GROUP LONG DISTANCE, INC.
COMMON STOCK PURCHASE WARRANT TO PURCHASE 50,000 SHARES
OF COMMON STOCK
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK UNDERLYING THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE
ACT") AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS (1) THEY ARE REGISTERED UNDER THE ACT OR (2) THE
HOLDER HAS DELIVERED TO THE ISSUER AN OPINION OF COUNSEL, WHICH OPINION SHALL
BE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT THERE IS AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THAT REGISTRATION IS OTHERWISE NOT REQUIRED.
FOR VALUE RECEIVED, Group Long Distance, Inc., a Florida corporation
(together with its successors and permitted assigns, the "Issuer") hereby
certifies and agrees that Tel-Save Holdings, Inc., a Delaware corporation
(together with its successors and permitted assigns, the "Holder"), is
entitled, subject to the terms, conditions and adjustments hereof, to receive,
in one or more exercises of this Warrant, from time to time, from the Issuer
such number of shares of Common Stock, without par value, of the Issuer (the
"Common Stock") as is determined under Section 1 hereof, during the period
commencing with the date of this Warrant (the "Commencement Date") and ending
at 5:00 P.M. Eastern Standard Time on December 2, 2001 (the "Termination
Date"), at an exercise price (the "Exercise Price") of $5.00 per share. The
number of shares of Common Stock issuable upon exercise of this Warrant ("this
Warrant") and the exercise price per share shall be subject to further
adjustment from time to time upon the occurrence of certain events as set
forth below. This Warrant is the "Warrant" referenced in, and issued in
conjunction with, the Consent and Amendment, dated as of December 2, 1996 (the
"Agreement"), between Tel-Save, Inc. and the Issuer.
The shares of Common Stock or any other shares or other units of stock
or other securities or property or any combination thereof receivable upon
exercise of this Warrant, as adjusted from time to time, are sometimes referred
to herein as the "Exercise Shares."
1. Exercise of Warrant;
Reservation of Shares; Capitalization.
(a) Exercise of Warrant. This Warrant may be exercised as to the
then remaining Warrant Shares (as hereinafter defined) by the Holder in whole
at any time or in part from time to time on or after the Commencement Date and
until the Termination Date. For purposes of this Warrant, "Warrant Shares"
shall mean the aggregate of 50,000 shares of Common Stock, subject to further
adjustment as provided in Section 7 hereof and to successive reduction upon any
exercise of this Warrant as and to the extent provided below in this clause
(a). This Warrant may be exercised on any business day by delivering to the
Issuer at its principal office, presently located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇ , ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other office of the
Issuer as shall theretofore have been designated by the Issuer by written
notice to the Holder), a completed and executed irrevocable Notice of Warrant
Exercise in the form set forth in Appendix A hereto and made a part hereof (or
facsimile copy thereof), specifying therein the number of Warrant Shares
(which shall not exceed the number thereof then remaining as to which no Notice
of Warrant Exercise has previously been given) with respect to which the Holder
is then exercising its rights hereunder, provided that this Warrant is so
delivered to the Issuer not later than the original executed copy of such
Notice of Warrant Exercise. The Issuer, pursuant to such Notice of Warrant
Exercise from Holder, duly completed, and in accordance with Section 2 hereof,
shall, upon receipt of this Warrant and the original executed copy of such
Notice of Warrant Exercise, issue, and deliver a certificate evidencing, such
number of Exercise Shares as shall, if the Holder shall have elected a
"Cashless Exercise" in the Notice of Warrant Exercise, equal the result of (x)
the product of (i) the difference between the Current Market Price (as defined
in Section 7(d) hereof) on the date of delivery of such Notice Of Warrant
Exercise and the then Exercise Price, multiplied by (ii) the number of Warrant
shares specified in such Notice of Warrant Exercise, divided by (y) the Current
Market Price on the date of delivery of such Notice of Warrant Exercise. If the
Holder shall not have elected a "Cashless Exercise" and the Notice of Warrant
Exercise is accompanied by cash in the amount of the Exercise Price, the Issuer
shall issue such number of Exercise Shares as shall have been indicated in such
Notice and paid for. Upon such exercise pursuant to such Notice of Warrant
Exercise, the number of Warrant Shares
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automatically shall be reduced by the number thereof specified in such Notice
of Warrant Exercise.
In the event that this Warrant shall be duly exercised in part prior
to the Termination Date, the Issuer shall issue a new Warrant of like tenor
evidencing the rights of the Holder thereof with respect to the balance of the
Warrant Shares under the Warrant so surrendered.
(b) Reservation of Shares; Capitalization.
