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Exhibit 10.3
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of January 19, 1996 (the "Agreement"),
among Global Telesystems Group, Inc., a Delaware corporation (the "Company"),
The Open Society Institute ("OSI") and Chatterjee Fund Management, L.P. ("CFM"
and together with OSI and permitted assignees of OSI and CFM, the "Holders" and
individually, a "Holder").
WHEREAS the Company proposes to issue and deliver its warrant
certificates ("Warrant Certificates") evidencing an aggregate of 2,222,222
warrants (the "Warrants"), each to purchase one share of common stock, par
value $0.0001 per share, of the Company ("Company Stock") in connection with
the Senior Promissory Notes dated as of the date hereof (the "Notes") in the
aggregate principal amount of thirty million ($30,000,000) dollars, issued by
the Company to the Holders, pursuant to, and subject to the terms and
conditions of, that certain Senior Note Purchase Agreement, dated as of the
date hereof (as it may be amended, supplemented or otherwise modified from time
to time, the "Note Purchase Agreement"), among the Company and the Holders.
NOW THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company and each Holder, the Company and each
Holder agree as follows:
1. Certain Definitions. The following terms, as used in this
Agreement, have the following meanings:
(a) "Affiliate" has the meaning set forth in the Note
Purchase Agreement.
(b) "Business Day" means any day other than a Saturday,
Sunday or day on which banks in New York city are closed for general business.
(c) "Common Stock" has the meaning set forth in the
preamble.
(d) "Exercise Period" means the period beginning on the
date of issuance of the Warrants and ending at 5 p.m. New York City time on the
sixth anniversary of such date.
(e) "Exercise Price" means $15.40 per share subject to a
reduction to $14.00 per share if all amounts payable under the Notes have not
been repaid in full on or
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before December 31, 1996 and subject to further adjustment as provided in
Section 4.
(f) "Expiration Date" for the Warrants means the last day
of the Exercise Period.
(g) "Holder" has the meaning set forth in the preamble.
(h) "Notes" has the meaning set forth in the Recital.
(i) "Notes Purchase Agreement" has the meaning set forth in
the Recital.
(j) "Person" means any individual, corporation, limited
liability company, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(k) "Register" has the meaning set forth in Section 7(b) of
this Agreement.
(l) "Transfer Restriction Termination Date" has the meaning
set forth in Section 7(a) of this Agreement.
(m) "Underlying Common Stock" means the shares of Common
Stock purchasable by the Holder upon the exercise of the Warrants.
(n) "Warrants" has the meaning set forth in the preamble.
(o) "Warrants Certificates" means the certificates
evidencing the Warrants.
2. Issue of Warrants. The Warrant Certificates shall be in
registered form only and substantially in the form attached hereto as Exhibit
A (including legends and endorsements as set forth in Exhibit A and as are not
inconsistent with the provisions of this Agreement, the Notes and the Note
Purchase Agreement) and shall be dated the date on which signed by an
authorized signatory of the Company. Warrant Certificates evidencing the
Warrants may be executed by any authorized officer of the Company. Warrant
Certificates evidencing 1,851,852 Warrants shall be delivered in the name of
OSI and Warrant Certificates evidencing 370,370 Warrants shall be delivered in
the name of CFM upon execution of this Agreement.
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3. Exercise Price, Exercise of Warrants.
(a) Exercise Price. Each Warrant shall entitle the
respective Holder of such Warrant, subject to the provisions of this Agreement,
to purchase one share of Common Stock at a purchase price per share equal to
the Exercise Price.
(b) Exercise of Warrants Generally.
(1) Exercise During Exercise Period. All Warrants
not exercised during the Exercise Period shall expire at 5 p.m. New York City
time on the Expiration Date.
(2) Liquidation Event. If, at any time prior to the
Expiration Date, the Company is to be liquidated, the Company shall give
written notice thereof to the Holder at the earliest practicable time; provided,
however, that, if the Company is to be liquidated in accordance with the
provisions of its Certificate of Incorporation, such notice shall be given no
less than 30 days prior to the date on which such liquidation is expected to
become effective.
(3) Method of Exercise; Payment of Exercise Price.
