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EXHIBIT 10.7
WARRANT AGREEMENT
FOR 740,740 WARRANTS
WARRANT AGREEMENT, dated as of June 6, 1996 (the "Agreement"), among Global
TeleSystems Group, Inc., a Delaware corporation (the "Company"), The Open
Society Institute ("OSI"), Winston Partners II LDC ("WPLDC") and Winston
Partners II LLC ("WPLLC," and together with OSI, WPLDC and any of their
permitted assignees, the "Holders" and individually, a "Holder").
WHEREAS the Company proposes to issue and deliver its warrant certificates
("Warrant Certificates") evidencing an aggregate of 740,740 warrants (the
"Warrants"), each to purchase one share of common stock, par value $0.0001 per
share, of the Company ("Common Stock") in connection with the Senior Promissory
Notes dated as of the date hereof, as such notes may be amended, supplemented or
otherwise modified from time to time (as so amended, supplemented or otherwise
modified, the "Notes") in the aggregate principal amount of ten million
($10,000,000) 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, among the Company and the Holders, as it
may be amended, supplemented or otherwise modified from time to time (as so
amended, supplemented or otherwise modified, the "Note Purchase Agreement").
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.
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(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 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) "Note 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) "Warrant 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 the Warrants may be executed by any authorized officer of the
Company. Warrant Certificates evidencing (a) 370,370 Warrants shall be delivered
in the name of OSI, (b) 246,914 Warrants shall be delivered in the name of WPLDC
and (c) 123,456 Warrants shall be delivered in the name of WPLLC 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 such Holder's Note (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 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
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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 is entitled, registered in the name of 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 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:
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(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 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.
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(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 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 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
of permitting the exercise in full of all outstanding Warrants.
7. Limitations on Transfer; Warrant Transfer Books.
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(a) Subject to the following provisions of this Section 7, the
Warrants may be sold, transferred, pledged, assigned, hypothecated or
otherwise disposed of (collectively, "transferred") to Affiliates of any
Holder or to The Chatterjee Group ("TCG") or its Affiliates at any time;
provided that if at any time prior to the Transfer Restriction Termination
Date, any such transferee ceases to be an Affiliate of such Holder or TCG,
it shall promptly transfer the Warrants to such Holder or TCG or to an
Affiliate of such Holder 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 any Holder 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 a Holder or TCG or an
Affiliate of a Holder 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 a
Holder or TCG or an Affiliate of a Holder 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 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.
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(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 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 share-
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holders 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. 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 9 to the party giving or making
such notice, demand or delivery:
(a) If to the Company, at:
Global TeleSystems Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(b) If to OSI, at:
The Open Society Institute
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(c) If to WPLDC or WPLLC, at:
Winston Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
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Provided that notices to OSI, WPLDC or
WPLLC shall be deemed to be delivered
to any such party if sent to TCG in
accordance with the provisions of this
Section 9 at:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
In each case of delivery or deemed
delivery to OSI, WPLDC or WPLLC, with
a copy to:
▇▇▇▇▇ Fund Management
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
and ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
10. Applicable Law. This Agreement and each Warrant Certificate issued
hereunder shall be governed by the laws of 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 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.
11. 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.
12. 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.
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13. 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.
14. 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.
15. 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 paries hereto have caused this Agreement to be duly
executed as of the day and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
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Name:
THE OPEN SOCIETY INSTITUTE
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name:
WINSTON PARTNERS II LDC
By /s/ [illegible]
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Name:
WINSTON PARTNERS II LLC
By: Chatterjee Advisors L.L.C.
Its Sole Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
WINSTON PARTNERS, L.P.
By: Chatterjee Fund Management, L.P.
Its General Partner
By
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Name:
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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/ ▇.▇. ▇▇▇▇▇▇▇▇▇
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Name:
THE OPEN SOCIETY INSTITUTE
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name:
WINSTON PARTNERS II LDC
By /s/ [ILLEGIBLE]
------------------------------------
Name: Curacao Corporation Company
N.V.
Sole Director
WINSTON PARTNERS II LLC
By: Chatterjee Advisors L.L.C.
Its Sole Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ PARTNERS, L.P.
By: Chatterjee Fund Management, L.P.
Its General Partner
By
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Name:
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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, 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
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to the terms and conditions 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 fully (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 June __, 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, Winston
Partners II LDC and Winston Partners II LLC 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 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
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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 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: June , 1996
--
GLOBAL TELESYSTEMS GROUP, INC.
By
-----------------------------------
Name:
Title:
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FORM OF REVERSE OF WARRANT 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 said
Warrants be
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registered or placed in the name and at the address specified below and
delivered thereto.
Date: , .
(1)
--------------------------------------
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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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
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company", as such terms are defined in the Public Utility Hodling Company Act of
1935, as amended or (c) a "public utility", as such term is defined in the
Federal Power Act, as amended.
Dated:
-------------, -------
--------------------------------------1)
[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.
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