(i) The Issuer shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued capital
stock, for issuance on exercise of this Warrant, such number of Shares
as shall be required for issuance and delivery upon exercise of this
Warrant;
(ii) As of the date hereof, the Issuer has authorized a total
of 5,000,000 shares of Common Stock, of which 2,257,348 shares are
issued and outstanding, and 1,000,000 shares of Preferred Stock of
which no shares are issued and outstanding and the Issuer holds
100,000 shares of Common Stock in its treasury (subject to a dispute
with ▇▇. ▇▇▇▇▇▇ relating to the ownership of such 100,000 shares). All
of the outstanding shares have been validly issued and are fully paid
and non-assessable. None of the shares of Common Stock have been
issued in violation of any securities laws of the United States or any
rules or regulations promulgated thereunder. Except as set forth in
Schedule I to this Warrant, the Issuer has not granted or issued, or
agreed to grant or issue, any options, warrants or similar rights to
acquire or receive any of the authorized but unissued shares of its
capital stock of any class or any securities convertible into shares
of its capital stock of any class except under this Warrant. The
Issuer is not subject to any obligation, contingent or otherwise, to
repurchase or otherwise acquire or retire any shares of capital stock
of any class of the Issuer or any convertible securities, rights, or
warrants or options to purchase any such shares other than hereunder.
Except as provided to the Holder and except as contemplated to be
granted to the underwriter of the Company's proposed public offering
and to the investors
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therein, the Issuer has not granted contractual rights to any person
to register, under the Act, any Common Stock held by such person, nor
does any person have any right to require the Issuer to register any
securities of the Issuer held by such person under the Act. The
Exercise Shares to be issued or delivered upon the due exercise of
this Warrant, shall be, upon issuance, in accordance with the terms
hereof, duly authorized, validly issued and shall be fully paid and
nonassessable shares of Common Stock free and clear of all taxes,
liens, charges and security interests (other than the limitations on
such Exercise Shares imposed by applicable securities laws and
limitations expressly included in this Warrant). Such Exercised Shares
shall not be issued In violation of any securities law of the United
States or any rules or regulations promulgated thereunder.
2. Notices of Corporate Action. In the event of a proposal by the
Issuer (or of which the Issuer shall have knowledge) for:
(i) any taking by the Issuer of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a regular
periodic dividend payable in cash) or other distribution, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other
right, or
(ii) any capital reorganization of the Issuer, any
reclassification or recapitalization of the capital stock of the
Issuer, any consolidation or merger involving the Issuer and any other
Person or any transfer of all or substantially all the assets of the
Issuer to any other Person, or
(iii) any voluntary or involuntary dissolution, liquidation or
winding-up of the Issuer,
the Issuer will deliver to the Holder a notice specifying (1) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or
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(2) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time, if any
such time is to be fixed, as of which the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for the securities
or other property deliverable upon such reorganization, reclassification,
recapitalization consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall with respect to Sections 1(a) and (b) hereof, be
furnished at least twenty (20) days prior to the date therein specified and,
with respect to Section 2 hereof, be furnished promptly upon the commencement
of any event described therein.
3. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
4. Transfer of Warrant. This Warrant may be transferred in whole or in
part only in accordance with the terms of the restrictive legend appearing on
the first page of this Warrant.
5. Loss or Destruction of Warrant. Upon receipt by the Issuer of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Issuer will execute and deliver a new Warrant of like
tenor and date. Any such new Warrant executed and delivered shall not
constitute an additional contractual obligation on the part of the Issuer,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be
at any time enforceable by anyone.
6. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Issuer, either at law or equity,
and the rights of the Holder are limited to those expressed in this warrant and
are not enforceable against the Issuer except to the extent set forth herein.
