STARTEC GLOBAL COMMUNICATIONS CORPORATION
UNDERWRITERS' WARRANT AGREEMENT
UNDERWRITERS' WARRANT AGREEMENT dated as of ___________, 1996 by and
between STARTEC GLOBAL COMMUNICATIONS CORPORATION, a Maryland Corporation (the
"Company"), and XXXXXX, XXXXX XXXXX INCORPORATED ("XXXXXX") and BOENNING &
SCATTERGOOD, INC. ("BOENNING") (Xxxxxx and Boenning sometimes being referred to
collectively herein as the "Underwriters").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue warrants to the Underwriters
(the Warrants") to purchase up to 150,000 shares of common stock, par value
$0.01 per share, of the Company (the "Stock"), of which 110,000 Warrants are to
be issued to Xxxxxx and the remaining 40,000 Warrants are to be issued to
Boenning; and
WHEREAS, the Underwriters have agreed, pursuant to an underwriting
agreement (the "Underwriting Agreement") dated _________, 1997, to which the
Underwriters and the Company are parties, to act as the co-lead underwriters in
connection with the Company's public offering of up to 1,900,000 shares of its
Stock at a public offering price of $_____ per share (the "Public Offering");
and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Underwriters in the amounts set forth in the
first recital above written, in consideration for, and as part of their
compensation in connection with acting as underwriters pursuant to the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the foregoing promises, which are
incorporated into the terms hereof, of the payment by Xxxxxx and Boenning to the
Company of $110.00 and $40.00, respectively for the Warrants purchased to be
purchased thereby hereunder, the agreements herein set forth and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT. The holders of the Warrants issued hereunder are hereby
granted the right to purchase, at any time from _______________, 1998 (the first
anniversary of the effective date of the Company's Registration Statement
relating to the Public Offering (the "Effective Date")) until 5:00 p.m.,
Washington, DC time, on _________, 2003 (the sixth anniversary of the Effective
Date), up to an aggregate of 150,000 shares of the Stock of the Company, at an
initial exercise price (subject to
adjustment as provided in Section 8 hereof) of $____ per Share (110% of the
initial public offering price per share in the Public Offering), subject to the
terms and conditions of this Agreement. The shares issuable upon exercise of the
Warrants are referred to herein as the "Warrant Shares".
2. WARRANT CERTIFICATES. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. EXERCISE OF WARRANTS. The Warrants are exercisable during the
term set forth in Section 1 hereof at the Exercise Price (defined below) per
Share set forth in Section 6 hereof, payable by certified or cashier's check or
money order payable in lawful money of the United States, subject to adjustment
as provided in Article 8 hereof; provided, however, that if the fair market
value of one Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash,
the Holder may elect to receive shares equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of the
Warrant Certificate at the principal office of the Company together with the
properly endorsed Notice of Exercise in the form attached as Exhibit A, in which
event the Company shall issue to the Holder a number of Warrant Shares computed
using the following formula:
Where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of shares of Common Stock purchasable pursuant to
the Warrant Certificate surrendered, or, if only a portion of
the Warrant represented by such Warrant Certificate is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation);
A = the fair market value of one share of the Company's Stock
(at the date of such calculation); and
B = Exercise Price (as adjusted to the date of such calculation).
