NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT
BIGMAR, INC.
JOHNSTOWN, OHIO, U.S.A.
CHF 3'000'000.--
4% Convertible Notes of 1999 due October 29, 2003
October 26, 1999
TABLE OF CONTENTS
DEFINITIONS
I. SUBJECT 3
II. ANNEXES 3
III. SALES RESTRICTIONS 4
IV. COMMISSION AND EXPENSES 8
V. WARRANTIES 9
VI. PAYMENT TO THE COMPANY 11
VII. CONDITIONS TO THE OBLIGATIONS
OF BANCA DEL GOTTARDO 12
VIII. INFORMATION MEMORANDUM 13
IX. PRINTING OF THE NOTES 13
X. SERVICING OF THE NOTES 14
XI. CANCELLATION OF NOTES AND COUPONS 16
XII. COVENANTS 16
XIII. RIGHT OF TERMINATION 18
XIV. COMMUNICATIONS 19
XV. APPLICABLE LAW AND JURISDICTION 19
XVI. EFFECTIVENESS 20
XVII. CURRENCY INDEMNITY 20
XVIII. ENTIRE AGREEMENT 21
XIX. AMENDMENT, CANCELLATION AND WAIVER 21
ANNEX A TERMS OF THE NOTES 22
ANNEX B DEFINITIVE NOTE (FACE) 34
ANNEX C INTEREST COUPONS 36
ANNEX D PERMANENT GLOBAL NOTE 37
ANNEX E CONVERSION AGENCY AGREEMENT 39
ANNEX F CERTIFICATE OF NO MATERIAL ADVERSE CHANGE 55
ANNEX G SPECIMEN SIGNATURE FORM 56
ANNEX H CERTIFICATE OF COMPLETION OF DISTRIBUTION ▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ PERSONS
OR PERSONS WITHIN THE UNITED STATES 58
ANNEX K CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP AND
FILING REQUIREMENTS 59
ANNEX L CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP AND
FILING REQUIREMENTS 60
NOTE PURCHASE, PAYING AND CONVERSION AGENCY AGREEMENT
entered into effective as of October 26, 1999
between
BIGMAR, INC.
being a corporation existing under the laws of the State of Delaware, whose head
office is situated at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, U.S.A.,
(hereinafter called the "Company")
on the one part
and
BANCA DEL GOTTARDO
being a corporation duly organized with limited liability and existing under the
laws of Switzerland, whose registered office is situated at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
on the other part
SOME DEFINITIONS
The Company's 4% Convertible Notes of 1999 due October 29, 2003, are referred to
herein as the "Notes".
Until the Notes have been printed in definitive form, if printed, pursuant to
Article IX hereof, the expression "Notes" herein shall include entitlements
under the Permanent Global Note, and the expressions "Noteholder(s)" and
"Couponholder(s)", mutatis mutandis, shall mean and include persons and entities
entitled to the benefits under the Permanent Global Note. Each Noteholder
possesses a co-ownership in the Permanent Global Note in relation to the
principal amount of Notes of which he is an owner. "Permanent Global Note" means
a global note for the total principal amount of Swiss Francs ("CHF")
3'000'000.-- issued in bearer form and representing 60 single Notes each in the
amount of CHF 50'000.-- and representing the aforementioned total principal
amount. The Permanent Global Note will be destroyed by Banca del Gottardo when
the Notes are printed, if printed. Banca del Gottardo shall promptly after
destruction provide to the Company a written certificate that the Permanent
Global Note has been destroyed.
I. SUBJECT
Subject to the terms and conditions hereof
- the Company, pursuant to authorization by its Board of Directors,
agrees to issue and sell to Banca del Gottardo CHF 3'000'000.--
Notes at a price of 100% of their principal amount and
- Banca del Gottardo agrees not later than October 29, 1999
(1) to purchase (i.e. underwrite) on a firm basis for CHF 3'000'000.--
Notes at a price of 100% of their principal amount, and
(2) to offer the Notes in a placement exclusively to its clients and
other financial institutions at a price of 100% of their principal
amount,
with a total principal amount of CHF 3'000'000.--
(Swiss Francs three million)
maturing on October 29, 2003
bearing interest at the rate of 4% per annum, payable
semi-annually in arrear each
on October 29 and April 29,
commencing April 29, 2000
until maturity
The aggregate amount for which Notes are sold are hereinafter referred
to as the "Proceeds".
The net Proceeds of the Notes will be utilized by the Company for the
financing of working capital and general corporate purposes.
Banca del Gottardo shall not have any responsibility for or be obliged
to concern itself with the application of the net Proceeds of the
Notes.
II. ANNEXES
The contents of each of the Annexes attached hereto, i.e.
Annex A: Terms of the Notes
Annex B: Form of Definitive Note (face)
Annex C: Form of Interest Coupons
Annex D: Form of Permanent Global Note
Annex E: Conversion Agency Agreement
Exhibit 1
to Annex E: Conversion Provisions
Annex F: Form of Certificate of No Material Adverse Change
Annex G: Specimen signature form
Annex H: Certificate of completion of distribution
Annex I: Certificate of nonavailability to United States persons
or persons within the United States
Annex K Certification of non-U.S. Beneficial Ownership and
Filing Requirements
Annex L Certification of non-U.S. Beneficial Ownership and
Filing Requirements
shall constitute an integral part of this Agreement.
III. SALES RESTRICTIONS
a) The Notes to be issued pursuant to this Agreement have not been
registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered, sold or
delivered, directly or indirectly, in the United States or to, or
for the account of, any U.S. person except in transactions exempt
from the registration requirements of the Securities Act.
b) As to the Company, the Notes are intended to be obligations that
are not required to be in registered form for purposes of United
States federal tax laws and the principal (to the extent
characterized as original issue discount) and interest payable on
the Notes are intended to be "portfolio interest" under Sections
871(h) and 881(c) of the United States Internal Revenue Code of
1986 as amended (the "Code"). Accordingly, the Notes may not, as
part of any part of the initial distribution, be offered for sale
or resale, sold or delivered, directly or indirectly, to a person
in the United States or to a United States person. Banca del
Gottardo (i) agrees and represents that no Notes will be offered,
sold or delivered to or on behalf of a person within the United
States or to a United States person, (ii) represents and agrees
that (a) during the period beginning on the earlier of the first
date that the Notes are offered or the date on which the Notes are
issued and ending on the date one (1) year after the later of the
date upon which the Notes were first offered or the date of
closing of this offering (the "Restricted Period"), it will not
offer or sell, Notes to a person who is within the United States
or to a United States person, (b) it has not delivered and will
not deliver within the United States the Permanent Global Note,
the Notes or any definitive Notes or coupons, if printed, that are
sold during the Restricted Period, (c) it has and throughout the
Restricted Period will have in effect procedures reasonably
designed to ensure that its employees or agents who are directly
engaged in selling Notes are aware that such Notes may not be
offered or sold during the Restricted Period to a person who is
within the United States or to a United States person and (d) it
has not entered and will not enter into any contractual
arrangement with respect to the distribution and delivery of the
Notes, except with its affiliates or with the prior written
consent of the Company, (iii) represents and agrees with respect
to each affiliate that acquires from it Notes for the purpose of
offering or selling such Notes during the Restricted Period,
repeating and confirming the representations and agreements
contained in clauses (ii) (a), (b), (c) and (d) on each such
affiliate's behalf, (iv) represents and agrees that it will not
sell or deliver Notes to a holder which is (a) immediately after
the sale or delivery, a "10-percent. shareholder" of the Company
within the meaning of Section 871 (h) (3) of the Code, (b) a bank
on an extension of credit made pursuant to a loan agreement
entered into in the ordinary course of its trade or business, (c)
a controlled foreign corporation which is related to the Company
under section 864 (d) (4) of the Code, or (d) within a foreign
country which the United States Secretary of the Treasury has
determined under section 871 (h) (6) of the Code that the exchange
of information with the foreign country is inadequate to prevent
evasion of United States tax by United States persons, (v)
represents and agrees that (a) on or before the delivery of the
Permanent Global Note by the Company, Banca del Gottardo will
deliver to the Company the certificate in the form attached hereto
as Annex I, and (b) Banca del Gottardo will deliver to the Company
the certificate in the form attached hereto as Annex H within ten
business days of the commencement of the Restricted Period and,
(vi) represents and agrees that the sale of the Notes shall be
made upon certification, in the form attached hereto as Annex K,
that the beneficial owners of the Notes either (i) will not be
United States persons or U.S. persons or (ii) are financial
institutions (within the meaning of United States Treasury
Regulation Section 1.165.12(c)(1)(v)) located outside the United
States that are not United States persons and are purchasing such
Notes for resale during the Restricted Period and certify they are
not acquiring the Notes for purposes of resale directly to a
United States person or to a person within the United States. Any
certificates provided by a clearing organization must be based on
statements provided to it by its members. Banca del Gottardo
agrees to furnish to the Company a properly completed certificate
with respect to each Note, in the form attached hereto as Annex K
(and, in the case of clearing organizations, require statements of
members of the clearing organization), on the earlier of the date
of the first actual payment of interest on the Note or the date of
delivery of any instrument or document transferring an interest in
or entitlement under the Permanent Global Note. For purposes of
this Agreement, whether an offer, sale or delivery is made to a
person within the United States or to a United States person will
be determined under the rules set out in the Code, and United
States Treasury Regulation Section 1.163-5(c)(2)(i)(D). Banca del
Gottardo agrees that it will comply fully with the selling
restrictions set out in this Sub-
Section (b) and, in particular, Banca del Gottardo hereby
covenants and agrees to the effect set out in clauses (ii) and
(iii) of the second preceding sentence.
c) The Notes will be represented by a permanent Global Convertible
Note (the "Permanent Global Note"), without interest coupons, the
Permanent Global Note to be deposited by the Company with Banca
del Gottardo, on the Payment Date. The Permanent Global Note may
be exchanged, as a whole or in part, for appropriate definitive
Notes, if printed, in bearer form in the denominations of CHF
50'000.-- with interest coupons (the "Coupons") attached, in
bearer form not earlier than 1 year after the later of the date on
which the Notes are first offered or the Payment Date, before
which time no Notes represented by the Permanent Global Note or
interest therein may be offered, sold or transferred into the
United States or to a U.S. person. Such exchange shall be made
upon certification, in the form attached hereto as Annex L, that
the beneficial owners of the Notes either (i) are not United
States persons or U.S. persons or (ii) are financial institutions
(within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v)) located outside the United States that are not
United States persons and have purchased such Notes for resale
during the Restricted Period and certify they have not acquired
the Notes for purposes of resale directly or indirectly to a
United States person or to a person within the United States. Any
certificates provided by a clearing organization must be based on
statements provided to it by its members. Banca del Gottardo
agrees to furnish to the Company a properly completed certificate
with respect to each Note, in the form attached hereto as Annex L
(and, in the case of clearing organizations, required statements
of members of the clearing organization), on the earlier of the
date of the first actual payment of interest on the Note or the
date of delivery by the Company of the Note in definitive form.
d) In this Agreement, references to "dollars" and "USD" are to United
States dollars, the term "United States" means the United States
of America (including the States and the District of Columbia),
its territories, its possessions and other areas subject to its
jurisdiction, and the term "United States person" means a citizen
or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate
or trust the income of which is subject to United States federal
income taxation regardless of its source, "U.S. person" shall have
the meaning set forth in Sections 230.901 through 904 of Title 17
of the United States Code of Federal Regulations ("Regulation S").
e) The following legends will appear on the Permanent Global Note and
all Notes and Coupons, if printed, issued pursuant to the Offer:
(i) "Any United States person who
holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations
provided in sections 165(j) and 1287(a) of the Internal Revenue
Code", and (ii) "This Note has not been and will not be
registered under the United Stated Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered, sold or
delivered, directly or indirectly, in the United States or to,
or for the benefit of, any U.S. person (as such terms are
defined in Regulation S under the Securities Act) unless this
Note is registered under the Securities Act or an exemption
from the registration requirements of the Securities Act is
available." The sections referred to in the legend provide
that, with certain exceptions, a United States person will not
be permitted to deduct any loss, and will not be eligible for
capital gain treatment with respect to any gain, realized on a
sale, exchange or redemption of such Notes or Coupons.
f) The Company represents, warrants and covenants that the Notes have
not been and shall not be offered or sold except in accordance
with Rule 903 of Regulation S promulgated under the Securities Act
or in a transaction exempt from the registration requirements of
the Securities Act. Each of the Company and Banca del Gottardo
represents, warrants and covenants that (i) none of it, its
affiliates or any person acting on its behalf has engaged or will
engage in any directed selling efforts (as defined in Rule 902 of
Regulation S promulgated under the Securities Act) in the United
States and it has complied and will comply with the offering
restrictions of Regulation S under the Securities Act in
connection with the offer of the Notes, (ii) none of it, its
affiliates or any person acting on its behalf has utilized or will
utilize any form of general solicitation or general advertising
(as such terms are used in Regulation D promulgated under the
Securities Act) in connection with the offer of the Notes in the
United States, (iii) none of it, its affiliates or any person
acting on its behalf has made or will make an offer of the Notes
in circumstances that would require the registration of the Notes
under the Securities Act and (iv) requests to purchase Notes shall
be accepted only from persons who are not within the United
States.
g) Banca del Gottardo has been advised by the Company and
acknowledges and confirms that it is aware (a) that a violation or
breach of any of the terms and conditions of Article III of this
Agreement could directly cause the Company to become subject to
damages and liabilities (including, but not limited to, excise
taxes, a loss of the interest deduction and assumption of
withholding taxes) under various United States securities and tax
laws, and (b) that, as a consequence, Banca del Gottardo shall
defend, indemnify and save harmless the Company, its officers,
directors, agents and employees from any and all third party
claims, demands, suits or proceedings (including reasonable legal
fees and expenses) arising out of any breach or alleged breach of
any
of the terms or conditions of Article III of this Agreement,
except to the extent the claim, demand, suit or proceeding arises
out of the negligence or willful misconduct of the Company. In
seeking indemnification, the Company shall give prompt notice of
the claim, demand, suit or proceeding to Banca del Gottardo,
cooperate with Banca del Gottardo, and allow Banca del Gottardo to
control the defense.
