attention of such
other officer, as the Company shall have furnished to each holder
of Registrable Securities at the time outstanding. Each such
notice, request or other communication shall be effective (i) if
given by mail, 72 hours after such communication is deposited in
the mail with first class postage prepaid, addressed as aforesaid
or (ii) if given by any other means (including, without
limitation, by fax or air courier), when delivered at the address
specified above, provided that any such notice, request or
communication shall not be effective until received.
8 Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto. In
addition, and whether or not any express assignment shall have
been made, the provisions of this Agreement which are for the
benefit of the parties hereto other than the Company shall also be
for the benefit of and enforceable by any subsequent holder of any
Registrable Securities. Each of the Holders of the Registrable
Securities agrees, by accepting any portion of the Registrable
Securities after the date hereof, to the provisions of this
Agreement including, without limitation, appointment of the
Sellers' Representative to act on behalf of such Holder pursuant
to the terms hereof which such actions shall be made in the good
faith discretion of the Sellers' Representative and be binding on
all persons for all purposes.
9 Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning
hereof.
10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
11 Counterparts. This Agreement may be executed by facsimile
and may be signed simultaneously in any number of counterparts,
each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same
instrument.
12 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the Company and each other
party hereto relating to the subject matter hereof and supercedes
all prior agreements and understandings relating to such subject
matter.
13 Severability. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance,
shall be held invalid, the remainder of this Agreement, or the
application of such provision to Persons or circumstances other
than those to which it is held invalid, shall not be affected
thereby.
Signature Page Follows
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
DIAL-THRU INTERNATIONAL CORPORATION
By:
Name: _______________________________
Title: _______________________________
Address: 700 South Flower
Suite 2950
Los Angeles, CA 90017
Fax:
Tel.:
GLOBAL CAPITAL FUNDING GROUP, L.P.
By its General Partner, Global Capital
Management Services, Inc.
By:
Name: Lewis N. Lester
Title: President
Address: 106 Colony Park Drive
Suite 900
Cumming, Georgia 30040
Fax: 678-947-6499
Tel.: 678-947-0028
EX-4.3
4
exh04-3.txt
CONVERTIBLE DEBENTURE
EXHIBIT 4.3
EXHIBIT A
FORM OF CONVERTIBLE DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE
AGREEMENT, DATED AS OF THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM
THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS
WHICH (A) LIMIT THE CONVERSION RIGHTS OF THE HOLDER, (B) SPECIFY VOLUNTARY
AND MANDATORY REPAYMENT, PREPAYMENT AND REDEMPTION RIGHTS AND OBLIGATIONS
AND (C) SPECIFY EVENTS OF DEFAULT FOLLOWING WHICH THE REMAINING BALANCE DUE
AND OWING HEREUNDER MAY BE ACCELERATED.
No. 1 $1,000,000
6% CONVERTIBLE DEBENTURE
of
Dial-Thru International Corporation, a Delaware corporation (together
with its successors, the "Company"), for value received hereby promises to
pay to:
Global Capital Funding Group, L.P.
(the "Holder") and registered assigns, the principal sum of One Million
($1,000,000) or, if less, the principal amount of this Debenture then
outstanding, on the Maturity Date by wire transfer of immediately available
funds to the Holder in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public
and private debts, and to pay interest, which shall begin to accrue on the
date of this Debenture, quarterly in arrears, on (i) the last day of March,
June, September and December of each year until the Maturity Date,
commencing June 30, 2001 (unless such day is not a Business Day, in which
event on the next succeeding Business Day) (each an "Interest Payment
Date"), (ii) the Maturity Date, (iii) each Conversion Date, as hereafter
defined, and (iv) the date the principal amount of the Convertible
Debentures shall be declared to be or shall automatically become due and
payable, on the principal sum hereof outstanding in like coin or currency,
at the rates per annum set forth below, from the most recent Interest
Payment Date to which interest has been paid on this Convertible Debenture,
or if no interest has been paid on this Convertible Debenture, from the date
of this Convertible Debenture until payment in full of the principal sum
hereof has been made. The Maturity Date is April 11, 2003.
The interest rate shall be six percent (6%) per annum (the "Interest
Rate") or, if less, the maximum rate permitted by applicable law. Past due
amounts (including interest, to the extent permitted by law) will also
accrue interest at the Interest Rate plus 7% per annum or, if less, the
maximum rate permitted by applicable law, and will be payable on demand
("Default Interest"). Interest on this Convertible Debenture will be
calculated on the basis of a 360-day year of twelve 30 day months. All
payments of principal and interest hereunder shall be made for the benefit
of the Holder pursuant to the terms of the Agreement (hereafter defined).
At the option of the Company, interest may be paid in cash or in shares of
Common Stock. If the Company determines to pay interest in shares of Common
Stock, it shall be required to notify the Holder of such election on the
Closing Date. On each Conversion Date, interest shall be paid in shares of
Common Stock on the portion of the principal balance of the Convertible
Debenture then being converted. The number of shares of Common Stock issued
as interest shall be determined by dividing the dollar amount of interest
due on the applicable Interest Payment Date by the Conversion Price then in
effect.
This Convertible Debenture (this "Convertible Debenture") is one of a
duly authorized issuance of $1,000,000 aggregate principal amount of
Convertible Debentures of the Company referred to in that certain Securities
Purchase Agreement dated as of the date hereof between the Company and the
Purchaser named therein (the "Agreement"). The Agreement contains certain
additional agreements among the parties with respect to the terms of this
Convertible Debenture, including, without limitation, provisions which (A)
limit the conversion rights of the Holder, (B) specify voluntary and
mandatory repayment, prepayment and redemption rights and obligations and
(C) specify Events of Default following which the remaining balance due and
owing hereunder may be accelerated. All such provisions are an integral
part of this Convertible Debenture and are incorporated herein by reference.