In order to exercise any or all of the Warrants represented by a Warrant
Certificate, the Holder thereof must surrender the Warrant Certificate to the
Company for exercise, with the reverse side of the Warrant Certificate duly
executed, together with any required payment of the Exercise Price for each
share of Underlying Common Stock to which such Holder is entitled, each such
payment of the Exercise Price to be made by check or wire transfer in
immediately available funds to an account designated by the Company; provided
that such Holder, in its sole discretion, may deduct or offset from such
payment any amounts outstanding under the Notes (to the extent such amounts are
then due and payable (after giving effect to applicable grace periods) to such
Holder). If a Holder elects to deduct or offset from such payments all or a
portion of the principal amount outstanding under the Note held by such Holder,
such Holder shall surrender its Note to the Company and if, following such
deduction or offset, any principal amount remains outstanding to such Holder,
the Company shall simultaneously issue to such Holder a note payable to the
order of such Holder in a principal amount equal to such remaining outstanding
amount with terms and provisions otherwise identical to the terms and
provisions of such Holder's original Note. If a Holder elects to exercise only
a portion of the Warrants represented by the Warrant Certificate or
Certificates registered in the Register in its name, then the remaining portion
of such Warrants shall be registered in the Register in such name or names
(subject to the limitation set forth in Section 7) as
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may be directed in writing by such Holder and shall be returned to such Holder
in the form of a new Warrant Certificate for the number of Warrants that were
not surrendered and with terms and provisions otherwise identical to the terms
and provisions of such Holder's original Warrant Certificate. Upon surrender
of a Warrant Certificate and the payment of the Exercise Price in conformity
with the foregoing provisions, the Company shall promptly, but in no event
later than five Business Days after the Payment of the Exercise Price of the
Warrants by such Holder, issue to the Holder of such Warrant Certificate share
certificates representing the Underlying Common Stock to which such Holder or
the name or names of such Affiliates of such Holder as may be directed in
writing by the latter, and shall deliver such share certificates to the Person
or Persons entitled to receive the same. Such shares shall be deemed issued and
outstanding on the date the Warrant is exercised and the Exercise Price is
paid to the Company, and the share certificates shall be dated as of such date
and the Holder shall be entitled to exercise all of the rights of a shareholder
as of such date.
(c) Exercise by Surrender of Warrant; Cashless Exercise. In addition to
the method of exercise set forth in Section 3(b)(3) above and in lieu of any
cash payment required thereunder, each Holder, at its sole discretion, shall
have the right at any time and from time to time to exercise the Warrants in
full or in part (provided that any exercise in part shall be in a minimum
amount of 50,000 Warrants or such lesser number of Warrants as may then be held
by such Holder) by surrendering its Warrant Certificate in the manner specified
in Section 3(b)(3) in exchange for the number of shares of Common Stock equal
to the product of (x) the number of shares as to which the Warrants are being
exercised multiplied by (y) a fraction, the numerator of which is the
difference between the fair market value of a share at exercise (as defined
hereafter) of the Common Stock less the Exercise Price and the denominator of
which is such fair market value. As used herein, "fair market value" shall mean
(A) (x) the average of the closing prices of the Common Stock sales on all
domestic exchanges on which the Common Stock may at the time be listed, or, (y)
if, there shall have been no sales on any such exchange on any day, the average
of the highest bid and lowest asked prices on all such exchanges at the end of
such day, or, (B) if on any day the Common Stock shall not be so listed, (x)
the average of the representative bid and asked prices quoted in the NASDAQ
System as of 3:30 p.m. New York City time, or (y) if on any day the Common
Stock shall not be quoted in the NASDAQ System, the average of the high and
low bid and asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation
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Bureau, Incorporation or any similar successor organization, in each case under
(A) and (B) above averaged over the period of 15 consecutive Business Days
immediately prior to the date of exercise; provided that if the Common Stock is
listed on any domestic exchange the term "Business Days" as used in this
sentence shall mean business days on which such exchange is open for trading.
If at any time the Common Stock is not listed on any domestic exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the fair
market value shall be the fair market value as of the date of exercise,
determined by a reputable investment banking firm selected by the Holder
exercising its Warrants pursuant to this Section 3(c) and acceptable to the
Company.