IV. COMMISSION AND EXPENSES
a) The Company will pay on October 29, ▇▇▇▇ ▇▇▇▇▇▇ time (the "Closing
Date") to Banca del Gottardo
(1) a managing and underwriting commission of 5% calculated
on the principal amount of the Notes
(2) out of pocket expenses of CHF 10'000.--
The payment by the Company of (1) and (2) above will be made by
deduction from the payment by Banca del Gottardo to the Company of
the Proceeds, resulting in the Net Proceeds as per Article VI.
b) The Company shall further bear when ascertainable and due
- all present or future taxes, duties or other charges levied by
or within the United States of America in connection with the
execution and delivery of this Agreement, the Permanent Global
Note (excluding tax on interest or principal on the Notes
which is addressed in Annex A); and
- the commissions and expenses for the servicing and the
conversion of the Notes as per Article X;
c) The Company will reimburse Banca del Gottardo on first demand for
all reasonable bank charges, reasonable legal fees and other
reasonable costs and expenses incurred or to be incurred by Banca
del Gottardo in case of or in connection with reorganization,
merger, restructuring or default, actual or threatened, of the
Company as well as in connection with the convening of a
Noteholders' meeting and the preservation and enforcement of any
of the rights under this Agreement, the Permanent Global Note or
the Notes.
d) Banca del Gottardo shall bear
- all costs and expenses in connection with the initial offering
and placement of the Notes incurred by it.
Banca del Gottardo shall further bear
- the cost for the printing and delivery to the holders of the
definitive Notes, if printed, incurred by Banca del Gottardo
on behalf of the Company.
- all costs incurred by it in connection with the offering,
including the printing in Switzerland of the Information
Memorandum relating to the Notes.
V. WARRANTIES
A) The Company warrants to and for the benefit of Banca del
Gottardo that:
1. STATUS: it is a corporation duly incorporated and
existing in good standing under the laws of the State of
Delaware capable of suing and being sued and has the
power and authority to own its assets and to conduct the
business which it presently conducts;
2. POWERS: it has the power to enter into, exercise its
rights and perform and comply with its obligations under
this Agreement;
3. AUTHORIZATION AND CONSENTS: except as to the registration
requirements provided for herein, all actions, conditions
and things required by the laws of the State of Delaware
and the United States of America have been taken,
fulfilled and done (including the obtaining of any
necessary consents) in order
a) to enable it lawfully to enter into, exercise its
rights and perform and comply with its obligations
under this Agreement; and
b) to ensure that those obligations are legally binding
and enforceable in accordance with their terms subject
to general equity principles, to applicable
bankruptcy, insolvency, conservatorship,
reorganization and other similar debtor relief laws,
and to other laws establishing liens and priorities or
otherwise relating to or affecting creditors-rights;
4. NON-VIOLATION OF LAWS, ETC: its entry into, and exercise
of its rights and/or performance of or compliance with
its obligations under this Agreement, the terms of the
Permanent Global Note and the Notes do not and will not
violate in any material way
a) any law to which it is subject; or
b) its Certificate of Incorporation; or
c) except for matters for which the Company has received
a waiver, any agreement to which it is a party or
which is binding on it or its assets, and does not and
will not result in the existence of, or obligate it to
increase, any security interest in those assets,
except to the extent that such violations in the
aggregate would not have a material adverse effect on
the financial conditions of the Company;
5. OBLIGATIONS BINDING: its obligations under this
Agreement, the Permanent Global Note and the Notes when
duly executed are valid, binding and enforceable in
accordance with their terms subject to general equity
principles, to applicable bankruptcy, insolvency,
conservatorship, reorganization and other similar debtor
relief laws, and to other laws establishing liens and
priorities or otherwise relating to or affecting
creditors' rights;
6. INFORMATION MEMORANDUM: the information pertaining to the
Company and its subsidiaries which is contained in the
Information Memorandum (defined in Article VIII) is
accurate in all material respects and there are no other
facts the omission of which makes any statement therein
materially misleading;
7. ACCOUNTS: the audited and unaudited consolidated
financial statements included as contained in the
Information Memorandum present fairly the results and
financial condition of the Company as a whole for the
periods and as of the dates thereof, and are in
accordance with generally accepted accounting principles
in the United States of America;
8. NO MATERIAL ADVERSE CHANGE: save as disclosed in the
Information Memorandum and the Company's filings with the
Securities and Exchange Commission in the U.S., there has
been no material adverse change in the consolidated
financial condition of the Company since June 30, 1999;
9. LITIGATION: except as disclosed in the Information
Memorandum, no litigation, arbitration or administrative
proceedings or judgment or award is current or, so far as
the Company is aware, threatened or pending
a) to restrain the entry into, exercise of its rights
under and/or performance or enforcement of or
compliance with its obligations under this Agreement;
or
b) which either individually or collectively are
material in the context of the issue and sale of the
Notes or the making and performance of this
Agreement;
10. NO BREACH OR DEFAULT: neither failure by the Company to
comply with Article III nor any event described in
Sections 8, 9 or 10 of the Terms of the Notes has
occurred and is continuing. The Company is not in breach
or in default under any agreement to an extent or in a
manner which has had or could have a material adverse
effect on the financial condition of the Company and its
consolidated affiliates taken as a whole.
(B) Since the commitment of Banca del Gottardo to purchase the
Notes is made on the basis of the aforesaid representations
and warranties, the Company hereby undertakes with Banca del
Gottardo that it will hold Banca del Gottardo harmless against
all losses, liabilities, costs, charges and expenses which it
may incur as a noteholder as a result of or in relation to any
material misrepresentation or any material breach of said
representations and warranties by the Company, and as long as
any of the Notes are outstanding Banca del Gottardo shall be
given prompt notice by the Company of any claim, action or
proceeding which might in the Company's good faith judgment
give rise to an obligation under this clause (B) of Article V.
This indemnification by the Company shall be in addition to
any other remedy available to Banca del Gottardo under
applicable law.
VI. PAYMENT TO THE COMPANY
On the Closing Date, Banca del Gottardo will pay to the Company the
NET PROCEEDS (the "Net Proceeds") of the offering against the
Permanent Global Note being delivered to Banca del Gottardo pursuant
to Article VII.
VII. CONDITIONS TO THE OBLIGATIONS OF BANCA DEL GOTTARDO
Banca del Gottardo shall have received from the Company at the latest
on October 28, 1999 the following DOCUMENTS:
(1) a copy of the Certificate of Incorporation, together with all
amendments thereto, of the Company certified by the Secretary
or the Assistant Secretary of the Company and a copy of a
Certificate of the Secretary of State of the State of Delaware
as to the good standing of the Company, each dated as of a
recent date;
(2) a certified copy of a resolution or resolutions duly adopted
by the Board of Directors of the Company signed by a duly
authorized officer of the Company, conferring the necessary
authority upon the person(s) signing this Agreement, the
Information Memorandum, the Permanent Global Note, the Notes
and any related documents; and a certificate of the Secretary,
or Assistant Secretary of the Company as to the incumbency and
signatures of the officer(s) of the Company signing the
documents provided for in this clause (2) on behalf of the
Company and the approval of this Agreement and the Information
Memorandum;
(3) PERMANENT GLOBAL NOTE (in the form of Annex D, without
interest coupons and without reproduction of the Terms of the
Notes) duly issued and signed by an authorized officer of the
Company to be held in escrow by Banca del Gottardo pending
payment of the Net Proceeds pursuant to Article VI;
(4) an executed copy of the Conversion Agency Agreement as set
forth in Annex E hereto;
(5) specimen signatures for the printing of the Notes;
(6) Certificate of No Material Adverse Change dated as of the
Closing Date and signed by an authorized officer of the
Company, substantially in the form of Annex F hereto;
(7) a legal opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, external U.S. counsel
to the Company on the laws of the United States of America,
dated as of the Closing Date;
(8) an opinion of the Company's Tax Counsel with respect to the
status of the Notes in respect of United States taxes, dated
as of the Closing Date;
(9) a certificate of two officers of the Company approving the
terms of the Notes and the issue and sale thereof by the
Company;
(10) 1 copy of the Information Memorandum duly signed by an
authorized officer of the Company; and
Each of documents 5, 6, 7, 8, 9 and 10 shall be substantially as
agreed by the Company and Banca del Gottardo prior to the Closing
Date.
VIII. INFORMATION MEMORANDUM
The Company will supply Banca del Gottardo on behalf of the holders
of the Notes in due time with information and documentation for the
preparation by Banca del Gottardo of the Information Memorandum (the
"Information Memorandum") relating to the Issue, in compliance with
Swiss law.
The Information Memorandum shall be reviewed by the Company and Banca
del Gottardo.
IX. PRINTING OF THE NOTES
The Notes and Coupons and all rights and obligations in connection
therewith are documented solely in form of a Permanent Global Note as
per Annex D hereto. Each Noteholder of a Note or Coupon therefore
retains a co-ownership in the Permanent Global Note to the extent of
his claim against the Company. Content and form of the Permanent
Global Note must be in accordance with the regulations of SIS
SEGAINTERSETTLE AG (the "SEGA"). Except as provided in item c) below,
no printing and delivery of definitive Notes or Coupons will occur.
a) Publicity: All documents and publications established in
connection with the issue of the Notes (i.e. the Information
Memorandum, advertisements, if any, as well as possible additional
publications) must explicitly and prominently state that the Notes
are represented by way of a Permanent Global Note and that
investors are not entitled to receive definitive Notes or Coupons.
b) Custodianship: Banca del Gottardo undertakes to hold in custody
the Permanent Global Note, which it has received duly signed in
accordance with Article VII item 3) above, after payment of the
Net Proceeds to the Company. The Permanent Global Note remains in
safekeeping with Banca del Gottardo during the entire duration of
the issue and until the complete redemption of the Notes.
c) Arrangements for printing of the definitive Notes and Coupons: The
Company irrevocably authorizes Banca del Gottardo to arrange for
the printing of the definitive Notes with Coupons attached, in the
name of and at the expense of the Company, should Banca del
▇▇▇▇▇▇▇▇ ▇▇▇▇ such printing to be necessary or useful, or if the
presentation of definitive Notes and Coupons is required by Swiss
or foreign laws and regulations in connection with the enforcement
of rights (e.g. in cases of bankruptcy, consolidation or
reorganisation of the Issuer). In such case, the Notes and Coupons
will be substantially in the form of Annex B and C. The Company
irrevocably authorizes Banca del Gottardo to reproduce on the
definitive Notes the signatures deposited with Banca del Gottardo
in accordance with Article VII item 5) above.
Should the definitive Notes and Coupons be printed, Banca del
Gottardo will then exchange the Permanent Global Note against the
definitive Notes and Coupons and thereupon cancel and return the
Permanent Global Note to the Company.
Notes and/or Coupons which are mutilated, lost or destroyed may be
replaced by Banca del Gottardo in accordance with the respective
provisions of the Terms of the Notes.
X. SERVICING OF THE NOTES
(1) TRANSFER OF FUNDS
The Company will effect transfer of the funds in freely
disposable Swiss Francs required to make any payment of
principal or interest on the Notes, including the commissions
referred to in paragraph (2) hereafter, to Banca del Gottardo,
Lugano, as Paying Agent, for value the respective due date
provided that, if such due date does not fall on a Business
Day, the Company shall be obliged to effect transfer of such
payments for value the Business Day immediately preceding such
due date. Any transfer risk shall be borne by the Company.
