As of May 5th, the following was stated in the most recent S3 (in which insider registered the sale of more than 3 MM shares for about $2 5/8). The following describes a floorless security.
Class A Preference Shares
All of the 2,737.443 outstanding shares of Class A Preference Shares are
held by B/EA. The Class A Preference Shares are convertible at any time into a
number of shares of Common Stock, determined by dividing $1,000 per share of
Class A Preference Shares, plus any accrued and unpaid dividends thereon by: (i)
prior to February 28, 1999, a conversion price equal to 70% of the average mean
of the closing bid and ask prices of the Common Stock for the 20 trading days
prior to the conversion (the "Market Price"); (ii) after February 28, 1999 and
prior to August 31, 1999, a conversion price equal to 65% of the Market Price;
and (iii) after August 31, 1999, a conversion price equal to 60% of the Market
Price. In the event the aggregate value of (i) the number of shares of Common
Stock then issued upon conversion of the Class A Preference Shares multiplied by
the then prevailing Market Price plus (ii) the number of shares of Common Stock
issuable upon further conversion of the Class A Preference Shares in accordance
with the foregoing formula multiplied by the then prevailing Market Price plus
(iii) all amounts received by B/EA in redemption of the Class A Preference
Shares by IEL plus (iv) all amounts received by B/EA as proceeds from the sale
of shares of Common Stock issued upon conversion of the Class A Preference
Shares is less than $2,737,443 (the "Loan Amount"), then IEL would be obligated
to either (x) issue such additional number of shares of Common Stock to B/EA
such that at the Market Price the aggregate value of B/EA's Common Stock, Class
A Preference Shares and redemption proceeds would equal the Loan Amount or (y)
purchase all Common Stock and Class A Preference Shares issued to B/EA for an
amount equal to the Loan Amount less B/EA's prior redemption proceeds. Dividends
on the Class A Preference Shares are cumulative as of February 28, 1997 and
payable quarterly at an annual dividend rate of 9% per $1,000. IEL, at its
option, can redeem the Class A Preference Shares, in whole or in part, at any
time and from time to time, at a redemption price of $1,000 per share to be
redeemed plus any accrued and unpaid dividends thereon. IEL is not required to
redeem the Class A Preference Shares. Upon liquidation, holders of the Class A
Preference Shares will be entitled to repayment of an amount equal to $1,000 per
share plus accrued and unpaid dividends, prior to any distributions to holders
of Common Stock. The Class A Preference Shares do not have any voting rights.
The Company has an agreement in principle with B/EA pursuant to which B/EA and
the Company have agreed that the Company will redeem the Class A Preference
Shares held by B/EA at their redemption price of $1,000 per share plus accrued
and unpaid dividends in an amount equal to $100,000 per month through March,
2000. If the Company is in compliance with its redemption obligations, B/EA has
agreed not to convert any of its Class A Preference Shares.
These are the facts as of a month ago.
Note however, that if IELSF keeps paying $100,000/month, B/EA agreed not to convert.
Zeev
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