This Convertible Debenture is transferable and assignable to one or more
Persons, in accordance with the limitations set forth in the Agreement.
This Convertible Debenture is secured by a Security Agreement (the
"Security Agreement") of even date herewith made by the Company and Holder
creating a security interest in favor of the Holder in certain of the
Company's assets described in the Security Agreement.
The Company shall keep a register (the "Register") in which shall be
entered the names and addresses of the registered holder of this Convertible
Debenture and particulars of this Convertible Debenture held by such holder
and of all transfers of this Convertible Debenture. References to the
Holder or "Holders" shall mean the Person listed in the Register as
registered holder of such Convertible Debentures. The ownership of this
Convertible Debenture shall be proven by the Register.
1. Certain Terms Defined. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings
provided for in the Agreement.
2. Covenants. The Company covenants and agrees to observe and
perform each of its covenants, obligations and undertakings contained in the
Agreement, which obligations and undertakings are expressly assumed herein
by the Company and made for the benefit of the holder hereof.
3. Prepayment; Payment of Principal. The Company may, at its option
at any time after the date hereof, prepay any portion or all of the
outstanding principal amount and accrued and unpaid interest on the
Convertible Debenture at a prepayment price ("Prepayment Price") equal to
(i) 102% of the outstanding principal amount of the Convertible Debentures,
plus all accrued and unpaid interest until the first anniversary of the
Closing Date or (ii) the Redemption Price set forth in Section 5.1 hereof on
any date following the first anniversary of the Closing Date. The Company
shall repay the remaining unpaid balance of this Convertible Debenture, plus
all accrued and unpaid interest on the Maturity Date.
4. Conversion.
4.1 Conversion of Convertible Debenture. Subject to Section 5
hereof, the Holder shall have the right, at its option, at any time
from and after the date of issuance of this Convertible Debenture,
convert the principal amount of this Convertible Debenture, or any
portion of such principal amount, into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then be
constituted) determined pursuant to this Section 4.1. The number of
shares of Common Stock to be issued upon each conversion of this
Convertible Debenture shall be determined by dividing the Conversion
Amount (as defined below) by the Conversion Price in effect on the date
(the "Conversion Date") a Notice of Conversion is delivered to the
Company, as applicable, by the Holder by facsimile or other reasonable
means of communication dispatched prior to 5:00 p.m., E.S.T. The term
"Conversion Amount" means, with respect to any conversion of this
Convertible Debenture, the sum of (1) the principal amount of this
Convertible Debenture to be converted in such conversion plus (2)
accrued and unpaid interest, if any, on such principal amount at the
interest rates provided in this Convertible Debenture to the Conversion
Date plus (3) Default Interest, if any, on the interest referred to in
the immediately preceding clause (2) plus (4) at the Holder's option,
any amounts owed to the Holder pursuant to Section 4.3 hereof, Section
10.1 of the Agreement or Section 10.4 of the Agreement.
4.2 Conversion Price and Limitation. At the option of the Holder, any
portion or all of the outstanding principal amount of this Convertible
Debenture shall be converted into a number of shares of Common Stock at
the conversion price (the "Conversion Price") equal to the lesser of
(i)100% of the volume weighted average sales price as reported by
Bloomberg L.P. of the Common Stock on the last Trading Day immediately
preceding the Closing Date (the "Fixed Conversion Price") and (ii) 80%
of the average of the five (5) lowest volume weighted average sales
prices as reported by Bloomberg L.P. during the twenty (20) Trading
Days immediately preceding but not including the date of the related
Notice of Conversion (the "Formula Conversion Price").
4.3 Authorized Shares.
(1) Consistent with Section 7.11 of the Agreement, the Company
(i) shall promptly irrevocably instruct the Company's transfer agent
to issue certificates for the Common Stock issuable upon conversion of
this Convertible Debenture and (ii) agrees that its issuance of this
Convertible Debenture shall constitute full authority to its officers
and agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares
of Common Stock in accordance with the terms and conditions of this
Convertible Debenture.
(2) If at any time a Holder of this Convertible Debenture submits
a Notice of Conversion (x) the Company does not have sufficient
authorized but unissued shares of Common Stock available to effect such
conversion in full in accordance with the provisions of this Article 4
or (y) the Company is prohibited by the applicable rules of the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time to effect such conversion in full as
provided in subsection (d) below, without stockholder approval (each, a
"Conversion Default"), the Company shall issue to the Holder all of the
shares of Common Stock which are then available to effect such
conversion. The portion of this Convertible Debenture which the Holder
included in its Conversion Notice and which exceeds the amount which is
then convertible into available shares of Common Stock (the "Excess
Amount") shall, notwithstanding anything to the contrary contained
herein, not be convertible into Common Stock in accordance with the
terms hereof until (and at the Holder's option at any time after) the
date additional shares of Common Stock are authorized by the Company,
or its stockholders, as applicable, at which time the Conversion Price
in respect thereof shall be the lower of (i) the Conversion Price on
the Conversion Default Date (as defined below) and (ii) the Conversion
Price on the Conversion Date thereafter elected by the Holder in
respect thereof. The Company shall pay to the Holder payments pursuant
to Section 10.1(b) of the Agreement ("Conversion Default Payments")
until the Conversion Default is cured. The Company shall use its best
efforts to authorize, or cause its stockholders to authorize within 90
days of the occurrence of a Conversion Default, as applicable, a
sufficient number of shares of Common Stock as soon as practicable
following the earlier of (i) such time that the Holder notifies the
Company or that the Company otherwise becomes aware that there are or
likely will be insufficient shares to allow full conversion thereof and
(ii) a Conversion Default. The Company shall send notice to the Holder
of the authorization of additional shares of Common Stock, the
Authorization Date and the amount of Holder's accrued Conversion
Default Payments. The accrued Conversion Default Payments for each
calendar month shall be paid in cash or shall be convertible into
Common Stock (at such time as there are sufficient authorized shares of
Common Stock) at the Market Price, at the Holder's option, as follows:
(1) In the event the Holder elects to take such payment in
cash, cash payment shall be made to Holder by the fifth Business
Day of the month following the month in which it has accrued; and
(2) In the event the Holder elects to take such payment in
Common Stock, the Holder may convert such payment amount into
Common Stock at the Conversion Price (as in effect at the time of
conversion) at any time after the fifth Business Day of the month
following the month in which it has accrued (at such time as there
are sufficient authorized shares of Common Stock) in accordance
with the terms of this Article 4.