"Business Day" means a day on which commercial banks are open
for domestic business and foreign exchange (including dealings
in Swiss Francs) in Lugano and New York.
Banca del Gottardo will supply the Company, by facsimile or
otherwise in writing received by the Company not less than
five Business Days prior to each due date for any payment
under the Notes, with any necessary information including
reference numbers and the name of a contact person for the
receipt of funds. Further in-
formation regarding the transfer may be obtained by Banca del
Gottardo from the Company at the address set out in Article
XIV below.
Banca del Gottardo shall credit the funds received to separate
non-interest bearing accounts with Banca del Gottardo for each
Coupon due date and/or redemption date. The receipt by Banca
del Gottardo of the due and punctual payment of the funds in
Lugano shall release the Company of its obligations under the
Permanent Global Note or under the Notes for the interest and
principal, to the extent of such payment.
Any funds held by Banca del Gottardo which will not be used as
a consequence of Coupons and Notes not having been collected
within the relevant period described by the Statute of
Limitations (as referred to in Section 11 of the Terms of the
Notes), shall be held by Banca del Gottardo at the disposal of
the Company. Banca del Gottardo shall promptly after the
expiry of the relevant period inform the Company about the
respective amount.
The risk of any exchange loss on the transfer of funds so held
by Banca del Gottardo from Banca del Gottardo to the Company
shall be borne by the Company, provided the transfer is made
by order of, or with the consent of, the Company.
(2) COMMISSIONS AND EXPENSES
The Company will pay to Banca del Gottardo for the servicing
of the Notes a commission of
- 0.25% on the face amount of Coupons to be paid and
- 0.125% on the principal amount of Notes redeemed.
(3) MODALITIES
Any transfer by the Company as per (1) and (2) above, shall be
made in Swiss Francs freely disposable, without any
restrictions, and whatever the circumstances may be,
irrespective of the nationality or domicile of the holder of
Notes and/or Coupons, and without requiring any affidavit, or
the fulfilment of any other formality.
(4) PAYING AGENCY
The Company hereby appoints Banca del Gottardo as sole Paying
Agent (the "Paying Agent") and Banca del Gottardo agrees to
pay to the Noteholders all amounts to become due under the
Notes.
The Company undertakes, in connection with the Issue, not to
appoint any institutions as paying agent without the consent
of Banca del Gottardo, which consent shall not be unreasonably
withheld and not to pay to other banks any commission or
remuneration for the payment of interest or principal on the
Notes.
XI. CANCELLATION OF NOTES AND COUPONS
The Company requests and authorizes Banca del Gottardo and Banca del
Gottardo undertakes to cancel and destroy all Coupons (if printed)
paid and Notes (if printed) redeemed, converted or replaced, after
the period prescribed by law, and to certify to the Company in
writing the serial numbers of Notes destroyed, the dates when such
destruction took place and the names of the persons witnessing such
destruction.
Banca del Gottardo reserves the right to record cashed Coupons as
well as redeemed, repaid, converted or replaced Notes on video tape
or other data carriers and to store them in this way instead of
keeping them physically during the period prescribed by law and to
destroy them subsequently. This reproduction of Coupons and/or Notes
will remain in safekeeping at Banca del Gottardo during the statutory
limitation.
XII. COVENANTS
As long as any of the Notes remain outstanding, the Company
undertakes:
(1) To send to Banca del Gottardo
a) Annual Reports, on Form 10-K, as filed with the United
States Securities and Exchange Commission (the "SEC"),
which report shall include or be accompanied by a copy of
the report of the Company's independent auditor', and
b) such regular and periodic reports on Form 10-Q and Form
8-K (deemed material) as the Company files with the SEC.
Banca del Gottardo is authorized to hold these documents at
the disposal of the Noteholders and/or holders of Coupons for
inspection.
(2) To provide Banca del Gottardo forthwith upon becoming aware
thereof with
- any change of its Certificate of Incorporation or By-laws,
and without waiting for Banca del Gottardo to take any of
the actions mentioned in Section 8, 9 or 10 of the Terms of
the Notes, with.i
- a notice in writing of any event provided for in Section 8,
9 or 10 of the Terms of the Notes.
(3) To hold meetings of the Board of Directors on at least a
quarterly basis, i.e. at least one meeting each quarter.
(4) To provide Banca del Gottardo with quarterly financial
statements of the Company by no later than the 45th day of the
month following the quarter covered by such statements. Such
statements shall provide Banca del Gottardo with a summary of
all of the Company's operations, in addition to a brief
summary of how the Net Proceeds of this issue have been used
by Company.
(5) To appoint two members, as reasonable acceptable to the
Company, of its Board of Directors upon request of Banca del
Gottardo, unless Banca del Gottardo has exercised any similar
right under any other agreement, and thereafter to nominate
such appointee for election by the Company's stockholders and
use its best efforts to assure their election until any Note
or Notes shall be redeemed by the Company.
(6) (a) So long as any Notes are outstanding, to keep
available authorized shares of Common Stock sufficient to
permit all Notes outstanding and unconverted to be
converted in accordance with the Provisions (Exhibit 1 to
Annex E of the Agreement);
(b) to assure that all shares of Common Stock delivered upon
conversion of Notes will be validly issued, fully-paid
and non-assessable;
(c) to file, on or before March 1, 2000, if required, any
registration under the United States securities laws that
may be required before the Shares can be delivered upon
conversion of the Notes and freely marketed in the United
States.
XIII. RIGHT OF TERMINATION
Notwithstanding anything contained in this Agreement, Banca del
Gottardo may by notice, setting forth in detail the basis for Banca
del Gottardo's reasonable opinion giving rise to such notice, to the
Company terminate this Agreement at any time before the time on the
Closing Date when payment would otherwise be due under this Agreement
to the Company in respect of the Notes if:
(1) in the reasonable opinion of Banca del Gottardo, circumstances
shall be such as:
a) to prevent or to a material extent restrict payment for
the Notes in the manner contemplated in this Agreement;
or
b) to a material extent prevent or restrict settlement of
transactions in the Notes in the market or otherwise; or
(2) in the reasonable opinion of Banca del Gottardo, there shall
have been:
a) any change in national or international political, legal,
tax or regulatory conditions; or
b) any calamity or emergency
which has in the view of Banca del Gottardo caused a substantial
deterioration in the price and/or value of the Notes.
Any such termination of this Agreement shall be without liability on
the part of Banca del Gottardo or on the part of the Company.
Upon any such termination of this Agreement pursuant to Article XIII
(1), the parties hereto shall (except for the liability of the
Company in relation to expenses as provided in Article IV (a) (2)
hereof and except for any liability arising before or in relation to
such termination) be released and discharged from their respective
obligations under this Agreement.
XIV. COMMUNICATIONS
All communications among Banca del Gottardo and the Company regarding
this Agreement shall be made in the English language, by telex or
facsimile, followed by registered letter, and shall be transmitted
BY THE COMPANY TO: BY BANCA DEL GOTTARDO TO:
Banca del Gottardo Bigmar, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇ 9711 Sportsman Club Road
6901 Lugano, Switzerland ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attn: Capital Market Department Attn: Chief Financial Officer
Telex No.: 841 052
Facsimile: 0114191 808 18 43 Facsimile: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
XV. APPLICABLE LAW AND JURISDICTION
The Terms of this Agreement shall be governed by Swiss law, save and
except that paragraph 8 of the Terms of the Notes shall be governed
by the laws of the State of New York.
Any dispute which might arise between Banca del Gottardo on the one
hand and the Company on the other hand regarding this Agreement shall
fall within the jurisdiction of the ordinary Courts of Justice of the
Canton of Ticino, THE PLACE OF JURISDICTION BEING LUGANO, with the
right of appeal to the Swiss Federal Court of Justice in Lausanne
where the law permits.
Solely for purposes of the preceding paragraph and for the purpose of
execution of a judgment in Switzerland, the Company elects legal and
special domicile at Banca del Gottardo's office in Lugano, and Banca
del Gottardo shall send to the Company as soon as possible any
documents received by it in this connection.
Banca del Gottardo shall also be at liberty to enforce its rights and
to take legal action before the competent courts of the United States
of America, in which case Swiss law,
save and except that paragraph 8 of the Terms of the Notes shall be
governed by the laws of the State of New York, shall be applicable
with respect to the construction and interpretation of this
Agreement.
XVI. EFFECTIVENESS
The effectiveness of this Agreement is subject to:
(a) the receipt by Banca del Gottardo of all documents as
requested in Article VII of this Agreement, in a form
reasonably acceptable to Banca del Gottardo,
(b) no exercise of the Right of Termination as per Article XIII.
XVII. CURRENCY INDEMNITY
If any sum due from the Company in favour of the Paying Agent has to
be converted from Swiss Francs (the "first currency") into another
currency (the "second currency") for the purpose of (i) making or
filing a claim or proof against the Company, (ii) obtaining an order
or judgment in any court or other tribunal or (iii) enforcing any
order or judgment given or made in relation hereto, the Company shall
indemnify and hold harmless Banca del Gottardo from and against any
loss suffered as a result of any discrepancy between (a) the rate of
exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (b) the rate or rates
of exchange at which Banca del Gottardo may in the ordinary course of
business purchase the first currency with the second currency upon
receipt of a sum paid to them in the second currency in satisfaction
in whole or in part of any such order, judgment, claim or proof.
This indemnity shall constitute a separate and independent obligation
from the other obligations contained herein, shall give rise to a
separate and independent cause of action and shall apply,
irrespective of any waiver granted by Banca del Gottardo from time to
time and shall continue in full force and effect notwithstanding any
judgment or order for a liquidated sum or sums in respect of amounts
due hereunder or under any such judgment or order. Any such loss or
damage aforesaid shall be deemed to constitute a loss suffered by
Banca del Gottardo and no further proof or evidence of any actual
loss shall be required by the Company.
XVIII. ENTIRE AGREEMENT
This Agreement together with the Annexes hereto and other agreements
and documents delivered pursuant hereto set forth the entire
agreement and understanding of the parties in respect of the subject
matter hereof and thereof and supersede all prior or contemporaneous
agreements, arrangements and understandings relating to the subject
matter hereof and thereof.
XIX. AMENDMENT, CANCELLATION AND WAIVER
This Agreement and the Annexes hereto may be amended, modified,
superseded or cancelled, and any of the terms hereof or thereof may
be waived, only by a written instrument executed by the Company and
Banca del Gottardo hereto or thereto, as the case may be, or, in the
case of a waiver, by the party or parties waiving compliance. The
failure of any party at any time or times to require performance of
any provision hereof or of any Annex hereto shall in no manner affect
the rights at a later time to enforce the same. No waiver by any
party of any condition or of the breach of any term contained in this
Agreement or in any Annex hereto, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be construed as a
further or continuing waiver of any such breach or the breach of any
other term of this Agreement or of the Annexes hereto.
THUS DONE AND SIGNED in 2 originals, of which one is for the Company,
in Lugano effective as of October 26, 1999
BIGMAR, INC.
By: _____________________________
BANCA DEL GOTTARDO
By: _____________________________
ANNEX A
TERMS OF THE "CONVERTIBLE NOTES" OF THE COMPANY
(1) FORM AND DENOMINATION
The Notes are issuable in bearer form in the denominations of CHF
50'000.-- nominal amount each, with interest coupons (the "Coupons")
attached. The Notes will be represented solely by a permanent Global
Note (the "Permanent Global Note"), without interest coupons, to be
deposited by the Company with Banca del Gottardo on the Payment Date.
Each holder of a Note or Coupon, retains a co-ownership in the Permanent
Global Note to the extent of his claim against the Company. EXCEPT AS
PROVIDED BELOW, NO PRINTING OF NOTES AND COUPONS WILL OCCUR. HOLDERS OF
NOTES AND COUPONS, THEREFORE, DO NOT HAVE THE RIGHT TO REQUEST THE
PRINTING AND DELIVERY OF INDIVIDUAL NOTES AND COUPONS. The Notes are
issued in the initial aggregate principal amount of three million Swiss
Francs (CHF 3'000'000.--).
The Permanent Global Note will remain in safekeeping with Banca del
Gottardo during the entire duration of the issue and until the complete
redemption of the Notes.
Should the definitive Notes and Coupons be printed, the Notes shall be
evidenced by bearer Notes with Coupons attached in the denomination of
CHF 50'000.-- nominal and multiples thereof.