4. Adjustments. The Exercise Price and the number of shares of
Common Stock issuable upon exercise of each Warrant shall be subject to
adjustment from time to time as follows:
(a) In the event, at any time and from time to time, the
Company shall issue additional shares of Common Stock (or securities
convertible into or exchangeable for Common Stock) in a stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or declare any
dividend or other distribution payable with additional shares of Common Stock
(or securities convertible into or exchangeable for Common Stock) with respect
to Common Stock or effect a split or subdivision of the outstanding shares of
Common Stock, the Exercise Price shall, concurrently with the effectiveness of
such stock dividend, stock distribution or subdivision, or the earlier
declaration thereof, be proportionately decreased, and the number of Underlying
Common Stock shall be proportionately adjusted so that, to avoid dilution of
each Holder's position, each Holder shall thereafter be entitled to receive at
such adjusted price an additional number of shares of the Company's Common
Stock which such Holder would have owned or would have been entitled to receive
upon or by reason of any of the events described above, had the Warrants been
exercised immediately prior to the happening of such event. If a dividend is
declared and such dividend is not paid, the Exercise Price shall again be
adjusted to be the Exercise Price in effect immediately prior to such record
date.
(b) If, at any time, the Company issues any additional
shares of Common Stock (or other securities convertible into or exchangeable
for Common Stock) for a price lower than $15.40 per share, the Exercise Price
with respect to the Warrants shall be automatically and immediately reduced to
such lower price, without any action or request on the part of either Holder.
The Company shall notify each Holder of such reduced Exercise Price in writing
prior to any such issuance of additional shares of Common
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Stock (or other securities convertible into or exchangeable for Common Stock);
provided that, if the Company should enter into any agreement in connection
with such issuance of additional shares of Common Stock (or other securities
convertible into or exchangeable for Common Stock), the Company shall
immediately notify each Holder in writing thereof and, upon such issuance of
shares of Common Stock (or other securities convertible into or exchangeable
for Common Stock), the Exercise Price shall be automatically reduced to such
reduced Exercise Price, effective retroactively to the effective date of such
agreement, whether or not the Warrants have been exercised during the time
period between the effective date of such agreement and the date of such
issuance (and if the Warrants have been exercised during such period, the
Company shall promptly pay to such Holder the difference between the payment
made by such Holder on such exercise and the payment that would have been
required if the Warrants were exercised at such reduced Exercise Price).
Notwithstanding the foregoing, the Exercise Price shall not be reduced as
contemplated by this Section 4(b) in connection with the issuance by the Company
of compensatory stock options to the extent that (i) the exercise price of such
compensatory stock options is not more than ten percent (10%) lower than $15.40
and (ii) such compensatory stock options, in the aggregate, shall represent a
right to purchase not more than two percent (2%) of the Common Stock in any
year (provided that in fiscal year [1995/1996] such compensatory stock options
issued to the Company's employees shall represent a right to purchase in total
not more than 850,000 shares of the Common Stock.
(c) In the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Exercise Price shall, concurrently
with the effectiveness of such combination or consolidation, be proportionately
increased and the number of Underlying Common Stock shall be proportionately
adjusted so that each Holder of any Warrant exercised after such date shall be
entitled to receive, upon payment of the same aggregate amount as would have
been payable before such before such date, the aggregate number of shares of
Common Stock which each Holder would have owned upon such exercise and been
entitled to receive, if such Warrant had been exercised immediately prior to the
happening of such combination or consolidation.
(d) In the event of any consolidation or merger of the
Company with or into another corporation or the conveyance of all or
substantially all of the assets of the Company to another corporation or entity
(other than any merger or sale which does not result in any reclassification
or change in the relative right or preference of the
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outstanding shares), the Warrants shall thereafter be exercisable for the
number of shares of capital stock or other securities or property that was
delivered at the time of such consolidation, merger or conveyance to a holder
of shares of Common Stock equal in number to the shares of Underlying Common
Stock that would have been deliverable to such Holder if such Holder had
exercised the Warrants immediately prior to such consolidation, merger or
conveyance; and, in any such case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interests of each Holder thereafter, to the end that the provisions set forth
herein (including provisions with respect to adjustments in the Exercise Price)
shall thereafter be applicable, as nearly as may be practicable, in relation to
any shares of stock or other property thereafter deliverable upon the exercise
of Warrants. At the request of either Holder, the resulting or surviving entity
in any such consolidation or merger, if other than the Company, shall
acknowledge in writing such Holder's rights hereunder.