(3) The Holder's election pursuant to this Section 4.3 shall be
made in writing to the Company at any time prior to 5:00 p.m., E.S.T.,
on the third Business Day of the month following the month in which
Conversion Default payments have accrued. If no election is made, the
Holder shall be deemed to have elected to receive cash. Nothing herein
shall limit the Holders right to pursue actual damages (to the extent
in excess of the Conversion Default Payments) due to the Company's
failure to maintain a sufficient number of authorized shares of Common
Stock.
(4) In no event shall the Company issue more than the Maximum
Number of Shares upon conversion of this Convertible Debenture, unless
the Company shall have obtained approval by the stockholders of the
Company ("Stockholder Approval") or a waiver of such requirement by the
OTC Bulletin Board or the National Market on which the Common Shares
are listed and traded at that time. Once the Maximum Number of Shares
has been issued (the date of which is hereinafter referred to as the
"Maximum Conversion Date"), unless the Company shall have obtained
Stockholder Approval or a waiver of such requirement by the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time within 90 days of the Maximum Conversion
Date, the Company shall pay to the Holder upon the earlier of (x) 90
days following the Maximum Conversion Date, and (y) such date that it
becomes reasonably apparent that Stockholder Approval will not be
obtained within such 90 day period, the applicable Prepayment Price.
The Maximum Number of Shares shall be subject to adjustment from time
to time for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock
occurring after the date hereof as contemplated by Article XI of the
Agreement. With respect to each Holder of Convertible Debentures, the
Maximum Number of Shares shall refer to such Holder's pro rata share
thereof based upon the aggregate principal balance of the Convertible
Debentures then outstanding. In the event that the Company obtains
Stockholder Approval, approval of the OTC Bulletin Board or the
National Market on which the Common Shares are listed and traded at
that time, or otherwise is able to increase the number of shares to be
issued above the Maximum Number of Shares (such increased number being
the "New Maximum Number of Shares"), the references to Maximum Number
of Shares above shall be deemed to be, instead, references to the New
Maximum Number of Shares.
4.4 Method of Conversion.
(1) Notwithstanding anything to the contrary set forth herein,
upon conversion of this Convertible Debenture in accordance with the
terms hereof, the Holder shall not be required to physically surrender
this Convertible Debenture to the Company unless the entire unpaid
principal amount of this Convertible Debenture is so converted.
Rather, records showing the principal amount converted (or otherwise
repaid) and the date of such conversion or repayment shall be
maintained on a ledger substantially in the form of Annex A attached
hereto (a copy of which shall be delivered to the Company or transfer
agent with each Notice of Conversion). It is specifically contemplated
that the Holder hereof shall act as the calculation agent for
conversions and repayments. In the event of any dispute or
discrepancies, such records maintained by the Holder shall be
controlling and determinative in the absence of manifest error or
failure of Holder to record the principal amount converted (or
otherwise repaid) from time to time, in which events the record of the
Company shall be controlling and determinative. The Holder and any
assignee, by acceptance of this Convertible Debenture, acknowledge and
agree that, by reason of the provisions of this paragraph, following a
conversion of a portion of this Convertible Debenture, the principal
amount represented by this Convertible Debenture will be the amount
indicated on Annex A attached hereto (which may be less than the amount
stated on the face hereof).
(2) The Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock or other securities or property on
conversion of this Convertible Debenture in a name other than that of
the Holder (or in street name), and the Company shall not be required
to issue or deliver any such shares or other securities or property
unless and until the person or persons (other than the Holder or the
custodian in whose street name such shares are to be held for the
Holder's account) requesting the issuance thereof shall have paid to
the Company the amount of any such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
(3) Subject to Section 5 hereof, upon receipt by the Company of a
Notice of Conversion, the Holder shall be deemed to be the holder of
record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on this Convertible Debenture shall be deemed reduced to
reflect such conversion, and, unless the Company defaults on its
obligations under this Article 4, all rights with respect to the
portion of this Convertible Debenture being so converted shall
forthwith terminate except the right to receive the Common Stock or
other securities, cash or other assets, as herein provided, on such
conversion. Subject to Section 5 hereof, if the Holder shall have
given a Notice of Conversion as provided herein, the Company's
obligation to issue and deliver the certificates for shares of Common
Stock shall be absolute and unconditional, irrespective of the absence
of any action by the Holder to enforce the same, any waiver or consent
with respect to any provisions thereof, the recovery of any judgment
against any person or any action by the Holder to enforce the same, any
failure or delay in the enforcement of any other obligation of the
Company to the Holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach
by the Holder of any obligation to the Company, and subject to Section
4.4(a) irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with
such conversion. The date of receipt (including receipt via telecopy)
of such Notice of Conversion shall be the Conversion Date so long as it
is received before 5:00 p.m., E.S.T., on such date.