Should Banca del ▇▇▇▇▇▇▇▇ ▇▇▇▇ the printing of the Notes with Coupons
attached to be necessary or useful, or if the presentation of definitive
Notes and Coupons is required by Swiss or foreign laws in connection with
the enforcement of rights (e.g. in cases of bankruptcy, consolidation or
reorganization of the Company), Banca del Gottardo will provide for such
printing without cost for the holders of the Notes and Coupons. Should
the definitive Notes and Coupons be printed, Banca del Gottardo will then
exchange the Permanent Global Note (deposited as above provided) as soon
as possible against the definitive Notes and Coupons. The Company has
irrevocably authorized Banca del Gottardo to provide for the printing of
the definitive Notes and Coupons on its behalf.
The Permanent Global Note may be exchanged, as a whole or in part, for
appropriate definitive Notes, if printed, in bearer form in denominations
of CHF 50'000.-- with the Coupons attached, not earlier than 1 year after
the later of the date on which the Notes are first offered or the Payment
Date. Such exchange shall be made upon certification that the beneficial
owners of the Notes either (i) are not United States persons or U.S.
persons or (ii)
are financial institutions (as defined in United States Treasury
Regulation Section 1.165-12(c)(1)(v)) located outside the United
States that are not United States persons and that have purchased such
Notes for purposes of resale during the Restricted Period and that
certify that they have not acquired the Notes for purposes of resale
directly or indirectly to a United States person or to a person within
the United States.
For purposes hereof, (i) the term "Restricted Period" means the period
beginning on the earlier of the first date that the Notes are offered or
the date on which the Notes are issued (the "Payment Date") and ending on
the date one (1) year after the later of the date upon which the Notes
were first offered or the date of closing of this offering, (ii) the term
"United States" means the United States of America (including the States
and the District of Columbia), its possessions, its territories and other
areas subject to its jurisdiction, (iii) the term "United States person"
means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of
the United States or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income
taxation regardless of its source and (iv) the term "U.S. person" has the
meaning set forth in Sections 230.901 through .904 of Title 17 of the
United States Code of Federal Regulations ("Regulation S").
Until such time as and if and when the definitive Notes and Coupons have
been issued, the expressions "Notes" and "Coupons" mean and include
co-ownership under the Permanent Global Note and the expressions "holder
of Note" and "holder of Coupon" shall mean and include any person
entitled to co-ownership and any further benefit under the Permanent
Global Note.
(2) INTEREST
The Notes bear interest from the Payment Date at the rate of 4% per
annum, payable semi-annually in arrear on April 29 and October 29 of each
year until maturity (the "Coupon Due Dates"), the first time on April 29,
2000. Such interest is payable in Swiss Francs. Each Note will cease to
bear interest on the date on which they become due for redemption or
repayment unless payment of principal and/or premium (if any) is
improperly withheld or refused or default is otherwise made in respect of
such payment. In such event, interest will continue to accrue (as well
after as before any judgment) up to but exluding the date on which
payment in full of the principal of such Note is made or (if earlier) the
date on which, payment in full of the principal thereof having been
received by Banca del Gottardo, notice to that effect shall have been
given to the holders of the Notes. Interest is computed on the basis of a
360-day year of twelve 30-day months.
(3) REPAYMENT
The Company undertakes to repay the principal amount of the Notes, unless
previously redeemed, without any previous notice on October 29, 2003.
(4) OPTIONAL REDEMPTION AND CONVERSION
The Company reserves the right to call all, but not part, of the
outstanding Notes for redemption on March 1, 2000, or thereafter up to
the close of business on October 22, 2003, at a price of 110% of the
principal amount thereof, together with interest accrued to the date of
such redemption provided that the average of the daily closing sales
prices of a Share for a period of 30 consecutive trading days, the last
day of which trading days is not more than 10 days prior to the day upon
which the Company sends a notice to Banca del Gottardo of its intention
to redeem the Notes under this sub-section (a), is at least 200% of the
Conversion Price, being initially USD 3.75 per Share ( the "Conversion
Price), in effect on such last day (taking into account any retroactive
adjustment not then reflected in the Conversion Price, whereby such
adjustment shall be calculated pursuant to the Conversion Provisions,
available at Banca del Gottardo). The closing sales price for any day
shall be the average of the closing prices on the New York Stock Exchange
and if not listed thereon, the average of the closing bid and asked
prices on the National Association of Securities Dealers Automated
Quotation (NASDAQ). All outstanding Notes will become due 60 days after
receipt of the aforesaid notice of early redemption by Banca del
Gottardo.
As long as the Shares are listed on a stock exchange or exchanges in the
United States of America, reference in this sub-section (a) to the sales
price for any day shall be deemed to refer to the closing price (regular
way) of a Share as reported by the principal stock exchange on which the
Shares are listed for such day, or the average of closing bid and asked
prices on NASDAQ. If no such sales price is reported for one or more
trading days, such day or days shall not be deemed as trading day or days
and shall be disregarded in the calculation of the said 30 trading day
period.
(5) PAYMENTS
Payments with respect to the Notes and Coupons shall be made in Swiss
Francs against presentation and surrender of such Notes or Coupons in the
manner specified below. Such payments shall be made without cost to the
Noteholders, without any limitations and under all circumstances
notwithstanding any transfer restrictions, regardless of any bilateral or
multilateral payment or clearing agreement in existence between the
United States of America and the Swiss Confederation, irrespective of the
nationality, residence or domicile of any of
the Noteholders and without requiring any affidavit or the fulfillment
of any formalities. The funds required for the payment of principal
and interest shall be made available to Banca del Gottardo in
Switzerland as Paying Agent by the Company prior to each Coupon Due
Date. The receipt of the funds by Banca del Gottardo in Switzerland
shall release the Company from its obligations in respect of the
payments due on the respective dates for principal and interest.
Banca del Gottardo will arrange for payment of such funds as and when due
to the holders of Notes and Coupons. Notes and coupons may be presented
for payment at the principal amount printed on the Notes and the amount
of interest printed on the Coupons only at the offices in Switzerland of
Banca del Gottardo. No payment on the Notes or Coupons will be made by
transfer to an account in, or by mailing to an address in, the United
States.
(6) TAX STATUS
All payments of principal and interest on the Notes and Coupons by the
Company shall be made without deduction for or on account of any present
or future tax, assessment or other governmental charge ("Taxes") imposed
upon such payment by the United States of America or any political
subdivision or taxing authority thereof or therein (the "United States").
If the Company shall at any time be required by law to withhold any such
Taxes, the Company will pay as additional amounts to Banca del Gottardo
for the account of the holders of Notes and Coupons, such amounts as may
be necessary so that every net payment on each Note or Coupon, after
withholding for or on account of any such Taxes (including any backup
withholding tax or similar charge that may be required in order for such
payment to be made without any certification or disclosure of the
nationality, residence or identity of the beneficial owner of such Note
or Coupon) will not be less than the amount provided in such Note or
Coupon to be then due or payable; provided, however, that the Company
will not be required to pay such additional amounts for or on account of
any such Taxes that are imposed (i) otherwise than by withholding from a
payment on a Note or Coupon, (ii) upon a holder of a Note or Coupon who
is subject to taxation by the United States for any reason other than
such holder's ownership or receipt of payments in respect of such Note or
Coupon, or (iii) on interest or principal received by a holder of a Note
or Coupon which is (a) a "10-per cent. shareholder" of the Company within
the meaning of section 871(h) (3) (B)(a) of the Code, (b) a bank or an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business, (c) a controlled foreign
corporation which is related to the Company under section 864(d)(4) of
the Code, (d) other than a nonresident individual or a foreign
corporation (as determined under United States tax principles) with
respect to the United States, or (e) a holder whose Note or Coupon is
presented for retirement or redemption, or payment is otherwise made,
other than outside the United States as provided in United States
Treasury Regulations. Any reference in this Note to the payment of
principal or
interest shall be deemed to include payment of the additional amounts
payable pursuant to the provisions of this paragraph.
If, as the result of any change in, enactment of, or amendment to any
laws or regulations of the United States or any political subdivision or
taxing authorities thereof affecting taxation, or any change in the
official application of such laws or regulations, or any change in,
execution of or amendment to any treaty or treaties affecting taxation to
which the United States is a party, it is determined by the Company that
it would be required at any time to pay additional amounts pursuant to
the preceding paragraph, the Company is entitled to redeem the Notes, as
a whole but not in part, on giving not more than 60 days' but not less
than 30 days' prior notice to Banca del Gottardo, on or after April 29,
2000 at par.
Notice of redemption shall be given by the Company in writing to Banca
del Gottardo and such notice so given shall constitute good and
sufficient notice and shall be binding upon all holders of the Notes,
regardless of who they may be or where they may be located.
Banca del Gottardo shall as soon as practicable notify the Noteholders of
such redemption in accordance with Section 12 hereof.
The Company has been advised by Banca del Gottardo that pursuant to the
Swiss federal laws at present in force, interest payments on the Notes
are not subject to Swiss withholding tax.
(7) AUTHORIZATIONS
The Company has confirmed to Banca del Gottardo that no authorizations or
approvals are required under the laws of the United States for
performance of its obligations hereunder, except for the registration
requirements provided for herein.
(8) STATUS OF THE NOTES AND NEGATIVE PLEDGE
The Notes constitute unsecured direct obligations of the Company, ranking
equally with other unsecured and unsubordinated indebtedness for borrowed
money of the Company.
So long as any Note remains outstanding the Company will not at any time
pledge or otherwise subject to any lien any of its property or assets
(other than (i) liens incurred in the ordinary course of business, as for
example, installment payment purchases of equipment or other assets used
in the Company's business and (ii) liens not incurred in the ordinary
course of business not exceeding USD 250'000.-- in the aggregate),
without thereby expressly
securing the Notes equally and ratably with any and all other
obligations and indebtedness secured by such pledge or other lien.
(9) CONVERSION
Exhibit 1 to Annex E attached to the Agreement dated October 26, 1999 and
entered into between the Company and Banca del Gottardo, which is
available for inspection at the Head Office in Lugano of Banca del
Gottardo, as Conversion Agent for the Notes, contains full provisions
relevant to conversion of the Notes into initially 8'800 Shares of Common
Stock (being the equivalent of USD 33'000.-- divided by USD 3.75
("Conversion Price"), the initial conversion price per Share, the
"Conversion Amount") which are to be duly registered under the 1933
Securities Act. The following is a summary of such provisions:
The holder of 1 Note or more will be entitled at any time on and after
March 1, 2000 up to the close of business on October 22, 2003, subject to
prior redemption, to convert the Notes, at the Conversion Amount thereof,
into initially 8'800 freely transferable and non-restricted (such
non-restriction being subject to the effectiveness of a registration
statement under the U.S. securities laws covering such common stock, if
required,) shares of Common Stock of the Company, Pricesubject to
adjustment as described below. No payment or adjustment will be made on
conversion of any Note for interest accrued thereon or dividends on any
Common Stock issued, except that accrued interest will be paid on the
conversion of any Note which has been called for redemption prior to the
conversion date. The Company is not required to issue fractional shares
of Common Stock upon conversion of Notes and, in lieu thereof, will pay a
cash adjustment based upon the market price of the Common Stock on the
last trading day prior to the date of conversion. In the case of Notes
called for redemption, conversion rights will expire at the close of
business on the fifth business day prior to the redemption date. Notes
may be presented for conversion only to an office of Banca del Gottardo
outside the United States and Banca del Gottardo will deliver Common
Stock or other consideration received upon conversion only to an account
or address outside the United States.
The Conversion Price is subject to adjustment in the following events
occurring after October 29, 1999:
- the issuance of stock of the Company as a dividend or distribution
on the Common Stock;
- subdivisions of outstanding shares of the Common Stock into a
greater number of shares;
- combinations of outstanding shares of Common Stock into a smaller
number of shares;
- reclassification of the Common Stock into other shares of the
Company's capital stock;
- issuance to all holders of Common Stock of certain rights entitling
them to subscribe for Common Stock at a price per share less than the
current market price but not for shares issuable under the Company's
stock option and stock purchase plans; and
- the distribution to all holders of Common Stock of debt securities or
assets of the Company or rights to purchase assets or debt securities
of the Company (excluding cash dividends or distributions from
retained earnings).
No adjustment in the Conversion Price will be made unless such adjustment
would require an increase or decrease of at least one Share in the
Conversion Price then in effect; but any adjustment that would otherwise
be required to be made shall be carried forward and taken into account in
any subsequent adjustment. No adjustment need be made for rights to
purchase Common Stock pursuant to a Company dividend or interest
reinvestment plan. If the Company consolidates or merges into or
transfers or leases all or substantially all of its assets to any person,
or is a party to a merger that reclassifies or changes its outstanding
Common Stock, the Notes will become convertible into the kind and amount
of securities, cash or other assets which the Holders would have owned
immediately after the transaction if the holders had converted the Notes
immediately before the effective date of the transaction.