5. Loss or Mutilation. Upon receipt by the Company of a notice of
the ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate and of indemnity satisfactory to the Company, and (in the case of
mutilation) upon surrender and cancellation thereof, then, in the absence of
notice to the Company that the Warrants represented thereby have been acquired
by a bona fide purchaser, the Company shall deliver to the Holder of such
Warrant Certificate, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor
and for a like aggregate number of Warrants.
6. Reservation and Authorization of Common Stock. The Company
shall, at all times until the Warrants have been exercised or have expired,
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as is sufficient for the
purpose permitting the exercise in full of all outstanding Warrants.
7. Limitations on Transfer; Warrant Transfer Books.
(a) Subject to the following provisions of this Section 7,
the Warrants may be sold, transferred, pledged, assigned, hypothecated or
otherwise dispose of (collectively, "transferred") to Affiliates of each of OSI
or CFM or to TCG or its Affiliates at any time after the earlier of (i) the
date on which the Shareholder Financing is consummated and (ii) the date on
which the Shareholder Financing can no longer be consummated due to the failure
by
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Capital Research International to either (x) provide a written commitment in
respect of such financing within the applicable time period or (y) disburse such
financing to the Company within the applicable time period; provided that if at
any time prior to the Transfer Restriction Termination Date, any such transferee
ceases to be an Affiliate of OSI or CFM or TCG, it shall promptly transfer the
Warrants to OSI, CFM or TCG or to an Affiliate of OSI, CFM or TCG. In addition
to such transfers, but subject to the following provisions of this Section 7,
the Warrants may be transferred by any Holder thereof to any Person, whether or
not such Person is an Affiliate of OSI, CFM or TCG after the earlier of (A)
January 19, 1999, or (B) the date on which the Underlying Common Stock has been
registered under an effective registration statement with the Securities and
Exchange Commission ("SEC") (such earlier date being the "Transfer Restriction
Termination Date"). Transfers of the Warrants under this Section 7 shall be in a
minimum amount of 50,000 Warrants or such lesser number of Warrants as may then
be held by the Holder thereof.
(b) The Company shall cause to be kept at the Principal executive
office of the Company a register (the "Register") in which the Company shall
provide for the registration of Warrant Certificates and transfers or exchanges
of Warrants as herein provided.
(c) In order to effect any Transfer of any Warrants under this
Section 7, the Warrant Certificate evidencing such Warrants shall be
surrendered at the principal executive office of the Company for registration
of transfer in the Register. Every Warrant Certificate surrendered for
registration of transfer shall be duly endorsed and the Form of Assignment
contained therein completed and duly executed by the Holder thereof. In
addition, upon the surrender of a Warrant Certificate for registration of
transfer prior to the Transfer Restriction Termination Date, there shall be
delivered to the Company a certificate of an officer of the surrendering Holder
certifying (i) that the transferee is OSI, CFM or TCG or an Affiliate of OSI,
CFM or TCG, (ii) that the transfer is not in violation of this Agreement and
(iii) that the transfer is pursuant to an exemption from registration under the
Securities Act of 1933. Prior to the registration of the Underlying Common
Stock pursuant to an effective registration statement filed with the SEC, the
Company may also require, upon the surrender of a Warrant Certificate for
registration of transfer to any Person other than OSI, CFM or TCG or an
Affiliate of OSI, CFM, or TCG, delivery of an opinion of counsel, reasonably
satisfactory to the Company, stating that an exemption from registration under
the Securities Act of 1933, as amended, is available in connection with such
transfer and that the proposed
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transferee is not an (i) an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary" of a "holding
company," or an "affiliate" of a "holding company," as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended, or (iii) a
"public utility," as such term is defined in the Federal Power Act, as amended.
(d) Upon the Company's receipt of a duly endorsed Warrant
Certificate (with the Form of Assignment contained therein duly executed),
together with any certificate or opinion required to be delivered therewith to
the Company pursuant to Section 7(c), the Company shall (i) accept such Warrant
Certificate and (ii) record the information contained therein in the Register.