(4) Notwithstanding the foregoing, if a Holder has not received
certificates for all shares of Common Stock prior to the expiration of
the Deadline with respect to a conversion of any portion of this
Convertible Debenture for any reason, then (unless the Holder otherwise
elects to retain its status as a holder of Common Stock by so notifying
the Company), the Holder shall regain the rights of a Holder of this
Convertible Debenture with respect to such unconverted portions of this
Convertible Debenture and the Company shall, as soon as practicable,
return such unconverted Convertible Debenture to the holder or, if the
Convertible Debenture has not been surrendered, adjust its records to
reflect that such portion of this Convertible Debenture not been
converted. In all cases, the Holder shall retain all of its rights and
remedies (including, without limitation, (i) the right to receive
Conversion Default Payments to the extent required thereby for such
Conversion Default and any subsequent Conversion Default and (ii) the
right to have the Conversion Price with respect to subsequent
conversions determined in accordance with Section 4.3 for the Company's
failure to convert this Convertible Debenture.
(5) In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer
agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of the Holder and
its compliance with the provisions contained in Section 4.1 and in this
Section 4.4, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting the account of Holder's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission
System.
5. Redemption.
5.1 Required Redemption. In accordance with the provisions of the
Purchase Agreement and this Convertible Debenture, the Company may be
required under certain circumstances, to redeem in whole or in part,
the remaining unpaid principal amount of this Convertible Debenture,
for cash at a redemption price (the "Redemption Price") equal to (x)
the number of shares of Common Stock into which this Convertible
Debenture is then convertible, times (y) the average Closing Bid Price
of Common Stock for the five (5) Trading Days as reported by Bloomberg
L.P. immediately preceding the date that this Convertible Debenture is
called for redemption, plus accrued and unpaid interest.
5.2 Mechanics of Redemption. The Company shall effect each such
redemption within 10 business days of giving notice of its election to
redeem by facsimile with a copy by either overnight or 2-day courier to
the Holder of this Convertible Debenture to be redeemed at the address
and facsimile number of such Holder appearing in the Company's register
for the Convertible Debentures. Such redemption notice shall indicate
whether the Company will redeem all or part of such portion of the
Convertible Debenture to be redeemed and the applicable Redemption
Price. The Company shall not be entitled to send any notice of
redemption and begin the redemption procedure unless it has (i) the
full amount of the Redemption Price, in cash, available in a demand or
other immediately available account in a bank or similar financial
institution or (ii) immediately available credit facilities, in the
full amount of the Redemption Price, with a bank or similar financial
institution on the date the redemption notice is sent to the Holders of
this Convertible Debenture. Provided, however, the Company will
process any Notice of Conversion received prior to the issuance of a
notice of redemption; and further provided that, after a notice of
redemption has been issued, the Holder may issue a Notice of Conversion
which will not be honored unless the Company fails to make the
redemption payment when due. In the event of such failure, the Notice
of Conversion will be honored as of the date of the Notice of
Conversion. Additionally, if the Company fails to make full payments
of the Redemption Price of this Convertible Debenture being redeemed by
the tenth day following the notice or redemption, then the Company
waives its right to redeem any of the remaining then outstanding
Debentures, unless approved by the Holder.
5.3 Payment of Redemption Price. The Redemption Price shall be paid
to the Holder of this Convertible Debenture within 10 business days of
the delivery of the notice of such redemption to such Holder.
6. Holder's Right to Advance Notice of Election Redeem.
6.1 Holder's Right to Elect to Receive Notice of Cash Redemption by
Company. The Holder of this Convertible Debenture shall have the right
to require Company to provide advance notice stating whether the
Company will elect to redeem all or part of the redeemable portion in
cash, pursuant to the Company's redemption rights discussed in Section
5.1 above.
6.2 Mechanics of Holder's Election Notice. Holder shall give notice
to the Company by facsimile (the "Election Notice"), requiring that the
Company disclose whether the Company would elect to redeem the
redeemable portion of this Convertible Debenture (in whole or in part)
if the Holder were to provide a Notice of Conversion and sought to
convert the Convertible Debenture in such principal amount as is
specified in the Notice of Election.
6.3 Company's Response. Company must respond, disclosing its
election, within two (2) business days of receipt of Holder's Election
Notice via facsimile. If Company does not respond to Holder within two
(2) business days (by 12:00 noon, if required above) via facsimile,
Company shall be deemed to have forfeited its right to exercise
redemption pursuant to Section 5(a) upon its receipt of (but only with
respect to) that Notice of Conversion.
7. Miscellaneous. This Convertible Debenture shall be deemed to be a
contract made under the laws of the State of Delaware, and for all purposes
shall be governed by and construed in accordance with the laws of said
State. The parties hereto, including all guarantors or endorsers, hereby
waive presentment, demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance and enforcement of
this Convertible Debenture, except as specifically provided herein, and
asset to extensions of the time of payment, or forbearance or other
indulgence without notice. The Company hereby submits to the exclusive
jurisdiction of the United States District Court for Delaware and of any
state court sitting in Delaware for purposes of all legal proceedings
arising out of or relating to this Convertible Debenture. The Company
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. The
Company hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Convertible Debenture.
The Holder of this Convertible Debenture by acceptance of this
Convertible Debenture agrees to be bound by the provisions of this
Convertible Debenture which are expressly binding on such Holder.