7. Adjustment of Exercise Price, Warrant Shares and Exercise Shares.
The Exercise Price, the number of Warrant Shares and the kind of Exercise
Shares issuable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the
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happening of certain events as hereinafter provided. The Exercise Price in
effect at any time, the number of Warrant Shares and the kind of securities
issuable upon exercise of this Warrant shall be subject to adjustment as
follows:
(a) Dividend Distributions. If the Issuer shall (i) pay a dividend
or make a distribution on its shares of Common Stock in shares of Common Stock,
(ii) subdivide or classify its outstanding Common Stock into a greater number
of shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be proportionally adjusted
so that the Holder of this Warrant exercised after such date shall be entitled
to receive the aggregate number and kind of shares that, if this Warrant had
been exercised by such Holder immediately prior to such date, such Holder would
have owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification. For example, if the Issuer
declares a 2 for 1 stock dividend or stock split and the Exercise Price
immediately prior to such event was $5.00 per share, the adjusted Exercise
Price immediately ater such event would be $2.50 per share. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) Issuance of Rights or Warrants. In case the Issuer shall issue
rights or warrants to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price (or having a conversion price per share) less
than the "Current Market Price" of the Common Stock (as defined in Paragraph d
of this Section below) on the record date mentioned below, the Exercise Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the date of such
issuance by a fraction, the numerator of which shall be the sum of the number
of shares of Common Stock outstanding on the record date mentioned below and
the number of additional shares of Common Stock that the aggregate offering
price of the total number of shares of Common Stock so offered (or the
aggregate conversion price of the convertible securities so offered) would
purchase at the "Current Market Price" per share of the Common Stock, and the
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denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of Common
Stock offered for subscription or purchases (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and, to the extent
that shares of Common Stock are not delivered (or securities convertible into
Common Stock are not delivered) after the expiration of such rights or
warrants, the Exercise Price shall be readjusted to the Exercise Price that
would then be in effect had the adjustment made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered.
(c) Adjustment Upon Notice of Warrant Exercise. Whenever the
Exercise Price payable upon exercise of this Warrant is adjusted pursuant to
Paragraphs (a) and (b) above, the number of Warrant Shares as to which a Notice
of Warrant Exercise may be given shall simultaneously be adjusted by multiplying
(x) the number of Warrant Shares then remaining as to which no Notice of Warrant
Exercise has theretofore been given by (y) the Exercise Price in effect just
prior to such adjustment, and dividing the product so obtained by the Exercise
Price, as adjusted
(d) Current Market Price. For the purpose of any computation in
this Warrant, the "Current Market Price" per share of Common Stock at any date
shall be (i) the average daily Market Price during a period of (ten) 10 days,
ending on the day the Current Market Price is determined, on which the national
securities exchanges were open for trading, and (ii) if no class of the
Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, the Market Price. For
purposes of the definition of "Current Market Price", the term (A) "Market
Price" shall mean (1) the last sale price, regular way, on such date or, if no
such sale takes place on such date, the average of the closing bid and asked
prices on such date, in each case as officially reported on the principal
national securities exchange on which the Common Stock is then listed or
admitted to trading, or (2) if the Common Stock is not then listed or admitted
to trading on any national securities
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exchange but is designated as a national market system security by the NASD, the
last trading price of the Common Stock on such date, or (3) if there shall have
been no trading on such date or if the Common Stock is not so designated, the
average of the reported closing bid and asked prices of the Common Stock on such
date as shown by The NASDAQ Small Cap Market System and reported by any member
firm of the New York Stock Exchange selected by the Company, or (4) if neither
(l), (2) nor (3) is applicable, the Book Value thereof; (B) "Book Value" per
share of Common Stock on any date specified herein shall be determined by an
independent industry expert selected by the Holder (with the consent of the
Issuer, such consent to not be unreasonably withheld); (C) "Consolidated Net
Worth" shall mean the sum of the capital stock (but excluding treasury stock and
capital stock subscribed and unissued) and surplus (including earned surplus,
capital surplus and the balance of the current profit and loss account not
transferred to surplus) accounts of the Company and its Subsidiaries appearing
on a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with generally acceptable accounting principles as of the date of
determination, after eliminating all intercompany transactions and all amounts
properly attributable to minority interests", if any, in the stock and surplus
of the Subsidiaries and (D) "NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.
(e) Minimum Adjustments. No adjustment in the Exercise Price shall
be required unless such adjustment would require an increase or decrease of at
least five cents ($0.05) in such price; provided, however, that any adjustments
that by reason of this Paragraph (e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment required to
be made hereunder. All calculations under this Section 7 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section 7 to the contrary notwithstanding, the Issuer shall be
entitled, but shall not be required, to make such additional reductions in the
Exercise Price, in addition to those required by this Section 7, as it, in its
sole discretion, shall determine to be advisable in order that any dividend or
distribution in shares of common Stock, subdivision, reclassification or
combination of Common Stock, issuance of warrants to purchase Common Stock or
distribution of evidences of indebtedness or other assets (excluding cash
dividends) referred to
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hereinabove in this Section 7 hereafter made by the Issuer to the holders of
its Common Stock shall not result in any tax to the Holders of its Common stock
or securities convertible into Common Stock.
(f) Notice of Issuer Regarding Adjustment and Termination.