Within five Business Days after such receipt, the Company, at its own expense,
shall execute and deliver to the transferee thereof, in exchange for the
surrendered Warrant Certificate, a new Warrant Certificate registered in the
name of such transferee and evidencing the number of Warrants transferred to
such transferee, and if the transferring Holder has retained any Warrants, a
new Warrant Certificate registered in the name of such transferring Holder and
evidencing the number of Warrants retained by it hereunder. Such new Warrant
Certificate shall be signed by an authorized officer of the Company, shall be
dated and effective as of the effective date specified in the Form of
Assignment for such transfer and shall otherwise be in substantially the form
of Exhibit A hereto. Upon surrender for registration of transfer of any Warrant
Certificate in accordance with Section 7(c) and acceptance and recording
thereof by the Company in the Register in accordance with this Section 7(d),
(x) the transferee thereunder shall be a party hereto, and shall have all the
rights and obligations of a Holder hereunder and shall be entitled to the
benefits of a Holder under this Agreement and (y) the Holder transferor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it, relinquish the rights and be released from the obligations
under this Agreement (and, in the case of a transfer of all or the remaining
portion of a transferring Holder's rights and obligations under this Agreement,
such Holder shall cease to be a party hereto).
(e) At the option of any Holder, Warrant Certificates may be
exchanged by surrendering such Warrant Certificate, duly endorsed by the Holder
thereof, at the principal executive office of the Company. Whenever any Warrant
Certificate is so surrendered for exchange by a Holder, the Company, at its own
expense, shall execute and deliver to such Holder a new Warrant Certificate
registered in the name of such Holder and evidencing the same number of
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Warrants as the surrendered Warrant Certificate. Each new Warrant Certificate
issued under this Section 7(e) upon surrender of a Warrant Certificate for
exchange shall be the valid obligation of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificate surrendered for exchange.
(f) No service charge shall be made for any registration of
transfer of, or exchange of, any Warrant Certificate; provided, however, that
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection such registration of
transfer or exchange.
8. No Voting or Dividend Rights. Prior to the exercise of the
Warrants, the Holder shall not be entitled to any rights of a shareholder of
the Company, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive right, but the
Holder shall receive all notices sent to shareholders of the Company, including
any notice of meetings of shareholders, and shall have the right to attend or
observe such meetings and the Holder shall be entitled to the full benefit of
and to exercise all rights of first offer as set forth in the Registration
Rights Agreement (as defined in the Note Purchase Agreement).
9. Cancellation of all Prior Warrant Agreements and Warrant
Certificates/Relinquishment of Warrants.
(a) Cancellation of All Prior Warrant Agreements and Warrant
Certificates. The execution of this Agreement by the Holders represents good and
valuable consideration for the full release and discharge by OSI of the Company
from, and full cancellation of, all of the Company's obligations to issue shares
of Common Stock under (i) the December 8 Warrant Agreement (as defined in the
Note Purchase Agreement), (ii) the December 20 Warrant Agreement (as defined in
the Note Purchase Agreement), (iii) Warrant Certificate No. 1 of the Company
issued to OSI on December 8, 1995 and (iv) Warrant Certificate No. 2 of
the Company issued to OSI on December 20, 1995, and all such Warrant Agreements
and Warrants are hereby canceled and shall be of no further force and effect.
Upon execution of this Agreement by the Purchasers, the Purchasers shall deliver
such cancelled Warrants to the Company
(b) Relinquishment of Warrants. Subject to the following
provisions of this Section 9(b), if the Company shall make any mandatory
prepayment of the Notes pursuant to Section 10.2 of the Note Purchase
Agreement, the Holders shall promptly (but in no event later than five
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Business Days following the date of such prepayment) relinquish for
cancellation in the aggregate 74,074 of the Warrants for each $1 million in
principal amount of the Notes so prepaid, by surrendering the Warrant
Certificates evidencing such Warrants at the principal executive office of the
Company; provided that such Warrants shall be relinquished for cancellation by
the Holders on a pro rata basis, based on the proportion (expressed as a
percentage) that the total principal amount outstanding under each Note bears
to the total aggregate principal amount outstanding under both of the Notes.