Signature Page Follows
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: April ___, 2001
Dial-Thru International Corporation
By:
Name:_______________________________
Title:________________________________
Convertible Debenture
ANNEX A
CONVERSION AND REPAYMENT LEDGER
----------------------------------------------------------------------------
Interest Principal
Date Principal Converted or Converted or New Principal Issuer
Balance Paid Paid Balance Initials
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FULL NAME AND ADDRESS OF SUBSCRIBER FOR REGISTRATION PURPOSES:
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
DELIVERY INSTRUCTIONS (IF DIFFERENT FROM REGISTRATION NAME):
NAME:
ADDRESS:
TEL NO:
FAX NO:
CONTACT
NAME:
SPECIAL INSTRUCTIONS: _____________________________________________________
_____________________________________________________
_____________________________________________________
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Convertible Debenture)
The undersigned hereby irrevocably elects to convert $________ of
the principal balance of the Convertible Debenture into shares of Common
Stock, ____ par value per share (the "Common Stock"), of Dial-Thru
International Corporation (the "Company") according to the conditions
hereof, as of the date written below. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any. The undersigned, as
contemplated by Section 5.1 of the Securities Purchase Agreement pursuant to
which the Convertible Debenture was issued, hereby states that the
representations and warranties of the undersigned set forth therein are true
and correct in all material respects as of the date hereof (provided, the
undersigned makes no representations concerning its investment intent with
respect to the Common Stock received upon this conversion).
Conversion calculations:
___________________________________________________
Date of Conversion
___________________________________________________
Applicable Conversion Price
___________________________________________________
Number of Shares
___________________________________________________
Name/Signature
___________________________________________________
Address:
EX-4.4
5
exh04-4.txt
COMMON STOCK PURCHASE WARRANT
EXHIBIT 4.4
EXHIBIT F
FORM OF COMMON STOCK PURCHASE WARRANT
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE
BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, OR (C) IF REGISTERED UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A
SECURITIES PURCHASE AGREEMENT ("PURCHASE AGREEMENT"), DATED THE DATE HEREOF,
A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING,
WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE HOLDER
AND SPECIFY MANDATORY REDEMPTION OBLIGATIONS OF THE COMPANY.
_______________________________________
DIAL-THRU INTERNATIONAL CORPORATION
COMMON STOCK PURCHASE WARRANT
----------------------------------------------------------------------------
No. 1
Number of shares: 100,000 Holder: Global Capital Funding Group L.P.
106 Colony Park Drive
Expiration Date: April 11, 2006 Suite 900
Cumming, GA 30040
Purchase Price Per Share: $0.89
For identification only. The governing terms of this Warrant are set forth
below.
----------------------------------------------------------------------------
Dial-Thru International Corporation, a Delaware corporation (the "Company"),
hereby certifies that, for value received, GCA Strategic Investment Fund
Limited or assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time after
the date hereof and prior to the fifth anniversary hereof (the "Exercise
Period"), at the Purchase Price hereinafter set forth, One Hundred Thousand
(100,000) shares of the fully paid and nonassessable shares of common stock
of the Company, $.001 par value per share (the "Common Stock"). The number
and character of such shares of Common Stock and the Purchase Price are
subject to adjustment as provided herein.
The purchase price per share of Common Stock issuable upon exercise of
this Warrant (the "Purchase Price") shall initially be $0.89, provided,
however, that the Purchase Price shall be adjusted from time to time as
provided herein.
1. Certain Defined Terms. Capitalized terms used herein not
otherwise defined shall have the meanings ascribed thereto in the Purchase
Agreement. As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Dial-Thru International
Corporation and any corporation that shall succeed or assume the
obligations of such corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's common
stock, $.001 par value per share, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or
after such date, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies,
be entitled to vote for the election of a majority of directors of the
Company (even though the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) that the Holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or that at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section
4 or otherwise.
1. Exercise of Warrant.
2.1 Method of Exercise.
(a) This warrant may be exercised in whole or in part (but not as
to a fractional share of Common Stock), at any time and from time to
time during the Exercise Period by the Holder hereof by delivery of a
notice of exercise (a "Notice of Exercise") substantially in the form
attached hereto as Exhibit A via facsimile to the Company. Promptly
thereafter the Holder shall surrender this Warrant to the Company at
its principal office, accompanied by payment of the Purchase Price
multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made, at the option of the Holder, (i) by check
or bank draft payable to the order of the Company, or (ii) by wire
transfer to the account of the Company. Upon exercise, the Holder
shall be entitled to receive, promptly refund the excess to the Holder.
Upon exercise, the Holder shall be entitled to receive, promptly after
payment in full, one or more certificates, issued in the Holder's name
or in such name or names as the Holder may direct, subject to the
limitations on transfer contained herein, for the number of shares of
Common Stock so purchased. The shares of Common Stock so purchased
shall be deemed to be issued as of the close of business on the date on
which the Company shall have received from the Holder payment in full
of the Exercise Price (the "Exercise Date").
(b) Notwithstanding anything to the contrary set forth herein,
upon exercise of all or a portion of this Warrant in accordance with
the terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on a
ledger substantially in the form of Annex B attached hereto (a copy of
which shall be delivered to the Company or transfer agent with each
Notice of Exercise). It is specifically contemplated that the Holder
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Holders shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following an exercise of a portion of
this Warrant, the number of shares of Common Stock represented by this
Warrant will be the amount indicated on Annex B attached hereto (which
may be less than the amount stated on the face hereof).