(10) EVENTS OF DEFAULT
Subject to the provisions of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ as regards
all Notes or Holders having 10% or more of the aggregate principal amount
of all Notes outstanding shall have the right to declare by notice to the
Company the Notes held by such Holder, plus accrued interest, to be due
and payable if any of the following events of default shall occur:
(a) default in the payment of principal, or, for a period of 15 days
after due and payable, in the payment of interest on any Note; or
(b) default in the performance or observance in any material respect
of any covenant or agreement of the Company in the Notes if such
default continues for a period of 30 days after notice thereof has
been given by Banca del Gottardo to the Company; or
(c) a default shall occur under any evidence of indebtedness for money
borrowed by the Company or under any instrument under which there
may be issued or by which there may be secured or guaranteed any
indebtedness for money borrowed by the Company, which default
involves the failure to pay when due (after any applicable grace
period
and subject to any extension or postponement of such maturity),
or results in the acceleration of, indebtedness in an amount in
excess of USD 500'000.-- without such indebtedness having been
discharged or such default or acceleration having been waived,
rescinded or annulled, within a period of 30 days after notice
thereof shall have been given by Banca del Gottardo to the
Company; or
(d) the entry of a decree or order in respect of the Company in an
involuntary case under any bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, trustee or other
similar official of the Company or for any substantial part of its
property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 45 consecutive days; or
(e) the Company shall commence a voluntary case under any bankruptcy,
insolvency or other similar law, or consent to the appointment of
or taking possession by a receiver, liquidator, trustee or other
similar official, of the Company or for any substantial part of
its property, or the making by it of a general assignment for the
benefit of creditors, or if it shall fail generally to pay its
debts as they become due, or shall take any corporate action in
furtherance of any of the foregoing; or
(f) if the Company shall merge or consolidate, or sell or convey all
or substantially all of its assets to, any other corporation,
unless (i) the Company is the surviving corporation, or (ii) the
surviving or transferee corporation expressly assumes all
obligations of the Company under the Notes by supplemental
agreement, confirmed by an opinion of U.S. counsel reasonably
satisfactory to Banca del Gottardo and the Company, or (iii) the
Company or the surviving or transferee corporation irrevocably
deposits in trust with Banca del Gottardo, money or U.S.
government obligations sufficient to pay principal and interest on
the Notes to maturity.
Upon the occurrence of an event of default, the Company shall promptly
give notice thereof to Banca del Gottardo which shall publish such notice
of default in accordance with Section 12 hereof. Banca del Gottardo shall
in relation to any event of default have no other obligation than the
publication of such event of default.
The principal amount of all Notes declared to be due and payable plus
accrued interest thereon shall become due and payable 15 days after
notice to the Company by Banca del Gottardo or by each Holder of such
event of default; provided, however, that such declaration shall be
rescinded if, within 15 days of such notice, such event of default shall
have been remedied by payment, in the case of a payment default, or in a
manner reasonably satisfactory to Banca del Gottardo.
In the event that a Resolution or Extraordinary Resolution is passed
at a meeting of Holders held pursuant to Section 15, any actions taken
pursuant to this Section 10 by a Holder shall be subject to any
previously taken action pursuant to such Section 15.
(11) PRESCRIPTION
In accordance with the Swiss statute of limitations as referred to in
Art. 127 et seq. of the Code of Obligations the coupons will become
barred five years and the Notes ten years after their respective due
dates.
(12) NOTICES AND PUBLICATIONS
All notices to the Holders shall be deemed to have been duly given if
published in the Feuille Officielle Suisse du Commerce and in a daily
newspaper in Lugano. All notices to the Company by any Holder shall be
deemed to have been duly given if sent by fax or telex to the principal
office of the Company.
(13) LISTING OF THE NOTES
No application will be made for the admission and quotation of the Notes
on any stock exchange.
(14) REPLACEMENT OF NOTES OR COUPONS
If any Note or Coupon, if printed, is defaced, mutilated, destroyed,
stolen or lost, it may be renewed or replaced at the head office of Banca
del Gottardo in Lugano, Switzerland on payment of such costs as may be
incurred in connection therewith and on presentation of such evidence and
indemnity as Banca del Gottardo may require. Defaced or mutilated Notes
or Coupons must be surrendered before replacements may be issued.
(15) NOTEHOLDERS' MEETING
a) A meeting of the Holders (hereinafter called a "Meeting") may be
convened by the Company or shall be convened by the Company if so
requested by Notes representing not less than 25% of the aggregate
principal amount of all Notes outstanding under the Terms of the
Notes (i) after the event of default shall have occurred and be
continuing to consider a waiver of an event of default or any
modification or amendment of the provisions of the terms of the
Notes, or (ii) a substitution of Banca del Gottardo.
The cost and expenses of a Meeting shall be borne by the Company.
b) Notice of the Meeting specifying the place, day and hour of the
Meeting shall be given at least 20 days prior to the proposed date
thereof (exclusive of the day on which the notice is given and the
day on which the Meeting is to be held) in accordance with Section
12 hereof. Such notice shall state generally the nature of the
business to be transacted at the Meeting thereby convened but
(except for an Extraordinary Resolution (as defined below)) it
shall not be necessary to specify in such notice the terms of any
resolution to be proposed.
c) The Meeting shall be held in Lugano and shall be chaired by a
representative of the Company or if such representative of the
Company shall not be present within 30 minutes after the time
appointed for the holding of the Meeting, the Noteholders present
shall choose one of their members to be chairman. The Meeting
shall be conducted in the English language exclusively.
d) Resolutions shall only be passed if a quorum of two or more
persons holding 25% or more of the aggregate principal amount of
all Notes outstanding are present. The quorum at any Meeting for
passing an Extraordinary Resolution shall be two or more persons
holding two-thirds or more of the aggregate principal amount of
all Notes outstanding. Resolutions shall be passed if approved by
the absolute majority of votes cast save that an Extraordinary
Resolution shall be passed only if approved by three-fourths or
more of votes cast. Any resolution passed at a Meeting duly
convened and held in accordance with the terms of the Notes shall
be binding upon all the Holders, whether present or not present at
such Meeting and whether or not voting, and upon all the holders
of coupons.
e) If within 30 minutes after the time appointed for any such Meeting
a quorum is not present, the Meeting shall, if convened upon the
request of Holders, be dissolved. In any other case, it shall
stand adjourned for such period being not less than 14 days nor
more than 28 days, and at such place as may be appointed by the
Company. At such adjourned Meeting, two or more persons present
holding 10% or more of the aggregate principal amount of all Notes
outstanding shall form a quorum, provided that if the business of
such adjourned Meeting includes consideration of a proposed
Extraordinary Resolution, the quorum shall be two or more persons
present holding one-third or more of the aggregate principal
amount of all Notes for the time being outstanding.
f) If within 30 minutes after the time appointed for any such
adjourned Meeting the respective quorum is not present the Meeting
shall stand further adjourned for such period being not less than
14 days nor more than 28 days, and at such place as may be
appointed by the Company and at such further adjourned Meeting two
or more persons present holding any Notes outstanding (whatever
the principal amount of the Notes so
held by them) shall form a quorum, provided that if the
business of such further adjourned Meeting includes
consideration of a proposed Extraordinary Resolution, the
quorum shall be two or more persons present holding one-third
or more of the aggregate principal amount of all Notes for the
time being outstanding.
g) Notice of any adjourned Meeting or further adjourned Meeting shall
be given in the same manner as notice of an original Meeting and
such notice shall state, in the case of an adjourned Meeting, that
two or more persons present holding 10% (or in the case of a
Meeting the business of which includes consideration of a proposed
Extraordinary Resolution, one-third) or more of the aggregate
principal amount of all Notes for the time being outstanding will
form a quorum, or, in the case of a further adjourned Meeting,
that two or more persons present holding any Notes outstanding (or
in the case of a Meeting the business of which includes the
consideration of a proposed Extraordinary Resolution, two or more
persons present holding one-third or more of the aggregate
principal amount of all Notes for the time being outstanding),
shall form a quorum.
h) The voting rights of the Holders shall be determined according to
the principal amount of Notes held, each Note with a principal
amount of CHF 50'000.-- giving the right to one vote. Holders of
the coupons shall not have any voting rights. Notes held by or on
behalf of the Company shall have no voting rights and shall be
disregarded for the purpose of this Section 15, save that the
Company shall be entitled to vote in respect of Notes held by it
for the benefit of and at the direction of an independent third
party. In the case of an equality of votes the chairman shall have
a casting vote in addition to the vote or votes (if any) to which
he may be entitled as a Holder.
i) Any director or officer of the Company and its lawyers and any
other person authorized on its behalf by it may attend and speak
at any Meeting.
j) The Meeting shall have the following powers exercisable by
Extraordinary Resolution with the consent of the Company:
(i) extension of the date fixed for final maturity of the
Notes;
(ii) reduction or cancellation of the principal payable on
the Notes;
(iii) reduction or cancellation of the rate or amount payable, or
extension of the date of payment, in respect of any
coupons;
(iv) alteration of the majority required to pass an
Extraordinary Resolution; and
(v) waiver of any Event of Default.
k) Any reference in these Terms of the Notes to an "Extraordinary
Resolution" shall be construed as references to resolutions of the
Holders passed in accordance with the foregoing provisions of this
Section 15 with respect to any of the matters stated in
sub-section j) above.
(16) APPLICABLE LAW AND JURISDICTION
The terms, conditions and form of the Notes and coupons (the English
language version of which shall govern) shall be governed by and
construed in accordance with Swiss law.
Any action or proceedings against the Company relating to the Notes may
be brought and enforced in the ordinary courts of the Canton of Ticino,
venue being in the City of Lugano, or, if such courts fail to grant
jurisdiction in the ordinary courts of the Canton of Basle-City, venue
being in Basle, and the Company hereby irrevocably submits to the
jurisdiction of such courts in respect of any such action or proceeding,
with the right to appeal, as provided by law, to the Swiss Federal Court
in Lausanne, the judgment of which shall be final. Solely for that
purpose, the Company hereby elects legal and special domicile at the
office of Banca del Gottardo, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇. Banca del Gottardo shall notify the Company promptly upon
receipt of any notice by it in its capacity as the Company's agent for
service of process. The Company covenants that so long as any Notes are
outstanding it will maintain an agent for service of process in
Switzerland. The aforementioned jurisdiction shall also be valid for the
cancellation and replacement of lost, stolen, defaced, mutilated or
destroyed Notes and coupons. Payment effected to a holder of Notes who
has been identified as the legitimate holder of a Note or coupon by a
final judgment of a Swiss court shall release the Company from its
payment obligations under such Note or coupon.
Any Noteholder shall also have the right to bring any legal action or
proceeding against the Company in respect of a Note or coupon and all
covenants contained therein in any state or federal court in the Country
of Franklin, Ohio, in the United States of America which may have
jurisdiction.
ANNEX B
(Form of Convertible Note)
No. ________________
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.
BIGMAR, INC.
(Incorporated in the State of Delaware)
CHF 50'000.--
4% Notes due October 29, 2003
Convertible into freely transferable and non-restricted shares
of Common Stock of the Company
BIGMAR, INC. (the "Company"), for value received, hereby certifies that it
owes to the bearer, payable upon presentation and surrender hereof, the
principal amount of 50'000.-- Swiss Francs (CHF fifty thousand) on October
29, 2003 or on such earlier date as such principal amount may become due in
accordance with the Terms of the Notes appearing on the reverse hereof, and
interest from October 29, 1999 on said principal amount at the rate of 4%
(four percent) per annum, payable in cash, semi-annually in arrear on April
29 and October 29 of each year and at maturity, until payment of said
principal amount has been made or duly provided for, but only, in the case of
interest due on or before maturity, upon presentation and surrender of the
interest coupons attached hereto as they shall severally become due, all in
accordance with the Terms of the Notes.
This Note is one of a duly authorized issue of 4% Notes due October 29, 2003
of the Company in the aggregate principal amount of 3'000'000.-- Swiss Francs
(the "Notes") issued pursuant to a Note Purchase, Paying and Conversion
Agency Agreement, dated as of October 26, 1999 (the "Agreement"), between the
Company of the first part and Banca del Gottardo of the second part. The
Notes are issued subject to and with the benefit of the Agreement.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under
its corporate seal as of October 29, 1999.
Swiss Security no.: 1012321
ISIN: CH001012321
BIGMAR, INC.
By:
------------------------------
ANNEX C
(Form of Coupon)
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.
Coupon No. 1-8
BIGMAR, INC.
Johnstown, Ohio, U.S.A.
Swiss Francs 50'000.--
4% Notes due October 29, 2003
Note of Swiss Francs 50'000.-- (fifty thousand)
Semi-annual interest due on April 29 and October 29, 2000/2003 payable
in cash on the terms set forth in the Terms of the Notes:
Swiss Francs 1'000.--
BIGMAR, INC.