For purposes of the above calculation, fair market value of one share of Stock
shall be determined by the Company's Board of Directors in good faith; provided,
however, that where there exists a public market for the Stock at the time of
such exercise, the fair market value per share shall be equal to the average of
the closing bid and asked prices of the Stock quoted in the Over-The-Counter
Market Summary or the last reported sale price of the Stock or the closing price
quoted on the Nasdaq National Market or on any exchange on which the Stock is
listed, whichever is applicable, as published in The Wall
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Street Journal for the five (5) trading days prior to the date of determination
of fair market value. Notwithstanding the foregoing, in the event the Warrant is
exercised in connection with a pubic offering by the Company (including, without
limitation, the Public Offering), the fair market value per share shall be equal
to the per share offering price to the public of the Stock in such public
offering.. Upon surrender of a Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Warrant Shares (and such other amounts, if any,
arising pursuant to Section 4 hereof) at the Company's principal office, the
registered holder of a Warrant Certificate (each, a "Holder" and, collectively,
the "Holders") shall be entitled to receive a certificate or certificates for
the Warrant Shares so purchased. (References herein to a "Holder" or "Holders of
Warrant Shares shall mean the registered holder or holders thereof). The
purchase rights represented by each Warrant Certificate are exercisable, at the
option of the Holder thereof, in whole or in part, (but not as to fractional
Warrant Shares). The Warrants may be exercised to purchase all or part of the
Warrant Shares represented thereby. In the case of the purchase of less than all
the Warrant Shares purchasable on the exercise of the Warrants represented by a
Warrant Certificate, the Company shall cancel the Warrant Certificate
represented thereby upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Warrant Shares
purchasable thereunder.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants
and payment of the Exercise Price therefor, the issuance of certificates for the
Warrant Shares underlying such Warrants shall be made forthwith (and, in any
event, within three (3) business days thereafter) without further charge to the
Holder thereof, and such certificates shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder effecting such exercise; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of such Holder, and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Warrant Certificates and the certificates representing
the Warrant Shares shall be executed on behalf of the Company by the persons and
in the manner prescribed by the Bylaws of the Company and by applicable law.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. RESTRICTIONS ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate (and its Permitted Transferee, as defined below), by its acceptance
thereof, covenants and agrees that the Warrants are being acquired as an
investment and not with a view to the distribution thereof; that the Warrants
may be sold, transferred, assigned,
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hypothecated or otherwise disposed of, in whole or in part, to any person (a
"Permitted Transferee"), provided such transfer, assignment, hypothecation or
other deposition is made in accordance with the provisions of the Securities Act
of 1933, as amended (the "1933 Act"); and provided, further, that until
__________, 1998 (one year after the Effective Date) only officers of the
Underwriters, or any selling group member or its officers or partners, shall be
Permitted Transferees.
6. EXERCISE PRICE
a. INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Warrant to
purchase Warrant Shares shall be $____ per Share. The adjusted exercise price
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof.
b. EXERCISE PRICE. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. REGISTRATION RIGHTS.
a. WARRANT LEGEND. The Warrant Certificates shall bear the
following legends:
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH
ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (III) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY
TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED FOR SALE OR SOLD EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR
(II) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH 1933 ACT IS
AVAILABLE.
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THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
b. DEMAND REGISTRATION. On any one (1) occasion commencing at any
time one (1) year after the Effective Date and expiring six (6) years after the
Effective Date, the Holders of the Warrants and the Warrant Shares representing
at least a Majority (as hereinafter defined) of such securities shall have the
right, exercisable by written notice to the Company, to have the Company prepare
and file with the Securities and Exchange Commission (the "Commission") a
registration statement on Form X-0, XX-0 (or other appropriate form, including,
without limitation, a post-effective amendment to the Company's Registration
Statement) and such other documents, including a prospectus, as may be necessary
in the opinion of both counsel for the Company and counsel for the Holders, in
order to comply with the provisions of the 1933 Act, so as to permit a public
offering and sale, for a period of not less than twelve (12) months, of the
Warrants and the Warrant Shares by such Holders, and any other Holders of the
Warrants and/or Warrant Shares who shall notify the Company within thirty (30)
business days after receipt of the notice described in the succeeding sentence.
The Company covenants and agrees to give written notice of any registration
request under this Section 7(b) by any Holder(s) of Warrants or Warrants Shares
to all other Holders of the Warrants and the Warrant Shares within ten (10)
calendar days from the date of the receipt of any such registration request. For
purposes of this Agreement, the term "Majority" in reference to the Holders of
the Warrants and/or Warrant Shares, shall mean the Holders of Warrant Shares and
Warrants representing, in the aggregate, in excess of fifty percent (50%) of the
then outstanding Warrant Shares and Warrant into which then-outstanding Warrants
are then exercisable excluding all Warrant Shares and Warrants that (i) are held
by the Company, an affiliate, officer, director, employee or agent thereof or
any of their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith, or (ii) have been resold to the public
pursuant to a registration statement filed with the Commission under the 1933
Act. The Holders of Warrants may demand registration without exercising the
Warrants, and shall never be required to exercise same. For the purposes of
subsection (i) above, the Underwriters and their respective officers, directors,
employees and agents shall not be deemed to be affiliates, officers, directors,
employees or agents of the Company.