2.2 Regulation D Restrictions. The Holder hereof represents and
warrants to the Company that it has acquired this Warrant and anticipates
acquiring the shares of Common Stock issuable upon exercise of the Warrant
solely for its own account for investment purposes and not with a view to or
for resale of such securities unless such resale has been registered with
the Commission or an applicable exemption is available therefore. At the
time this Warrant is exercised, the Company may require the Holder to state
in the Notice of Exercise such representations concerning the Holder as are
necessary or appropriate to assure compliance by the Holder with the
Securities Act.
2.3 Company Acknowledgment. The Company will, at the time of the
exercise of this Warrant, upon request of the Holder hereof, acknowledge in
writing its continuing obligation to afford to such Holder the registration
rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of a Registration Rights
Agreement dated the date hereof (the "Registration Rights Agreement"). If
the Holder shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford such Holder any
such rights.
2.4 Limitation on Exercise. Notwithstanding the rights of the
Holder to exercise all or a portion of this Warrant as described herein,
such exercise rights shall be limited, solely to the extent set forth in the
Purchase Agreement as if such provisions were specifically set forth herein.
In addition, the number of shares of Common Stock issuable upon exercise of
this Warrant is subject to reduction as specified in Section 10.3 of the
Purchase Agreement.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within
three (3) business days thereafter, the Company at its expense (including
the payment by it of any applicable issue, stamp or transfer taxes) will
cause to be issued in the name of and delivered to the Holder thereof, or,
to the extent permissible hereunder, to such other person as such Holder may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (or Other Securities) to which such
Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price, together with any
other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to
Section 2 or otherwise.
3. Adjustment for Extraordinary Events. The Purchase Price to be
paid by the Holder upon exercise of this Warrant, and the consideration to
be received upon exercise of this Warrant, shall be adjusted in case at any
time or from time to time pursuant to Article XI of the Purchase Agreement
as if such provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of 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 of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant against impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par
value of any shares of stock receivable on the exercise of this Warrant
above the amount payable therefor on such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and unassessable shares of stock on the
exercise of this Warrant, and (c) will not transfer all or substantially all
of its properties and assets to any other person (corporate or otherwise),
or consolidate with or merge into any other person or permit any such person
to consolidate with or merge into the Company (if the Company is not the
surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
5. Accountant's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause independent certified public accountants of
national standing selected by the Company to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately
prior to such issue or sale and as adjusted and readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of this Warrant, and will, on the written request
at any time of the Holder of this Warrant, furnish to such Holder a like
certificate setting forth the Purchase Price at the time in effect and
showing how it was calculated.
6. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of
any class or securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution
or right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any, as of which the holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for then and in each such event the Company will mail or cause
to be mailed to the Holder of this Warrant a notice specifying (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount of character of such dividend,
distribution or right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any, as of which the holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be mailed
at least 20 days prior to the date specified in such notice on which any
action is to be taken.
7. Reservation of Stock, etc. Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of this
Warrant.
8. Exchange of Warrant.
(a) On surrender for exchange of this Warrant, properly endorsed
and in compliance with the restrictions on transfer set forth in the legend
on the face of this Warrant, to the Company, the Company at its expense will
issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face of the Warrant so surrendered.
(b) Upon written notice from the Purchasers that the Purchasers
have elected to transfer amongst each other a portion of this Warrant, and
on surrender for amendment and restatement of this Warrant, the Company at
its expense will issue and deliver to or on the order of the Holder thereof
a new Warrant of like tenor, in the name of such Holder as the Purchasers
(on payment by such Holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock as set forth in such notice reflecting such transfer.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
10. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
11. Negotiability, etc.. This Warrant is issued upon the following
terms, to all of which each Holder or owner hereof by the taking hereof
consents and agrees:
(a) title to this Warrant may be transferred by endorsement and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona
fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of such
bona fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary;
and
(d) notwithstanding the foregoing, this Warrant may not be sold,
transferred or assigned except pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption
therefrom.
12. Registration Rights. The Company is obligated to register the
shares of Common Stock issuable upon exercise of this Warrant in accordance
with the terms of the Registration Rights Agreement.
13. Warrant Redemption. Upon occurrence of the events described in
Sections 3.4 and 10.4(c) of the Purchase Agreement, the Company, at the
request of Holder, shall redeem all outstanding Warrants that remain
unexercised at a redemption price equal to the greater of (x) an appraised
value of the Warrants, as determined by Black Sholes, on the date they are
called for redemption and (y) the number of Warrants being redeemed
multiplied by the excess of (A) the average Closing Bid Price of the Common
Stock for the five Trading Days immediately prior to the date that the
Warrants are called for redemption over (B) the exercise price of the
Warrants.
14. Notices, etc.. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have
been furnished to the Company in writing by such Holder or, until any such
Holder furnishes to the Company any address, then to, and at the address of,
the last Holder of this Warrant who has so furnished an address to the
Company.
15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of Delaware.
The headings in this Warrant are for the purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
[Signature Page Follows]
DATED as of April ___, 2001.
DIAL-THRU INTERNATIONAL CORPORATION
By: _______________________________
Name: John Jenkins
Title: President
[Corporate Seal]
Attest:
By: ______________________
Secretary
EXHIBIT A
FORM OF NOTICE EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To ____________________________________________
The undersigned registered Holder of the accompanying Warrant, hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
__________1 shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the
date written below. The undersigned requests that the certificates for such
shares of Common Stock be issued in the name of, and delivered to, _________
_________________________whose address is _________________________________.
The Exercise Price is paid as follows:
[ ] Bank draft payable to the Company in the amount of $_____________.
[ ] Wire transfer to the account of the Company in the amount of
$___________.
Upon exercise pursuant to this Notice of Exercise, the Holder will be
in compliance with the Limitation on Exercise (as defined in the Securities
Purchase Agreement pursuant to which this Warrant was issued).