By:
-----------------------------------
(Reverse Coupon)
This coupon is payable at the head office in Lugano of Banca del Gottardo.
ANNEX D
(to be typed on security paper)
PERMANENT GLOBAL NOTE
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR
TO, OR FOR THE BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) UNLESS THIS NOTE IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.
BIGMAR, INC.
CHF 3'000'000.--
4% Notes due October 29, 2003
Convertible into shares
of Common Stock of the Company
This Permanent Global Note without interest coupons is a Permanent Global
Note in respect of a duly authorized issue of 4% Notes due October 29, 2003
(the "Notes") of Bigmar, Inc. (the "Company"), a corporation duly organized
and existing under the laws of the State of Delaware, in the principal amount
of three million Swiss Francs and issued pursuant to a Note Purchase, Paying
and Conversion Agency Agreement (the "Agreement") dated as of October 26,
1999 between the Company of the first part and Banca del Gottardo of the
second part.
Subject to the provisions of the Agreement, Bigmar, Inc., for value received,
hereby promises to pay to the holder of this Permanent Global Note, payable
upon presentation and surrender hereof, the amount of Swiss Francs
3'000'000.-- (CHF three million) and interest thereon at 4% per annum, in
accordance with the Terms of the Notes set forth in Annex A of the Agreement.
Each holder of Notes retains a co-ownership in this Permanent Global Note to
the extent of his claims against the Company. The decision, if and when the
definitive Notes with Coupons attached are to be printed, is at the sole
discretion of Banca del Gottardo. An exchange of this Permanent Global Note
prior to the complete redemption of the issue can only be effected against
the definitive Notes with Coupons attached.
If definitive Notes are printed, this Permanent Global Note is exchangeable
for the definitive Notes in accordance with Article IX of the Agreement.
Unless and until so exchanged, Banca del Gottardo, on behalf of the holders
of the Notes, as the bearer of this Permanent Global Note shall enjoy the
benefit of and be subject to the Agreement (including the Terms of the Notes).
The Terms of the Notes set forth in Annex A of the Agreement are hereby
incorporated by reference herein MUTATIS MUTANDIS and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company
shall make all payments hereunder as and when provided in the Terms of the
Notes and shall be bound by all its covenants set forth therein.
This Permanent Global Note shall be governed by and construed in accordance
with the laws of Switzerland.
IN WITNESS WHEREOF, the Company has caused this Permanent Global Note to be
duly executed under its corporate seal as of October 29, 1999.
Dated: ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇ Security no.: 1012321
ISIN: CH0010123211
BIGMAR, INC.
By:
---------------------------------
This Permanent Global Note shall not become valid for any purpose until this
Permanent Global Note has been authenticated by any two officers of Banca del
Gottardo.
By: By:
----------------------------------- -------------------------------
Authorized Officer Authorized Officer
ANNEX E
CONVERSION AGENCY AGREEMENT
This agreement is entered into effective as of October 29, 1999, between
BIGMAR, INC., a Delaware corporation with principal offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America (the "Company") of
the first part and BANCA DEL GOTTARDO, a Swiss corporation with principal
offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Banca del
Gottardo") of the second part.
As authorized by its Board of Directors on October 5, 1999 and pursuant to a
Note Purchase, Paying and Conversion Agency Agreement dated October 26, 1999
(the "Agreement"), the Company proposes to make an offer on the Swiss capital
market for the sale of its convertible notes (the "Convertible Notes"). The
Convertible Notes will be convertible into shares (the "Shares") of the
Common Stock of the Company (the "Common Stock"), on the terms and conditions
provided hereafter. The Board of Directors of the Company has approved this
agreement as regards the conversion of the Notes and has authorized the
conversion of the Convertible Notes into the Common Stock of the Company on
the terms and conditions hereof.
Article 1 CONVERSION AGENT
1.1. The Company hereby appoints Banca del Gottardo, acting
through its specified office in Switzerland, as sole
Conversion Agent (the "Conversion Agent") for the conversion
of Notes or coupons into Shares in accordance with the
provisions for conversion set forth in Exhibit 1 hereto (the
"Conversion Provisions") which constitutes an integral part
of this agreement.
1.2. So long as any Notes are outstanding, the Company shall
maintain a stock transfer agent (the "Stock Transfer Agent")
or shall itself perform the functions required of such agent
under this agreement.
1.3. The appointment of the Conversion Agent hereunder shall
continue in effect until the conversion right in respect of
the Convertible Notes shall have terminated. So long as
Banca del Gottardo satisfactorily performs its obligations
hereunder the Company shall not without the consent of Banca
del Gottardo appoint any other Conversion Agent or pay any
other bank any commission or remuneration for the conversion
of the Convertible Notes or coupons.
Article 2 COMMISSIONS
2.1. In consideration for the services rendered by the Conversion
Agent in connection with the conversion of the Convertible
Notes and coupons, the Company undertakes to pay upon demand
to the Conversion Agent in Swiss Francs a commission of 0.25
per cent of the principal amount of each Note converted,
however at least CHF 125.-- per conversion of a Convertible
Note in a principal amount of CHF 50'000.-- together with
reasonable out-of-pocket expenses (e.g., telex, cable,
postage, telephone, legal and insurance expenses, if any)
incurred by the Conversion Agent in connection with its
services hereunder.
2.2. Neither Banca del Gottardo nor the Noteholders shall have
any obligation to pay to the Stock Transfer Agent any
commission, fees, costs or charges in connection with the
conversion of Convertible Notes or coupons and the making
available of the respective Shares as provided hereafter.
Article 3 INDEMNIFICATION
The Company will indemnify and hold harmless the Conversion Agent
against any losses, liabilities, costs, claims, actions or demands
which it may incur or which may be made against it as a result of
or in connection with its appointment or the exercise of its
powers and duties under this Agreement other than those based upon
or arising out of the negligence of willful misconduct on the part
of the Conversion Agent or any of its employees.
Article 4 CONVERSION OF CONVERTIBLE NOTES AND COUPONS
Each Convertible Note, if printed, and all unmatured coupons
attached thereto, submitted for conversion to the Conversion Agent
(a "Converted Note") shall be imprinted or stamped by the
Conversion Agent with a legend to the effect that such Convertible
Note or coupon has been converted. All Converted Notes and coupons
shall be held by Banca del Gottardo for the account of the
Company. Banca del Gottardo shall maintain a record of Convertible
Notes and coupons converted.
Article 5 NOTICES
All notices required under this Agreement shall be deemed to have
been duly given if sent by cable, telex or facsimile transmission
(confirmed in writing, sent by registered airmail) to the
following addresses:
If to the Company:
BIGMAR, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Attn: Chief Financial Officer
Facsimile: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
If to the Conversion Agent:
BANCA DEL GOTTARDO
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attention: New Issue Department
Telex: 841 052
Facsimile: 0114191 808 18 43
or to such other address as at the party receiving the notice
shall have notified to the other party in writing. Such cable,
telex or facsimile transmission notice shall be deemed to have
been duly given at the time of dispatch. Any party receiving a
notice by cable, telex or facsimile transmission will be protected
by relying upon the cabled, telexed or transmitted notice even
though such notice is not subsequently confirmed in writing.
Article 6 GOVERNING LAW
6.1. This agreement shall be governed by and construed in
accordance with Swiss law, except as to matters regarding
conversion of the Notes into Common Stock of the Company,
which shall be governed by and construed in accordance with
the laws of Delaware. Any action or proceedings against the
Company relating to this agreement or the Convertible Notes
or coupons may be brought and enforced in the ordinary
courts of the Canton of Ticino, venue being in the City of
Lugano, and the Company hereby irrevocably submits to such
courts in respect of any such action or proceeding with the
right to appeal, as provided by law, to the Swiss Federal
Court in Lausanne, the judgment of which shall be final.
Solely for that purpose and for the purpose of execution in
Switzerland, the Company hereby elects legal and special
domicile at the office of Banca del Gottardo, ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇. Banca del Gottardo
shall notify the Company promptly upon receipt of any notice
by it in its capacity as the Company's agent for service of
process.
6.2. The Conversion Agent shall also have the right to bring any
legal action or proceeding hereunder against the Company in
any state or federal court in Franklin County, Ohio.
Article 7 COUNTERPARTS
This agreement may be executed in any number of counterparts, each
of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and Banca del Gottardo have caused
this agreement to be signed and acknowledged by their officers
authorized to do so, as of October 26, 1999.
BIGMAR, INC.
By:
--------------------------------------
BANCA DEL GOTTARDO
By:
--------------------------------------
EXHIBIT 1 TO ANNEX E
CONVERSION PROVISIONS
The following are the provisions for the conversion (the "Conversion
Provisions") of the CHF 3'000'000.-- 4% Convertible Notes due October 29, 2003
of Bigmar, Inc., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, U.S.A., (the "Company") into shares of
the common stock of the Company. Unless otherwise defined herein, the terms used
herein have the meanings ascribed to them in the Note Purchase, Paying and
Conversion Agency Agreement and the Conversion Agency Agreement (the "Agency
Agreement") dated as of October 26, 1999, between the Company and Banca del
Gottardo.
--------------------------------------------------------------------------------
ARTICLE 1
Conversion Right
1.1. Subject to and upon compliance with these Conversion Provisions, the
holder of any Note (a "Noteholder") will have the right at any time on
and after March 1, 2000 up to the close of business of banks in Lugano on
October 22, 2003, or, in case the Notes are called for redemption in
accordance with Section 4 of the Terms of the Notes, then prior to the
close of business of banks in Lugano on the earlier of October 22, 2003
and the fifth business day preceding the date fixed for redemption, but
in no event thereafter, to convert USD 33'000.-- (the Conversion Amount)
of one Note or more Notes into initially 8'800 freely transferable and
non-restricted (such non-restriction being subject to the effectiveness
of a registration statement under the U.S. securities laws covering such
common stock) shares of common stock which are duly registered under the
1933 Securities Act, with par value USD 0.001 per share (such presently
authorized capital stock and any other stock into which such presently
authorized common stock may hereafter be changed, the "Common Stock"), of
the Company, calculated as to each conversion to the greatest number of
full Shares, disregarding fractions, at a price of initially USD 3.75 per
share, such price being subject to adjustment in certain instances as
provided in Article 2 hereafter (as so adjusted from time to time, the
"Conversion Price"). Fractions of a share will not be issued on
conversion; provided, however, that if a Noteholder at any one time
delivers more than one Note for conversion, the number of Shares issued
shall be calculated on the basis of the aggregate principal amount of the
Notes so delivered. A cash adjustment shall be paid in respect of any
fractional Share which would otherwise be issuable upon conversion of any
Note in an amount in Swiss Francs based upon the market price of the
Common Stock on the last trading day prior to the date of conversion.
Cash adjustments for fractional shares will not be made for amounts less
than five U.S. Dollar/seven Swiss Francs.
1.2. In order to exercise the right of conversion, a Noteholder shall (a)
deliver the Note or Notes to be converted during normal business hours,
accompanied by the conversion notice in the form obtainable from the
Conversion Agent (the "Conversion Notice") to any Conversion Agent and
(b) pay to the Conversion Agent any stamp or other taxes that may be
payable in Switzerland on such conversion. Each Note, if printed,
delivered for conversion must be delivered with all unmatured coupons
attached and/or with an amount equal to the face value of any missing,
unmatured coupons. Such missing, unmatured coupons shall be paid by Banca
del Gottardo upon subsequent presentation thereof, provided they shall
not have become barred pursuant to Section 11 of the Terms of the Notes.
1.3. The Conversion Agent undertakes to:
(a) make available to Noteholders the Conversion Notice in such form
as may from time to time be agreed by the Company and the
Conversion Agent;
(b) upon receipt of a Conversion Notice from a Noteholder:
(i) verify that (A) the Conversion Notice has been duly
completed and signed by or on behalf of the Noteholder
named therein, (B) the Conversion Notice is accompanied by
all Notes, if printed, to which it relates and all
unmatured coupons appertaining to such Notes and/or an
amount equal to the face value of any missing unmatured
coupons and (C) the amount of any stamp or other taxes
payable by the Noteholder has been paid; and
(ii) endorse the Conversion Notice;
(c) imprint or stamp all Notes, if printed, submitted to it for
conversion, and all unmatured coupons attached thereto, in
accordance with Article 4 of the Agency Agreement promptly upon
satisfaction by the Noteholder of all conditions precedent to the
conversion; and
(d) dispatch within two business days after satisfaction by the
Noteholder of all conditions precedent to the conversion to the
relevant tax authorities, payment in respect of any stamp or other
taxes payable on the conversion, in accordance with the laws of
Switzerland.
1.4. The Conversion Agent shall promptly, upon the later of the date of
receipt of the Conversion Notice and the satisfaction of all other
conditions precedent to the conversion stated above, endorse the
Conversion Notice and notify the Company and the Stock Transfer Agent of
the
Company (at present American Stock Transfer & Trust Company, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, U.S.A.), by facsimile, telex or cable of
(a) the principal amount and serial numbers of the Notes deposited for
conversion, (b) the number of Shares issuable upon conversion of such
Notes and (c) the name and address of each person (the "Shareholder")
to whom such Shares are to be issued. Such conversion shall become
effective at the close of business on the date (the "Conversion Date")
on which the Company shall have received at its principal executive
offices, during normal business hours, from the Conversion Agent a
telex or cable notification. If such facsimile, telex or cable
notification is received after the close of business on such date, the
Conversion Date will be the immediately following business day. At
such Conversion Date the rights of the holder (other than the Company)
of a Note shall cease and the Shareholder shall be deemed to have
become the holder of such Shares.
1.5. As soon as practicable on or after the Conversion Date, but in no event
later than seven business days thereafter, the Company shall (a) cause
the Shareholder to be registered as the owner of the Shares issued upon
conversion of such Shareholder's Notes in the register of Shareholders of
the Company, (b) make available, or cause the Stock Transfer Agent to
issue, a certificate or certificates for such Shares registered in the
name of the Shareholder (together with any other securities, properties
or cash deliverable at the Conversion Date) and (c) at the request of the
Shareholder, cause the Stock Transfer Agent to forward, at the risk and
expense and for account of such Shareholder, such certificate or
certificates (together with any other securities, properties or cash
deliverable upon conversion) to such person or persons at the address
specified in the Conversion Notice, together with such assignments and
other documents, if any, as may be required by law to effect the transfer
thereof with full benefits under the laws of the applicable jurisdiction
of the United States of America.
1.6. The Company covenants that:
(a) so long as any Notes are outstanding, it shall keep available
authorized shares of Common Stock sufficient to permit all Notes
outstanding and unconverted to be converted in accordance with
these Conversion Provisions;
(b) all shares of Common Stock delivered upon conversion of Notes as
provided herein will be validly issued, fully-paid and
non-assessable;
(c) it shall file, on or before March 1, 2000, if required, any
registration under the United States securities laws that may be
required before the Shares can be delivered upon conversion of the
Notes and freely marketed in the United States.
1.7. Shares issued upon conversion and registered in the name of the
Shareholder shall be freely transferable and non-restricted and shall be
entitled to receive all dividends paid on such Common Stock on or after
the Conversion Date, except for dividends payable to Shareholders
registered as such as of a record date occurring prior to the Conversion
Date. No payments shall be made upon conversion for interest accrued
since the Coupon Due Date next preceding the Conversion Date.
1.8. Notes may be presented for conversion only to an office of the Conversion
Agent outside the United States. The Company and the Conversion Agent
will deliver Common Stock or other consideration received upon conversion
only to an account or address outside the United States.
ARTICLE 2
The Conversion Price shall be subject to adjustments in the following
circumstances occurring after October 29, 1999:
2.1. In case the Company shall hereafter (i) pay a dividend on its Common
Stock in shares of its Common Stock or make a distribution in shares of
its Common Stock with respect to its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares of Common Stock or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the Conversion
Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision or combination shall be determined
by multiplying the Conversion Price in effect immediately prior to such
record date or effective date by a fraction, the numerator of which shall
be the total number of outstanding shares of Common Stock immediately
prior to such record date or effective date, and the denominator of which
shall be the total number of outstanding Common Stock immediately
following such record date or effective date. Such adjustments made
pursuant to this Section 2.1 shall be made successively whenever any
event listed above shall occur.
2.2. In case the Company shall fix a record date for the issuance of rights,
options to all (but not less than all) holders of its outstanding Common
Stock entitling them to subscribe for or purchase shares of Common Stock
(or securities convertible into shares of Common Stock) at a price per
share (or having a price per share, if a security convertible into Common
Stock) less than the Current Market Price per share of Common Stock (as
defined in Section 2.4) on such record date, the Conversion Price to be
in effect after such record date shall be determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the number of shares of Common
Stock
outstanding on such record date plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares
of Common Stock so to be offered (or the aggregate initial Conversion
Price of the convertible securities so to be offered) would purchase
at such Current Market Price and of which the denominator shall be the
number of shares of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible security so to
be offered are initially convertible). In case such subscription or
exercise price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration
shall be as determined by the Board of Directors of the Company.
Shares of Common Stock owned by or held for the account of the Company
or any majority-owned subsidiary shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event
that such rights are not so issued, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect
if such record date had not been fixed.
2.3. In case the Company shall fix a record date for the making of a
distribution to all (but not less than all) holders of shares of Common
Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of surplus legally available
for dividends under the laws of the jurisdiction of incorporation of the
Company, dividends or distributions payable in shares of Common Stock as
described in Section 2.1, or rights, options or convertible securities
containing the right to subscribe for or purchase shares of Common Stock
(excluding those referred to in Section 2.2)), the Conversion Price to be
in effect after such record date shall be determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the Current Market Price per
share of Common Stock (as defined in Section 2.4) on such record date,
less the fair market value per share (as determined by the Board of
Directors of the Company, whose determination shall be conclusive, and
described in a statement filed with Banca del Gottardo) of the portion of
the assets or evidences of indebtedness so to be distributed, or of such
rights, options, or convertible securities, applicable to one share of
Common Stock, and of which the denominator shall be such Current Market
Price per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
record date had not been fixed. If any such rights, options, or
convertible securities shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional
consideration per share of Common Stock payable to the Company upon the
exercise or conversion thereof, the Conversion Price then in effect
shall, forthwith upon any such increase becoming effective, be readjusted
to reflect such increase.
2.4. For the purpose of any computation under Sections 2.2 and 2.3, the
"Current Market Price" means with respect to any Trading Day the last
sale price (regular way) of the Common on such day as reported on the New
York Stock Exchange Consolidated Tape (as published in the Wall Street
Journal), or, if such Common Stock is not listed on the New York Stock
Exchange, Inc. or reported on such Consolidated Tape, then the last sale
price on such day on the principal domestic stock exchange on which such
stock is then listed or admitted to trading, or, if no sale takes place
on such day on such exchange, the average of the closing bid and asked
prices on such day as officially quoted on such exchange, or, if such
Common Stock is not then listed or admitted to trading on any domestic
stock exchange but is quoted in the Smallcap System ("NASDAQ") of the
National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ"), then the Current Market Price for each such Trading
Day shall be the last sale price on such day as quoted by NASDAQ, or, if
no sale takes place on such day or if such Common Stock is neither listed
or admitted to trading on any domestic stock exchange nor quoted on such
National Market System, then the Current Market Price for each such
Trading Day shall be the average of the reported closing bid and asked
price quotations on such day in the over-the-counter market, as reported
by NASDAQ, or, if not so reported, as furnished by the National Quotation
Bureau, Inc., or, if such firm at the time is not engaged in the business
of reporting such prices, as furnished by any similar firm then engaged
in such business as selected by the Company, or if there is no such firm,
as furnished by any member of the National Association of Securities
Dealers, Inc. selected by the Company with the written approval of the
Holders of the Notes convertible for a majority of the shares of Common
Stock issuable under then outstanding Notes. If at any time such Common
Stock is not listed on any domestic exchange or quoted in the domestic
over-the-counter market, the Current Market Price shall be deemed to be
an amount mutually agreed upon in writing between the Company and the
Holder of this Note within fifteen days immediately following the date on
which the Current Market Price is to be determined. If no agreement as to
Current Market Price is determined as stated herein, (i) the Holder of
this Note shall select an independent appraiser who shall determine the
fair market value per share of the Common Stock which shall be the
Current Market Price, provided the Company shall agree to such Current
Market Price. If the Company shall not agree to the Current Market Price
as determined in the preceding sentence then (ii) the Company and Banca
del Gottardo shall each select an independent appraiser who shall,
independently of the other appraiser, determine the fair market value of
the Common Stock of the Company. If the value determined by the appraiser
whose determination is the higher of the two appraisals does not exceed
by more than ten percent (10%) the average of the values determined by
each appraiser, then the Current Market Price shall be the average of the
values determined by the two appraisers. If the value determined by the
appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined
by each appraiser, then the two appraisers shall select a third
independent
appraiser who shall, independently of the other appraisals, determine
the fair market value of the Common Stock. The value determined by the
appraiser whose determination is the most discrepant from the average
of the three appraisals shall be discarded, and the Current Market
Price shall equal the average of the remaining two appraisals; except
that in the event that the highest and lowest appraisals are equally
discrepant from the average of the three appraisals, the Current
Market Price shall be such average. The Company shall bear the
expenses of all appraisals.
For the purpose of this Section 2.4, "trading day" shall mean a day on
which the securities exchange or on NASDAQ specified for purposes of this
Section 2.4 shall be open for business or, if the shares of Common Stock
shall not be listed on such exchange for such period, a day with respect
to which quotations of the character referred to in the next preceding
sentence shall be reported.
2.5. In computing an adjustment in the Conversion Price pursuant to Sections
2.1 to 2.3 above, shares of Common Stock not outstanding at the time of
such computation shall be deemed outstanding to the extent that the
Conversion Price has been previously adjusted to reflect the issuance of
such shares of Common Stock or rights, options to subscribe for or
purchase such shares of Common Stock.
2.6. Except as stated in Sections 2.1, 2.2 and 2.3 above, the Conversion Price
(except at the Company's option) shall not be adjusted for the issuance
of shares of Common Stock of the Company whether or not at less than the
Current Market Price or the current Conversion Price, whether for cash or
property.
2.7. No adjustment shall be made to the Conversion Price unless such
adjustment would result in any increase or decrease of at least USD 0.05
in the Conversion Price then in effect; provided, however, that any
adjustments which by reason of this Section 2.7 are not required to be
made will by carried forward and taken into account in any subsequent
adjustment.
2.8. All calculations under these Conversion Provisions shall be made to the
nearest one U.S. cent, with 0.5 U.S. cent or more to be considered a full
U.S. cent, or to the nearest one-hundredth of a share, as the case may
be.
2.9. Whenever the Conversion Price is adjusted as herein provided, the Company
shall promptly send to Banca del Gottardo a certificate of the Company
setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment and the
date on which it becomes effective. The contents of any certificate
required by this Section 2.9 may be transmitted by telex or cable, but
shall be confirmed in writing as
hereinbefore provided. Banca del Gottardo may rely upon such
certificate (or such transmission by cable or telex, whether or not so
confirmed) as conclusive evidence of the correctness of the adjustment
referred to therein.
2.10. Notwithstanding the foregoing, no adjustment shall be made to the extent
that it would reduce the Conversion Price to less than the par value of
the shares of Common Stock (USD .01 at the date hereof).
2.11. Anything in this Article 2 to the contrary notwithstanding, the Company
shall be entitled, but shall not be required, to make such reductions in
the Conversion Price in addition to those required by this Article as it,
in its discretion, shall determine to be advisable.
2.12. In any case in which this Article shall require that an adjustment be
made retroactively immediately following a record date, the Company shall
as promptly as practicable issue to the holder of any Note converted
after such record date the shares of Common Stock and other common stock
of the Company issuable on such conversion in excess of the shares of
Common Stock and other common stock of the Company issuable on such
conversion on the basis of the Conversion Price prior to such adjustment.
ARTICLE 3
3.1. In the event that:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options to subscribe for or purchase
any shares of Common Stock or any securities convertible into
shares of Common Stock, or of any other subscription rights;
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in
Common Stock);
(c) there shall be any consolidation or merger to which the Company is
a party and for which approval of any shareholders of the Company
is required, or there shall be the conveyance or transfer of all
or substantially all of the properties and assets of the Company,
or there shall be any reorganization or reclassification or change
of outstanding Common Stock issuable upon the exercise of
conversion rights hereunder (other than a change in par value, or
from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination);
(d) there shall be voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
(e) the Company proposes to take any action (other than the actions of
the type described in Section 2.1) which would require an
adjustment of the Conversion Price pursuant to Article 2;
then the Company shall, at least 10 days prior to the applicable record
date, provide written notice of such event to Banca del Gottardo stating
(x) the record date in the United States of America as of which the
holders of record of shares of Common Stock to be entitled to receive any
such rights, warrants, or distributions are to be determined, or (y) the
date in the United States of America on which such reorganization,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective, and the date as of which it
is expected that holders of record of the shares of Common Stock shall be
entitled to vote upon, and, if approved, to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding-up.
3.2. If the event described in the notice given pursuant to Section 3.1. will
result in an adjustment of the Conversion Price pursuant to Article 2,
such notice shall also state the new Conversion Price unless the
Conversion Price cannot be calculated at the time such notice is given.
3.3. The failure to give or publish the notice required by this Article 3 or
any defect therein shall not affect the legality or validity of the
proceedings referred to in Section 3.1.
ARTICLE 4
So long as any of the Convertible Notes remain convertible, the Company shall
not take any action which would result in an adjustment of the Conversion Price
pursuant to Article 2 if, after giving effect thereto, the Conversion Price
would be decreased to such an extent that the Shares could not be legally
issued, under applicable law of the jurisdiction of incorporation of the Company
then in effect, at such decreased Conversion Price as fully-paid and
non-assessable Shares.
ARTICLE 5
The Conversion Agent shall not at any time be responsible to any Noteholder for
determining whether any facts exist (a) which may require any adjustment of the
Conversion Price, (b) with respect to the nature or extent of any such
adjustment when made, (c) with respect to the method employed, or herein or in
any supplemental agreement (if any) provided to be employed in making
any such adjustment. The Conversion Agent makes no representation as to the
validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities, property or cash, which may at any time be issued or
delivered upon the conversion of any Convertible Note. The Conversion Agent
shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of stock or stock
certificates or other securities or property upon the surrender of any Note
for the purpose of conversion or to comply with any of the covenants of the
Company contained in these Conversion Provisions.
ARTICLE 6
6.1. In case of any consolidation of the Company with, or merger of the
Company into, any other corporation (other than a consolidation or merger
in which the Company is the continuing corporation), or in the case of
any sale or transfer of all of the assets of the Company as an entirety
or substantially as an entirety, the corporation formed by such
consolidation or the corporation into which the Company shall have been
merged or the corporation which shall have acquired such assets, as the
case may be, shall execute with Banca del Gottardo a supplemental
agreement which shall (a) provide that the holder of each Convertible
Note then outstanding shall have the right to receive thereafter, during
the period such Convertible Note shall be convertible as specified in
Article 2, upon conversion of such Convertible Note, in lieu of each
share of Common Stock deliverable on such conversion immediately prior to
such event, only the kind and amount of shares and/or other securities
and/or property and/or cash which are receivable, or which, but for the
failure to distribute to holders of Common Stock all or substantially all
of the consideration receivable on such sale or transfer of assets, would
be receivable upon such consolidation, merger, sale or transfer by a
holder of one share of Common Stock of the Company and (b) set forth the
Conversion Price for the shares and/or other securities and/or property
and/or cash so issuable, which shall be an amount equal to the Conversion
Price per share of Common Stock of the Company immediately prior to such
event.
6.2. In case of any reclassification or change of the shares of Common Stock
issuable upon conversion of the Notes (other than a change in par value,
or from par value to no par value, or as a result of a subdivision or
combination) or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing
corporation and in which the holders of the shares of Common Stock
thereafter receive shares, other securities, property, cash or any
combination thereof for such shares of Common Stock (including for this
purpose shares reflecting a change in par value or from par value to no
par value or as a result of a subdivision or combination of the shares of
Common Stock), the Company shall execute with Banca del Gottardo a
supplemental agreement which shall (a) provide that the holder of each
Convertible Note then outstanding shall receive, upon
conversion thereof, in lieu of each share of Common Stock of the
Company deliverable upon such conversion immediately prior to such
event, the kind and amount of shares and/or other securities and/or
property and/or cash receivable upon such reclassification, change,
consolidation or merger by a holder of one share of Common Stock, and
(b) set forth the Conversion Price for the shares and/or other
securities and/or property and/or cash so issuable, which shall be an
amount equal to the Conversion Price per share of Common Stock
immediately prior to such event.
6.3. If, as a result of Section 6.1 or Section 6.2, the holder of any
Convertible Note thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes of common stock of the
Company, the Board of Directors (whose determination shall be conclusive)
shall determine the allocation of the Conversion Price between or among
shares of such classes of capital stock. Any supplemental agreement
executed pursuant to Sections 6.1 and 6.2 shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments
provided for herein, and, where appropriate, state the Conversion Price
in terms of one full share of Common Stock or one full share of common
stock of any successor or purchasing corporation. The terms of this
Article 6 also shall apply to successive consolidations, merger, sales or
transfers. In the event that at any time as a result of an adjustment
made pursuant to this Article 6 the holder of any Note thereafter
surrendered for conversion shall become entitled to receive any shares or
securities other than shares of Common Stock, thereafter the prices or
price of such other shares or other securities so receivable on
conversion of any Convertible Note shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in Article 2,
and the provisions of Article 2 with respect to the Common Stock shall
apply on like terms to any such other shares.
6.4. The Conversion Agent shall have no responsibility for any consolidation,
merger, sale or transfer, the form or substance or any plan relating
thereto or the consequences thereof to any Noteholder.
The Conversion Agent shall have no responsibility to determine the
correctness of any provision contained in any supplemental agreement
relating either to the kind or amount of shares of stock or securities or
property receivable by Noteholders upon the conversion of their
Convertible Notes after any such consolidation, merger, sale or transfer,
or to any adjustment made with respect thereto. The Conversion Agent may,
at its option, receive an opinion of counsel for the Company as
conclusive evidence that any such supplemental agreement complies with
the provisions of this Article.
ARTICLE 7
CONVERSION AGENT:
BANCA DEL GOTTARDO
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇
ANNEX F
Dated: October 26, 1999
To: Banca del Gottardo
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Re: Bigmar, Inc. (the "Company")
CHF 3'000'000.-- 4% Convertible Notes of 1999
Due October 29, 2003 (the "Notes")
-------------------------------------------------------------------------------
"CERTIFICATE OF NO MATERIAL ADVERSE CHANGE"
Pursuant to the Note Purchase, Paying and Conversion Agency Agreement dated
October 26, 1999 (the "Agreement") between the Company and Banca del Gottardo
covering the issue of the Notes by the Company.
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, being President of the Company HEREBY CERTIFY on behalf
of the Company that except as set forth in the Information Memorandum as to the
date hereof:
a) there has been no material adverse change in the financial condition of
the Company and its consolidated affiliates taken as a whole since June
30, 1999, and
b) no event has occurred rendering untrue or incorrect any of the warranties
set forth in Article V of the Agreement to a material extent, and
c) no event has occurred which constitutes or which with the giving of
notice or lapse of time would constitute one of the events referred to in
Section 10 of the Terms of the Notes.
Yours truly,
Bigmar, Inc.
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
ANNEX G
(Specimen Signature Form)
BIGMAR, INC.
Johnstown, Ohio, U.S.A.
Swiss Francs 3'000'000.-- 4 per cent Swiss Francs
Convertible Notes
Due October 29, 2003
The specimen signature of ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, the President to be used for
the printing of the above-captioned Notes and coupons is as follows:
----------------------------------
----------------------------------
----------------------------------
October 26, 1999
ANNEX H
CERTIFICATE OF COMPLETION OF DISTRIBUTION
The undersigned, being the duly authorized officers of Banca del Gottardo, a
corporation duly organized with limited liability and existing under the laws
of Switzerland ("Gottardo"), does hereby certify for and on behalf of
Gottardo that the offering of those certain 4% Convertible Notes due October
29, 2003 of Bigmar, Inc., a Delaware corporation ("Bigmar") as described in
that certain Note Purchase, Paying and Conversion Agency Agreement, effective
October 29, 1999 (the "Note Purchase Agreement"), between the Gottardo and
Bigmar, has closed and the 1 year restricted period described in the Note
Purchase Agreement has commenced.
IN WITNESS WHEREOF, the undersigned have executed this document as of the
date set forth below.
October 26, 1999
BANCA DEL GOTTARDO
By:
----------------------------------------
Its:
----------------------------------------
ANNEX I
CERTIFICATE OF NONAVAILABILITY
TO UNITED STATES PERSONS
OR PERSONS WITHIN THE UNITED STATES
The undersigned, being the duly authorized officers of Banca del Gottardo, a
corporation duly organized with limited liability under the laws of
Switzerland ("Gottardo"), does hereby certify for and on behalf of Gottardo
that it is a "financial institution" within the meaning of United States
Treasury Regulations Section 1.165-12(c)(1)(v) and that it is not acquiring
Bigmar Inc.'s CHF 3'000'000.-- 4% Notes due October 29, 2003, which is
evidenced by a Permanent Global Note for purposes of resale directly or
indirectly to a "United States person" or to a person within the "United
States" as such terms are defined in the Note Purchase, Paying and Conversion
Agency Agreement between Gottardo and Bigmar, Inc. dated October 26, 1999.
IN WITHNESS WHEREOF, the undersigned have executed this document as of the
date set forth below.
October 26, 1999
BANCA DEL GOTTARDO
By:
----------------------------------------
Its:
----------------------------------------
ANNEX K
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
AND FILING REQUIREMENTS
BIGMAR, INC.
4% CONVERTIBLE NOTES DUE OCTOBER 29, 2003
The undersigned certifies that, as to the portion of the Permanent Global
Note being purchased by the undersigned, the beneficial owners of the Notes
(a) are not either United States persons or U.S. persons or (b) are financial
institutions (within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v) located outside the United States that are not United
States persons and that they are purchasing such Notes for purposes of resale
during the Restricted Period. Financial Institutions that are purchasing the
Notes for purposes of resale during the Restricted Period also hereby certify
that they are not acquiring the Notes for purposes of resale directly or
indirectly to a United States person or U.S. person or to a person within the
United States. The undersigned certifies further that it is (i) the
beneficial owner of the portion of the Permanent Global Note being purchased
or (ii) a financial institution (within the meaning of United States Treasury
Regulation Section 1.165-12(c)(1)(v) through which the beneficial owner
directly or indirectly will hold the portion of the Permanent Global Note
being purchased.
For purposes of this certification, (i) the term "Restricted Period" means
the period beginning on the earlier of the first date that the Notes are
offered or the date on which the Notes are issued (the "Payment Date") and
ending one (1) year after the later of the date upon which the Notes were
first offered or the date of closing of the offering, (ii) the term "United
States" means the United States of America (including the States and the
District of Columbia, its possessions, its territories and other areas
subject to its jurisdiction, (iii) the term "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source,
and (iv) the term "U.S. person" has the meaning set forth in Sections 230.901
through .904 of Title 17 of the United States Code of Federal Regulations
("Regulation S").
-----------------------------
Beneficial Owner or
Financial Institution
Name:
-----------------------
Address:
--------------------
ANNEX L
CERTIFICATION OF NON-U.S. BENEFICIAL OWNERSHIP
AND FILING REQUIREMENTS
BIGMAR, INC.
4% CONVERTIBLE NOTES DUE OCTOBER 29, 2003
The undersigned certifies that as to the portion of the Permanent Global Note
(i) hereby presented for exchange into definitive Notes, or (ii) hereby
presented for conversion into Common Stock the beneficial owners of the Notes
(a) are not either United States persons or U.S. persons or (b) are financial
institutions (within the meaning of United States Treasury Regulation Section
1.165-12(c)(1)(v) located outside the United States that are not United
States persons and that have purchased such Notes for purposes of resale
during the Restricted Period. Financial Institutions that have purchased the
Notes for purposes of resale during the Restricted Period also hereby certify
that they have not acquired the Notes for purposes of resale directly or
indirectly to a United States person or U.S. person or to a person within the
United States. The undersigned certifies further that it is (i) the
beneficial owner of the portion of the Permanent Global Note tendered for
exchange or (ii) a financial institution (within the meaning of United States
Treasury Regulation Section 1.165-12(c)(1)(v)) through which the beneficial
owner directly or indirectly holds the portion of the Permanent Global Note
tendered.
For purposes of this certification, (i) the term "Restricted Period" means
the period beginning on the earlier of the first date that the Notes are
offered or the date on which the Notes are issued (the "Payment Date") and
ending one (1) year after the later of the date upon which the Notes were
first offered or the date of closing of the offering, (ii) the term "United
States" means the United States of America (including the States and the
District of Columbia), its possessions, its territories and other areas
subject to its jurisdiction, (iii) the term "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source and
(iv) the term "U.S. person" has the meaning set forth in Sections 230.901
through .904 of Title 17 of the United States Code of Federal Regulations
("Regulation S").
The undersigned hereby confirms that, upon conversion of the Notes into
Common Stock, the undersigned will not hold beneficially five percent (5%) or
more of the then outstanding shares of common stock, or in the alternative,
hereby undertakes to make, on a timely basis, all filings required to be made
under the United States Securities Exchange Act of 1934, as amended, with
respect to holdings of Common Stock by the undersigned.
-----------------------------
Beneficial Owner or
Financial Institution
Name:
-----------------------
Address:
--------------------