c. PIGGYBACK REGISTRATION. If, at any time within eight (8) years
after the Effective Date, the Company should file a registration statement with
the Commission under the 1933 Act (other than in connection with a merger or
pursuant to Form S-8) it will give written notice by registered mail, at least
forty-five (45) calendar days prior to the filing of each such registration
statement, to each of the Underwriters (if then a Holder) and to all other
Holders of the Warrants and/or the Warrant Shares of its
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intention to do so. If the Underwriters or other Holders of the Warrants and/or
the Warrant Shares notify the Company within thirty (30) calendar days after
receipt of any such notice of its or their desire to include any Warrants or
Warrant Shares in such proposed registration statement, the Company shall afford
such Underwriters and Holders of the Warrants and/or Warrant Shares the
opportunity to have any such Warrants or Warrant Shares registered under such
registration statement. Notwithstanding the provisions of this Section 7(c), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7(c) (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
If the underwriter of an offering to which the above piggyback rights
apply objects to such rights, such objection shall preclude such inclusion.
However, in such event, the Company will, within six (6) months of completion of
such subsequent underwriting, file at its sole expense, a registration statement
relating to such excluded Warrants and/or Warrant Shares, which shall be in
addition to any registration statement required to be filed pursuant to Section
7(b), unless such Holders had refused an opportunity provided with the consent
of the underwriter, to be included in the registration statement on the
condition that they agree not to offer the securities for sale (without the
prior written consent of the underwriter) for a period not exceeding (60)
calendar days from the effective date of such registration statement.
If the underwriter in such underwritten offering shall advise the Company
that it declines to include a portion or all of the Warrants or Warrant Shares
requested by the Underwriters and the Holders to be included in the registration
statement, then (i) registration of all of the Warrant Shares shall be excluded
from such registration statement on the condition that all securities to be
registered by other selling security holders, if any, are also excluded and (ii)
registration of a portion of such Warrants and Warrant Shares allocated among
the Underwriters and the Holders and any other selling securityholders in
proportion to the respective numbers of securities to be registered by the
Underwriters and each such Holder and other selling securityholder (provided
that, for purposes of such allocation, Warrants shall be treated as representing
the number of Warrant Shares then represented thereby). In such event the
Company shall give the Underwriters and the Holders prompt notice of the number
of Warrants and Warrant Shares excluded.
d. COVENANTS OF THE COMPANY IN RESPECT OF REGISTRATION.
In connection with any registrations under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a registration
statement within sixty (60) calendar days of receipt of any
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demand therefor; provided, however, that the Company shall not
be required to produce audited or unaudited financial
statements for any period prior to the date such financial
statements are required to be filed in a report on Form 10-K
or Form 10-Q (or Form 10-KSB or Form 10-QSB), as the case may
be. The Company shall use its best efforts to have any
registration statement declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell
Shares such number of prospectuses as shall reasonably be
requested.
(2) The Company shall pay all costs (excluding any underwriting
discounts or commissions), fees and expenses in connection
with any registration statement filed pursuant to Sections
7(b) or 7(c) hereof including, without limitation, the actual
and reasonable costs and expenses of one firm serving as legal
counsel to the Holders, the Company's legal and accounting
fees, printing expenses, and any blue sky fees and expenses.
If the Company shall fail to comply with the provisions of
Section 7(d)(1), the Company shall, in addition to any other
equitable or other relief available to the Holder(s), be
liable for any or all incidental, special and consequential
damages and damages due to loss of profit sustained by the
Holder(s) requesting registration of their Warrant Shares.
(3) The Company will take all necessary and reasonable steps which
may be required to qualify or register the Warrants and
Warrant Shares included in a registration statement for
offering and sale under the securities or blue sky laws of
such states as reasonably are requested by the Holder(s),
provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify
as a foreign corporation to do business under the laws of any
such jurisdiction.
(4) The Company shall indemnify the Holder(s) of the Warrants and
Warrant Shares to be sold pursuant to any registration
statement, each, director, officer, partner, employee and
agent of each such Holder and each person, if any, who
controls such Holder within the meaning of Section 15 of the
1933 Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (the
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"Exchange Act"), against all losses, claims, damages, expenses
or liability (including, without limitation, all expenses
reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become
subject under the 1933 Act, the Exchange Act or otherwise,
arising from such registration statement, but only to the same
extent and with the same effect as the provisions pursuant to
which the Company has agreed to indemnify the Underwriters
contained in Section 9 of the Underwriting Agreement.