Date: ____________________ ______________________________________________
(Name must conform to name of Holder as
specified on the face of the Warrant)
By: __________________________________________
Name: ____________________________________
Title:____________________________________
Address of Holder: ___________________________
______________________________________________
______________________________________________
Date of exercise: _________________________________________________________
__________________
1 Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial exercise,
a new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the Holder surrendering
the same.
ANNEX B
WARRANT EXERCISE LEDGER
----------------------------------------------------------------------------
Original Warrants Exercise New Balance Issuer Holder
Date Number of Exercised Price of Warrants Initials Initials
Warrants Paid
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EX-4.5
6
exh04-5.txt
COMMON STOCK PURCHASE WARRANT
EXHIBIT 4.5
PLACEMENT AGENT WARRANT
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE
BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, OR (C) IF REGISTERED UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
_______________________________________
DIAL-THRU INTERNATIONAL CORPORATION
COMMON STOCK PURCHASE WARRANT
----------------------------------------------------------------------------
No. 1
Number of shares: 25,000 Holder: D.P. Securities, Inc.
3655 Nobel Drive
Expiration Date: April 6, 2006 San Diego, CA 92122
Purchase Price Per Share: $____
For identification only. The governing terms of this Warrant are set forth
below.
----------------------------------------------------------------------------
Dial-Thru International Corporation, a Delaware corporation (the "Company"),
hereby certifies that, for value received, D.P. Securities, Inc. or assigns
("Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company at any time or from time to time after the date hereof and
prior to the fifth anniversary hereof (the "Exercise Period"), at the
Purchase Price hereinafter set forth, Twenty Five Thousand (25,000) shares
of the fully paid and nonassessable shares of common stock of the Company,
$.001 par value per share (the "Common Stock"). The number and character of
such shares of Common Stock and the Purchase Price are subject to adjustment
as provided herein.
The purchase price per share of Common Stock issuable upon exercise of
this Warrant (the "Purchase Price") shall initially be $_____; provided,
however, that the Purchase Price shall be adjusted from time to time as
provided herein.
1. Certain Defined Terms. Capitalized terms used herein not
otherwise defined shall have the meanings ascribed thereto in that certain
Securities Purchase Agreement of even date herewith between the Company and
GCA Strategic Investment fund Limited (the "Purchase Agreement"). As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The term "Company" shall include Dial-Thru International
Corporation and any corporation that shall succeed or assume the
obligations of such corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's common
stock, $.001 par value per share, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or
after such date, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies,
be entitled to vote for the election of a majority of directors of the
Company (even though the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) that the Holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or that at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section
4 or otherwise.
1. Exercise of Warrant.
2.1 Method of Exercise.
(a) This warrant may be exercised in whole or in part (but not as
to a fractional share of Common Stock), at any time and from time to
time during the Exercise Period by the Holder hereof by delivery of a
notice of exercise (a "Notice of Exercise") substantially in the form
attached hereto as Exhibit A via facsimile to the Company. Promptly
thereafter the Holder shall surrender this Warrant to the Company at
its principal office, accompanied by payment of the Purchase Price
multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made, at the option of the Holder, (i) by check
or bank draft payable to the order of the Company, or (ii) by wire
transfer to the account of the Company. Upon exercise, the Holder
shall be entitled to receive, promptly refund the excess to the Holder.
Upon exercise, the Holder shall be entitled to receive, promptly after
payment in full, one or more certificates, issued in the Holder's name
or in such name or names as the Holder may direct, subject to the
limitations on transfer contained herein, for the number of shares of
Common Stock so purchased. The shares of Common Stock so purchased
shall be deemed to be issued as of the close of business on the date on
which the Company shall have received from the Holder payment in full
of the Exercise Price (the "Exercise Date").
(b) Notwithstanding anything to the contrary set forth herein,
upon exercise of all or a portion of this Warrant in accordance with
the terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on a
ledger substantially in the form of Annex B attached hereto (a copy of
which shall be delivered to the Company or transfer agent with each
Notice of Exercise). It is specifically contemplated that the Holder
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Holders shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following an exercise of a portion of
this Warrant, the number of shares of Common Stock represented by this
Warrant will be the amount indicated on Annex B attached hereto (which
may be less than the amount stated on the face hereof).
2.2 Regulation D Restrictions. The Holder hereof represents and
warrants to the Company that it has acquired this Warrant and anticipates
acquiring the shares of Common Stock issuable upon exercise of the Warrant
solely for its own account for investment purposes and not with a view to or
for resale of such securities unless such resale has been registered with
the Commission or an applicable exemption is available therefore. At the
time this Warrant is exercised, the Company may require the Holder to state
in the Notice of Exercise such representations concerning the Holder as are
necessary or appropriate to assure compliance by the Holder with the
Securities Act.
2.3 Company Acknowledgment. The Company will, at the time of the
exercise of this Warrant, upon request of the Holder hereof, acknowledge in
writing its continuing obligation to afford to such Holder the registration
rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of a Registration Rights
Agreement dated the date hereof (the "Registration Rights Agreement"). If
the Holder shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford such Holder any
such rights.
2.4 Limitation on Exercise. Notwithstanding the rights of the
Holder to exercise all or a portion of this Warrant as described herein,
such exercise rights shall be limited, solely to the extent set forth in the
Purchase Agreement as if such provisions were specifically set forth herein.
In addition, the number of shares of Common Stock issuable upon exercise of
this Warrant is subject to reduction as specified in Section 10.3 of the
Purchase Agreement.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within
three (3) business days thereafter, the Company at its expense (including
the payment by it of any applicable issue, stamp or transfer taxes) will
cause to be issued in the name of and delivered to the Holder thereof, or,
to the extent permissible hereunder, to such other person as such Holder may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (or Other Securities) to which such
Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price, together with any
other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to
Section 2 or otherwise.
3. Adjustment for Extraordinary Events. The Purchase Price to be
paid by the Holder upon exercise of this Warrant, and the consideration to
be received upon exercise of this Warrant, shall be adjusted in case at any
time or from time to time pursuant to Article XI of the Purchase Agreement
as if such provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of 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 of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder of this Warrant against impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par
value of any shares of stock receivable on the exercise of this Warrant
above the amount payable therefor on such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and unassessable shares of stock on the
exercise of this Warrant, and (c) will not transfer all or substantially all
of its properties and assets to any other person (corporate or otherwise),
or consolidate with or merge into any other person or permit any such person
to consolidate with or merge into the Company (if the Company is not the
surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
5. Accountant's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause independent certified public accountants of
national standing selected by the Company to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately
prior to such issue or sale and as adjusted and readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of this Warrant, and will, on the written request
at any time of the Holder of this Warrant, furnish to such Holder a like
certificate setting forth the Purchase Price at the time in effect and
showing how it was calculated.
6. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of
any class or securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution
or right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any, as of which the holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for then and in each such event the Company will mail or cause
to be mailed to the Holder of this Warrant a notice specifying (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount of character of such dividend,
distribution or right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any, as of which the holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be mailed
at least 20 days prior to the date specified in such notice on which any
action is to be taken.
7. Reservation of Stock, etc. Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of this
Warrant.
8. Exchange of Warrant.
(a) On surrender for exchange of this Warrant, properly endorsed
and in compliance with the restrictions on transfer set forth in the legend
on the face of this Warrant, to the Company, the Company at its expense will
issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face of the Warrant so surrendered.
(b) Upon written notice from the Purchasers that the Purchasers
have elected to transfer amongst each other a portion of this Warrant, and
on surrender for amendment and restatement of this Warrant, the Company at
its expense will issue and deliver to or on the order of the Holder thereof
a new Warrant of like tenor, in the name of such Holder as the Purchasers
(on payment by such Holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock as set forth in such notice reflecting such transfer.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
10. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
11. Negotiability, etc.. This Warrant is issued upon the following
terms, to all of which each Holder or owner hereof by the taking hereof
consents and agrees:
(a) title to this Warrant may be transferred by endorsement and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery.
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona
fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of such
bona fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary;
and
(d) notwithstanding the foregoing, this Warrant may not be sold,
transferred or assigned except pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption
therefrom.
12. Registration Rights. The Company is obligated to register the
shares of Common Stock issuable upon exercise of this Warrant in accordance
with the terms of the Registration Rights Agreement.
13. Warrant Redemption. Upon occurrence of the events described in
Sections 3.4 (i) and (iv) and 10.4(c) of the Purchase Agreement, the
Company, at the request of Holder, shall redeem all outstanding Warrants
that remain unexercised at a redemption price equal to the greater of (x) an
appraised value of the Warrants, as determined by Black Sholes, on the date
they are called for redemption and (y) the number of Warrants being redeemed
multiplied by the excess of (A) the average Closing Bid Price of the Common
Stock for the five Trading Days immediately prior to the date that the
Warrants are called for redemption over (B) the exercise price of the
Warrants.
14. Notices, etc.. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have
been furnished to the Company in writing by such Holder or, until any such
Holder furnishes to the Company any address, then to, and at the address of,
the last Holder of this Warrant who has so furnished an address to the
Company.
15. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of Delaware.
The headings in this Warrant are for the purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
[Signature Page Follows]
DATED as of April ___, 2001.
DIAL-THRU INTERNATIONAL CORPORATION
By: _______________________________
Name: John Jenkins
Title: President
[Corporate Seal]
Attest:
By: ______________________
Secretary
EXHIBIT A
FORM OF NOTICE EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To ____________________________________________
The undersigned registered Holder of the accompanying Warrant, hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
__________1 shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the
date written below. The undersigned requests that the certificates for such
shares of Common Stock be issued in the name of, and delivered to, _________
_________________________whose address is _________________________________.
The Exercise Price is paid as follows:
[ ] Bank draft payable to the Company in the amount of $_____________.
[ ] Wire transfer to the account of the Company in the amount of
$___________.
Upon exercise pursuant to this Notice of Exercise, the Holder will be
in compliance with the Limitation on Exercise (as defined in the Securities
Purchase Agreement pursuant to which this Warrant was issued).
Date: ____________________ ______________________________________________
(Name must conform to name of Holder as
specified on the face of the Warrant)
By: __________________________________________
Name: ____________________________________
Title:____________________________________
Address of Holder: ___________________________
______________________________________________
______________________________________________
Date of exercise: _________________________________________________________
__________________
1 Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial exercise,
a new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the Holder surrendering
the same.
ANNEX B
WARRANT EXERCISE LEDGER
----------------------------------------------------------------------------
Original Warrants Exercise New Balance Issuer Holder
Date Number of Exercised Price of Warrants Initials Initials
Warrants Paid
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EX-23.2
7
exh23-2.txt
CONSENT
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of DIAL-THRU INTERNATIONAL CORPORATION pertaining
to 2,880,906 shares of common stock, of our report dated December 1,
2000, with respect to the consolidated financial statements of DIAL-THRU
INTERNATIONAL CORPORATION included in the Annual Report Form 10-K/A for the
year ended October 31, 2000.
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
October 9, 2001