Whenever the Exercise Price is adjusted as herein provided or the Termination
Date extended as herein provided, the Issuer shall promptly cause a notice,
setting forth the adjusted Exercise Price and adjusted number of Warrant Shares
as to which a Notice of Warrant Exercise may be given under this Warrant and/or
the extended Termination Date, to be mailed to the Holder, at its last address
appearing in the books of the Issuer, and shall cause a certified copy thereof
to be mailed to its transfer agent, if any. The Issuer may retain a firm of
independent certified public accountants selected by the Board of Directors
(who may be the regular accountants employed by the Issuer) to make any
computation required by this Section 7, and a certificate signed by such firm
shall be conclusive evidence of the correctness of such adjustment.
(g) Future Adjustment to other Shares and Warrant. In the event
that at any time, as a result of an adjustment made pursuant to Section 7 (a)
above, the Holder of this Warrant thereafter shall become entitled to receive
any Exercise Shares of the Issuer, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of this Warrant 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 the Common Stock
contained in Paragraphs (a) through (e), inclusive, of this Section 7.
(h) Maintenance of Price and Number of Shares. Irrespective of any
adjustments in the Exercise Price, the number of Warrant Shares or kind of
Exercise Shares purchasable upon exercise of this Warrant, Warrants theretofore
or thereafter issued in exchange or substitution for this Warrant or any part
thereof may continue to express the same price and number and kind of shares as
are stated in this Warrant.
(i) Officers Certificate Regarding Termination Date and Adjustment
to Exercise Price. Whenever the Exercise Price shall be adjusted or the
Termination Date extended, in each case as required by the provisions hereof,
the Issuer shall forthwith file
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in the custody of its Secretary or an Assistant Secretary at its principal
office and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and/or the
Termination Date extended and, in the case of an Exercise Price adjustment,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable time. for inspection by the Holder and the
Issuer shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder.
8. Termination Date Extension. If, by reason of Section 3(b) of the
Registration Rights Agreement, as amended, dated as of July 11, 1996, between
the Issuer and TS Investment, Inc., the Holder is not permitted to sell the
Exercise Shares for a period that includes the Termination Date (before any
adjustment under this Section 8), the Termination Date will be extended by such
number of days as equals the number of days from the beginning of such period
that the Holder is so prevented from selling to the Termination Date (before
any adjustment under this Section 8).
9. Survival. Any obligation of the Issuer under this Warrant, the
complete performance of which may require performance beyond the term of this
Warrant, shall survive the expiration of such term.
10. Amendments and Waivers. The respective rights and obligations of
the Issuer and the Holder may be modified or waived only by a writing executed
by the party against whom the amendment or waiver is to be enforced.
11. Governing Law; Venue: Recovery of Reasonable Attorney's Fees by
Prevailing Party. This warrant shall be governed in all respects by the laws of
the State of Florida. Any and all actions and proceedings arising out of or
pertaining to this Warrant shall be brought in the federal or state courts
located in Broward County, Florida and the prevailing party shall be entitled
to recover its reasonable attorney fees and costs.
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IN WITNESS WHEREOF, the Issuer has caused this Warrant to be duly
executed and delivery as of October 31, 1996.
GROUP LONG DISTANCE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
President
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Appendix A
PURCHASE FORM
The undersigned hereby irrevocably elects to execercise its rights
under this Warrant as to _______________ shares and hereby makes payment of
$________________ in payment for the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF COMMON STOCK
Name: ____________________________________________________________________
(Please typewrite or print in block letters)
Address: ____________________________________________________________________
Signature:___________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________
hereby sells, assigns, and transfers unto
Name: ____________________________________________________________________
(Please typewrite or print in block letters)
Address: ____________________________________________________________________
____________________________________________________________________
the right to purchase Common Shares represented by this Warrant to the extent
of __________ Common Shares as to which such right is exercisable and does
hereby irrevocably constitute and appoint _____________ Attorney, to transfer
the same on the books of the Issuer with full power of substittution in the
premises.
Dated: ___________, 199_
Signature: _________________
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SCHEDULE I
Description of Options and Warrants
1. An option to be granted to ▇▇ ▇▇▇▇▇▇▇▇ to purchase an aggregate of
up to 187,500 shares of the Issuer's common Stock and/or 187,500 Redeemable
Warrants within 45 days of the date of the Issuer's Prospectus, solely for the
purpose of covering over-allotments, if any.
2. 1,250,000 Redeemable Warrants, and the securities underlying such
Redeemable Warrants, registered for public sale under the Issuer's Prospectus.
3. 300,000 outstanding warrants at an exercise price of $5.75 per
share.
4. 76,216 outstanding options at a weighted average exercise price of
$2.23 per share.
5. 438,000 options granted, subject to shareholder approval, under the
issuer's stock option plan at an exercise price of $5.0625 per share.
6. 162,000 options available for future grant under the Issuer's stock
option plan.