Within five Business Days of the Company's receipt of any Warrant Certificate
surrendered by a Holder pursuant to this Section 9(b), the Company shall, at
its own expense, execute and deliver to such Holder a new Warrant Certificate
registered in the name of such Holder and evidencing the number of Warrants not
relinquished for cancellation hereunder and, upon execution and delivery of
such new Warrant Certificate, the Company shall ▇▇▇▇ the surrendered Warrant
Certificate "Cancelled." Each new Warrant Certificate issued under this Section
9(b) shall be executed by an authorized officer of the Company, shall be dated
the date on which executed by such authorized officer, and shall otherwise be
in substantially the form of Exhibit A hereto.
10. Notices. Any notice, demand or delivery authorized by this
Agreement shall be in writing and shall be sufficiently given or made upon
receipt thereof, if made by personal delivery or facsimile transmission (with
confirmed receipt thereof) followed by a hard copy, or four Business Days after
mailed, if sent by first-class mail, postage prepaid, or on the next Business
Day, if sent by overnight courier, addressed to the Holder or the Company, as
the case may be, at their respective addresses below, or such other address as
shall have been furnished in accordance with this Section 10 to the party
giving or making such notice, demand or delivery:
(a) If to the Company, to it at:
Global TeleSystems Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
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(b) If to OSI, at:
The Open Society Institute
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(c) If to CFM, at
Chatterjee Fund Management, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Provided that notices to OSI or CFM shall be deemed to
be delivered to OSI and CFM if sent to TCG in
accordance with the provisions of this Section 10 at:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
In each case of delivery or deemed delivery to OSI or
CFM, with a copy to:
▇▇▇▇▇ Fund Management
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
and ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
11. Applicable Law. This Agreement and each Warrant Certificate
issued hereunder shall be governed by, the laws of the State of New York
excluding (to the greatest extent a New York court would permit) any rule of
law that would cause application of the laws of any jurisdiction other than the
State of New York. The Company and the Holders hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. The Company irrevocably
waives, to the fullest extent permitted by law, any objection which it may
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now or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
12. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
13. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14. Captions and Headings. The captions and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
15. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each Holder.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon the Holders, each future holder of the Warrants and the Company.
16. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
THE OPEN SOCIETY INSTITUTE
By /s/ Arveh ▇▇▇▇▇
----------------------------------------
Name: ARVEH ▇▇▇▇▇
CHATTERJEE FUND MANAGEMENT, L.P.
By /s/ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇▇▇
15
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii)
TO THE EXTENT APPLICABLE PURSUANT TO RULE 144 UNDER THE ACT
(OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT.
THIS WARRANT CERTIFICATE AND THE WARRANTS
REPRESENTED HEREBY ARE TRANSFERABLE ONLY
IN ACCORDANCE WITH THE PROVISIONS SET FORTH IN
THE WARRANT AGREEMENT REFERRED TO BELOW
(INCLUDING, WITHOUT LIMITATION,
REGISTRATION OF THE TRANSFER TO THE
TRANSFEREE IN THE COMPANY'S REGISTER)
WARRANTS TO PURCHASE COMMON STOCK
OF GLOBAL TELESYSTEMS GROUP, INC.
No.__________ ___________________________Warrants
This certifies that ____________________________________ is the
owner of the number of Warrants set forth above, each of which represents the
right to purchase from GLOBAL TELESYSTEMS GROUP, INC., a Delaware corporation
(the "Company"), one share of common stock, par value $0.0001 per share, of the
Company ("Common Stock"), subject to adjustment as set forth in the Warrant
Agreement referred to below, at the exercise price (the "Exercise Price")
of $15.40, subject to a reduction to $14.00 if all amounts payable under the
Notes have not been repaid in full on or before December 31, 1996 and subject to
further adjustment as set forth in the Warrant Agreement. As provided in
the Warrant Agreement and subject to the terms and conditions
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A-2
set forth therein, the Warrants are exercisable by surrender of this Warrant
Certificate at the office of the Company at Global TeleSystems Group, Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with the
Exercise Subscription Form on the reverse hereof duly executed and with payment
in full (by check or wire transfer in immediately available funds to an account
designated by the Company) of the Exercise Price for the number of shares of
Common Stock as to which the Warrant(s) represented by this Warrant Certificate
are exercised, or by surrender of this Warrant Certificate at the same address
in lieu of cash payment. The Warrants will expire at 5 p.m. New York City time,
and this Warrant Certificate shall be void and all rights represented hereby
shall cease, on the Expiration Date.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of January _, 1996, as it may be amended,
supplemented or otherwise modified from time to time (as so amended,
supplemented or modified, the "Warrant Agreement"), among the Company, The Open
Society Institute and Chatterjee Fund Management, L.P. and subject to the
terms and provisions contained therein, to all of which terms and provisions
the holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby
17
A-3
made to the Warrant Agreement for a full description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Company and the
Holders of the Warrants. Capitalized defined terms used herein have the same
meanings as in the Warrant Agreement. Copies of the Warrant Agreement are on
file at the office of the Company and may be obtained by writing to the Company
at the following address: Global TeleSystems Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of the General
Counsel.