(5) The Holder(s) of the Warrants and/or Warrant Shares to be sold
pursuant to a registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the
Company, its officers and directors and each persons, if any,
who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the Exchange Act, against all
losses, claims, damages, expenses or liability (including all
expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may
become subject under the 1933 Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf
of such Holders, or their successors or assigns, for specific
inclusion in such registration statement to the same extent
and with the same effect as the provisions contained in
Section 9 of the Underwriting Agreement pursuant to which the
Underwriters have agreed to indemnify the Company.
(6) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to
the initial filing of any registration statement or the
effectiveness thereof.
(7) If the manner of distribution proposed by the holders of the
Warrants and the Warrant Shares is an underwriting, the
Company shall furnish to each Holder participating in the
offering and to each underwriter of such offering, a signed
counterpart, addressed to such Holder or underwriter of (i) an
opinion of counsel to the Company, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, an
8
opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who
have issued a report (or reports) on the Company's financial
statements included in such registration statements, in each
case covering substantially the same matters with respect to
such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel in
accountants' letters delivered to underwriters in underwritten
public offerings of securities.
(8) The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within
the first full four fiscal quarters following the effective
date, make "generally available to its security holders"
(within the meaning of Rule 158 under the 0000 Xxx) an
earnings statement (which need not be audited) complying with
Section 11(a) of the 0000 Xxx.
(9) The Company shall deliver promptly to one designated
representative for each Holder participating in the offering
requesting the correspondence described below and any managing
underwriter, copies of all correspondence between the
Commission and the Company, its counsel or auditors with
respect to the registration statement and permit each Holder
and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules
of the National Association of Securities Dealers, Inc. (the
"NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the
business of the Company with its officers and independent
auditors, all
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to such reasonable extent and at such reasonable times and as
often as any such Holder shall reasonably request.
(10) In connection with an offering for which the Holders have
demand rights, the Company shall enter into an underwriting
agreement with the managing underwriter selected for such
underwriting by Holders holding a Majority of the Warrants and
Warrant Shares requested to be included in such underwriting.
In connection with an offering for which the Holders have
piggyback rights, the Company shall have the sole right to
select the managing underwriter. Such underwriting agreement
shall be satisfactory in form and substance to the Company, a
Majority of such Holders and such managing underwriter, and
shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily
contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Warrants
and/or Warrant Shares and may, at their option, require that
any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriter shall
also be made to and for the benefit of such Holders. Such
Holders shall not be required to make any representations or
warranties to or agreements with the Company or the
underwriter except as they may relate to such Holders, their
ownership of Warrants or Warrant Shares subject to
registration, and their intended methods of distribution.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
a. ADJUSTMENT OF EXERCISE PRICE. Except as hereinafter
provided, in the event the Company shall, at any time or from time to time after
the date hereof, issue any shares of Stock as a stock dividend to the holders of
Stock, or subdivide or combine the outstanding shares of Stock into a greater or
lesser number of shares (any such issuance, subdivision or combination being
herein called a "Change of Shares"), then, and thereafter upon each Change of
Shares, the Exercise Price for the Warrants (whether or not the same shall be
issued and outstanding) in effect immediately prior to such Change of Shares
shall be changed to a price (including any applicable fraction of a cent to the
nearest cent) determined by dividing (i) the sum of (a) the total number of
shares of Stock outstanding immediately prior to such Change of Shares,
multiplied by the Exercise Price in effect immediately prior to such Change of
Shares, and (b) the
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consideration, if any, received by the Company upon such issuance, subdivision
or combination by (ii) the total number of shares of Stock outstanding
immediately after such Change of Shares; provided, however, that in no event
shall the Exercise Price be adjusted pursuant to this computation to an amount
in excess of the Exercise Price in effect immediately prior to such computation,
except in the case of a combination of outstanding shares of Stock.
For the purposes of any adjustment to be made in accordance with this
Section 8(a) the following provisions shall be applicable:
(1) Shares or equivalents of Stock issuable by way of
dividend or other distribution on any stock of the
Company shall be deemed to have been issued immediately
after the opening of business on the day following the
record date for the determination of stockholders
entitled to receive such dividend or other distribution
and shall be deemed to have been issued without
consideration.
(2) The reclassification of securities of the Company other
than shares of Stock into securities including shares of
Stock shall be deemed to involve the issuance of such
shares of Stock for a consideration other than cash
immediately prior to the close of business on the date
fixed for the determination of security holders entitled
to receive such shares, and the value of the
consideration allocable to such shares of Stock shall be
determined in good faith by the Board of Directors of
the Company on the basis of a record of values of
similar property or services.
(3) The number of shares of Stock at any one time
outstanding shall be deemed to include the aggregate
maximum number of shares issuable (subject to
readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the
conversion or exchange of convertible or exchangeable
securities.
b. ADJUSTMENT OF NUMBER OF WARRANTS. Upon each adjustment
of the Exercise Price pursuant to Section 8.a. above, the number of shares of
Stock purchasable upon the exercise of each Warrant shall be the number derived
by multiplying the number of shares of Stock purchasable immediately prior to
such adjustment by the Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the applicable adjusted Exercise Price.
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c. ACTION UPON RECLASSIFICATION, MERGER, ETC. The Company
will not merge, reorganize or take any other action which would terminate the
Warrants without first making adequate provision for the Warrants as provided
for herein. In case of any reclassification or change of the outstanding shares
of Stock (other than a change in par value to no par value, or from nor par
value to par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company with, or
merger of the Company into, another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any reclassification or change of the outstanding Stock except a
change as a result of a subdivision or combination of such shares or a change in
par value, as aforesaid), or in the case of a sale or conveyance to another
corporation or other entity of the property of the Company as an entirety, the
Holder of each Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to purchase, upon
exercise of such Warrant, the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holder were the owner of the
shares of Stock underlying such Warrants immediately prior to any such events at
a price equal to the product of (x) the number of shares issuable upon exercise
of the Warrants and (y) the Exercise Prices in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance, as if such Holder has exercised the Warrants. In the event of a
consolidation, merger, sale or conveyance of property, the corporation formed by
such consolidation or merger, or acquiring such property, shall execute and
deliver to the Holders a supplemental warrant agreement to such effect. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustment to those provided in Section 8. The provisions of
this Section 8.c. shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales or conveyances.
d. EFFECT OF ADJUSTMENTS ON WARRANT CERTIFICATES. Irrespec-
tive of any adjustments or changes in the Exercise Price or the number of shares
of Stock purchasable upon exercise of the Warrants, the Warrant Certificates
theretofore and thereafter issued shall, unless the Company shall exercise its
option to issue new Warrant Certificates, continue to express the Exercise Price
per share and the number of shares purchasable thereunder as the Exercise Price
per share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
e. NOTIFICATION TO HOLDERS. After each adjustment of the
Exercise Price pursuant to this Section 8, the Company will promptly prepare a
certificate signed by the Chairman or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Exercise Price as so adjusted; (ii) the number of shares
of Stock purchasable upon exercise of each Warrant, after such adjustment; and
(iii) a brief statement of the facts accounting for such
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adjustment. The Company will promptly cause a copy of such certificate to be
sent by first class mail to each Holder at his last address as it shall appear
on the registry books of the Company. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect the validity thereof
except as to the Holder to whom the Company failed to mail such notice, or
except as to the Holder whose notice was defective. The affidavit of the
Secretary or an Assistant Secretary of the Company that such notice has been
mailed shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
f. EVENTS NOT TRIGGERING ADJUSTMENT. No adjustment of the
Exercise Price shall be made upon the issuance or sale of: (i) the Warrants or
the Warrant Shares; (ii) the shares of Stock pursuant to the Public Offering; or
(iii) the shares of Stock issuable upon the exercise of the options or warrants
outstanding or shares reserved for issuance pursuant to stock option plans in
effect on the date hereof as described in the prospectus relating to the Public
Offering. In addition, no adjustment of the Exercise Price shall be made if the
amount of said adjustments shall be less than five cents ($.05) per Warrant
Share, provided, however, that in such case any adjustment that would otherwise
be required then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment which, together with
any adjustment so carried forward, shall amount to at least five cents ($.05)
per Warrant Share.
g. SECURITIES INCLUDED IN THE DEFINITION OF "STOCK". For the
purpose of this Agreement, the term "Stock" shall mean (i) the class of stock
designated as Common Stock in the Charter of the Company as it may be amended as
of the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassification of such Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that the Company shall, after the date hereof issue securities with
greater or superior voting rights than those of the shares of Stock outstanding
as of the date hereof, each Holder, at its option, may receive upon exercise of
any Warrant either shares of Stock or a like number of such securities with
greater or superior voting rights.
h. NONCASH DIVIDENDS AND OTHER DISTRIBUTIONS. In the event
that the Company shall at any time prior to the exercise or expiration of all
the Warrants declare a dividend (other than a dividend consisting solely of
shares of Stock) or otherwise distribute to its stockholders any assets,
property, rights, evidences of indebtedness, securities (other than shares of
Stock), whether issued by the Company or by another, or any other thing of
value, the Holders of the unexercised Warrants shall thereafter be entitled, in
addition to the shares of Stock or other securities and property receivable upon
the exercise thereof, to receive, upon the exercise of such Warrants, the same
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised immediately prior
to such dividend or
13
distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 8h.
i. SUBSCRIPTION RIGHTS FOR SHARES OF STOCK AND OTHER
SECURITIES. In the event that the Company or an affiliate of the Company shall
at any time after the date hereof and prior to the exercise or expiration of all
the Warrants issue any rights to subscribe for shares of Stock or any other
securities of the Company or of such affiliate to all the stockholders of the
Company, the Holders of the unexercised Warrants shall be entitled to receive,
in addition to the Warrant Shares receivable upon the exercise of the Warrants,
such rights at the time such rights are distributed to the other stockholders of
the Company.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable, without expense, upon the surrender thereof by the
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of the Warrants, if mutilated, the Company
will make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of Warrant Shares upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests; provided, however, that if a Holder exercises all
Warrants held of record by such Holder the fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of Shares.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at
all times reserve and keep available out of its authorized shares of Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Stock as shall be issuable as Warrant Shares upon the
exercise on conversion thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all the
Warrant Shares issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause the Stock to be listed and quoted (subject to official
notice of issuance) on all securities exchanges on which the Stock issued to the
public in connection herewith may then be listed or quoted.
14
12. LIMITATIONS ON RIGHTS OF, AND CERTAIN NOTICES TO WARRANT
HOLDERS. Nothing contained in this Agreement shall be construed as conferring
upon the Holders of Warrants, prior to the exercise thereof, the right to
receive cash dividends to vote or to consent or to receive notice as a
stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
the Warrants or their earlier exercise, any of the following events shall occur:
(1) the Company shall take a record of the holders of
its shares of Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend
or distribution on the books of the Company; or
(2) the Company shall offer to all the holders of its Stock
any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares
of Stock or such other capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(3) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or
merger) or a sale of all or substantially all of its
property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least thirty (30) calendar days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when (i) personally delivered, (ii) three (3) business days after
having been
15
properly addressed, enclosed in a properly sealed envelope or wrapper and sent
postage-paid by first class mail, (iii) transmitted by facsimile transmission,
if acknowledged by such facsimile equipment as received, or (iv) one (1)
business day after being sent, at the expense of the sender, by Federal Express,
Airborne, U.S. Express Mail or similar overnight carrier (i) if to the Holder of
the Warrants, to the address of such Holder as shown on the books of the Company
or (ii) if to the Company, at its principal office or to such other address as
the Company may designate by notice to the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the Underwriters
may, from time to time, supplement or amend this Agreement without the approval
of any Holders of Warrants (other than the Underwriters) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Underwriters may deem necessary or desirable and which the Company and
the Underwriters deem shall not adversely affect the interests of the Holders of
Warrants.
15. SUCCESSORS. All the covenants and provisions of this Agree-
ment shall be binding upon and inure to the benefit of the Company, the
Underwriters, the Holders and their respective successors and assigns hereunder.
16. TERMINATION. This Agreement shall terminate at the close of
business on __________, 2006 (the eighth anniversary of the Effective Date).
Notwithstanding the foregoing, the registration provisions and indemnification
provisions of Section 7 shall survive such termination until the close of
business on the later of the expiration of any applicable statue of limitations
or ________, 2008.
17. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Maryland and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, each of the
Underwriters and each and any Holders each hereby agrees that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement, the Warrants or the Warrant Certificates shall be brought and
enforced in the courts of the State of Maryland or of the United States of
America for the District of Maryland, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company, each of the
Underwriters and each and any Holders each hereby irrevocably waives any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, the Underwriters and the
Holders (at the option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address set
forth in Section 13 hereof. Such mailing shall be
16
deemed personal service and shall be legal and binding upon the party so served
in any action, proceeding or claim.
18. ENTIRE AGREEMENT; Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof. Subject to Section 14, this Agreement may not be modified
except upon the express agreement of the Company and a Majority of the of the
Warrants and the Warrant Shares.
19. SEVERABILITY. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agree-
ment are for convenience of reference only and are not intended, nor should they
be construed as, a part of this Agreement and shall be given no substantive
effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation, other than the Company and the
Underwriters and any other Holder(s) of the Warrants or Warrant Shares, any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Underwriters and any other Holder(s) of the Warrants or Warrant Shares.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts together shall together constitute but
one and the same instrument.
23. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Company, each of the Underwriters and their successors and
assigns and the Holders from time to time of the Warrant(s) or any of them.
17
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By:----------------------------------------
Print Name:--------------------------------
Title:-------------------------------------
XXXXXX, XXXXX XXXXX, INCORPORATED
By-----------------------------------------
Print Name:--------------------------------
Title:-------------------------------------
BOENNING & SCATTERGOOD, INC.
By:----------------------------------------
Print Name:--------------------------------
Title:-------------------------------------
18
EXHIBIT A
STARTEC GLOBAL COMMUNICATIONS CORPORATION
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE OR
SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER
SUCH 1933 ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING ________, 1998 THROUGH 5:00 P.M., WASHINGTON, DC TIME
________, 2003
NO. WC- ___ --------- WARRANTS
This Warrant Certificate certifies that ______________
_______________ or registered assigns, is the registered holder of _________
warrants (the "Warrants") to purchase initially, at any time from _______, 1998,
until 5:00 p.m., Washington, DC time on _______, 2003 (the "Expiration Date"),
up to _____________ fully paid and non-assessable shares (the "Shares"), of the
Common Stock, par value $0.01 per share (the "Stock"), of STARTEC Global
Communications Corporation, a Maryland corporation
19
(the "Company") at the exercise price of $____ per Share (the "Exercise Price"),
upon the surrender of this Warrant Certificate and payment of the Exercise Price
at an office or agency of the Company, but subject to the conditions set forth
herein and in the warrant agreement dated as of ____________________, 1997 (the
"Warrant Agreement") by and between the Company and Xxxxxx, Xxxxx Xxxxx,
Incorporated and Boenning & Scattergood, Inc. Payment of the Exercise Price
shall be made as provided in Section 3 of the Warrant Agreement.
No Warrant may be exercised after 5:00 X.X, Xxxxxxxxxx, XX time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
20
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this __th
day of _______, 1997.
STARTEC GLOBAL COMMUNICATIONS CORPORATION
By:----------------------------------------
Print Name:--------------------------------
Title:-------------------------------------
[SEAL]
ATTEST:
By:----------------------------
21
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and
transfers unto __________________________________ (Please print name and address
of transferee) this Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________________________________ Attorney, to transfer the within Warrant
Certificate on the books of STARTEC Global Communications Corporation, with full
power of substitution.
Dated: Signature:
---------------------------- ----------------------------------------
(Signature must conform in all respects
to the name of holder as specified on
the face of the Warrant Certificate.)
----------------------------------------
(Insert Social Security or Other
Indemnifying Number of Holder)
22
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
_______ Shares
and herewith tenders in payment for such securities the amount of $____________,
in accordance with the terms of this Warrant Certificate and of the Warrant
Agreement. The undersigned requests that a certificate for such securities be
registered in the name of _______________________________________, whose address
is ____________________________________________________________________________,
and that such Certificate be delivered to _____________________________________,
whose address is _______________________________________________________________
____________________________________________.
Dated: Signature:
------------------------- ----------------------------------------
(Signature must conform in all respects
to the name of holder as specified on
the face of the Warrant Certificate.)
----------------------------------------
(Insert Social Security or Other
Indemnifying Number of Holder)
23