The number of shares of the Common Stock of the Company purchasable
upon the exercise of each Warrant and the Exercise Price are subject to
adjustment as set forth in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise
of Warrants and the payment of the Exercise Price therefor shall be validly
issued, fully paid and nonassessable.
Subject to the terms of the Warrant Agreement, this Warrant
Certificate and all rights hereunder are transferable by the Holder hereof, in
whole or in part, upon surrender of this Warrant Certificate duly endorsed and
with the Form of Assignment contained herein completed and duly executed by
such Holder, together with certificates and opinions as are required by the
Warrant Agreement, and upon, payment of any necessary transfer tax or other
governmental
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A-4
charge imposed upon such transfer. As set forth in the Warrant Agreement, upon
any partial transfer, the Company shall issue and deliver to such Holder a new
Warrant Certificate or Certificates with respect to any portion not so
transferred.
Dated: January _, 1996
GLOBAL TELESYSTEMS GROUP, INC.
By
-----------------------------
Name:
Title:
▇▇
▇-▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Global TeleSystems Group, Inc.
The undersigned irrevocably exercises ________ of the Warrants
evidenced by this warrant Certificate for the purchase of shares of Common
Stock, par value $0.0001 per share, of GLOBAL TELESYSTEMS GROUP, INC. and
herewith:
_______ (a) makes payment of $__________(such payment being made
by bank check or wire transfer in immediately available funds to the
account designated by Global TeleSystems Group, Inc. and constituting
the Exercise Price (as defined in the Warrant Agreement) for the
shares as to which the Warrants evidenced by this Warrant Certificate
are exercised); or
_______ (b) surrenders this Warrant Certificate in lieu of cash
payment in accordance with the terms of Section 3(c) of the Warrant
Agreement, all on the terms and conditions specified in this Warrant
Certificate and the Warrant Agreement herein referred to.
The undersigned hereby irrevocably surrenders this Warrant
Certificate and all right, title and interest therein to Global TeleSystems
Group, Inc. and directs that the shares of Common Stock deliverable upon the
exercise of
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said Warrants be registered or placed in the name and at the address specified
below and delivered thereto.
Date: ,
-------------- ----------
-----------------------------
Signature of Owner
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Securities and/or check to be issued to:
Please insert identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by
the within Warrant Certificate to be issued to:
Please insert identifying number:
Name:
Street Address:
City, State and Zip Code:
------------------
1) The signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever.
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A-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of this
Warrant Certificate hereby sells, assigns and transfers, effective as of _____,
unto the Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by this Warrant
Certificate not being assigned hereby) all of the right of the undersigned
under this Warrant Certificate, with respect to the number of Warrants set
forth below:
Names of Identifying Number of
Assignees Address Number of Assignee(s) Warrants
and does hereby irrevocably constitute and appoint ______________________ the
undersigned's attorney to make such transfer on the books of Global
TeleSystems Group, Inc. maintained for that purpose, with full power of
substitution. The assignment is subject in all respects to the terms of the
Warrant Agreement referred to in the Warrant Certificate of which this Form of
Assignment is a part.
The Assignee represents and warrants that it is not (a) an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended, (b) a
"holding company" or a "subsidiary" of a "holding company", or an "affiliate"
of a "holding company", as such terms are
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A-8
defined in the Public Utility Holding Company Act of 1935, as amended or (c) a
"public utility", as such term is defined in the Federal Power Act, as amended.
Dated: ,
-------------- --------
-----------------------------
[Assignor]
-----------------------------
[Assignee]
---------------------
1) The signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever.