Exhibit 4.4
EXHIBIT B
[FORM OF WARRANT]
THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK PURCHASABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND
UNTIL REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL
TO THE HOLDER OF THIS WARRANT IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, THAT SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION,
TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT AND SUCH LAWS. THE
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO CERTAIN
RIGHTS AND OBLIGATIONS AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF NOVEMBER 27, 1996, A COPY OF WHICH IS ON FILE AT THE OFFICES
OF THE COMPANY.
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No. of Shares of Class A Common Stock: __________
Warrant No.:5
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WARRANT
To Purchase Class A Common Stock of
Telegroup, Inc.
THIS IS TO CERTIFY THAT __________, (the "Purchaser") a Delaware
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limited partnership, or its registered assigns, is entitled, at any time
prior to the Expiration Date (as hereinafter defined), to purchase from
Telegroup, Inc., an Iowa corporation (the "Company"), 3,825 shares of
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Common Stock (as hereinafter defined and subject to adjustment as
provided herein), in whole or in part, at a
purchase price of $.01 per share, all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. Definitions. As used in this Agreement, the following terms
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have the respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
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Stock issued by the Company after the Initial Date, other than any
Warrant Stock.
"Applicable Percentage" means, as of any date of determination, the
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number of shares of Common Stock which then represents 4% of the Common
Stock on a fully diluted basis (exclusive of any Excluded Shares),
except that if a Public Offering has not occurred prior to July 1, 1997,
the term "Applicable Percentage" shall thereafter mean, as of any date
of determination, the number of shares of Common Stock which then
represents 4.5% of the Common Stock on a fully diluted basis (exclusive
of any Excluded Shares) and if a Public Offering has not occurred prior
to January 1, 1998, the term "Applicable Percentage" shall thereafter
mean, as of any date of determination, the number of shares of Common
Stock which then represents 5% of the Common Stock on a fully diluted
basis (exclusive of any Excluded Shares).
"Business Day" shall mean any day that is not a Saturday or Sunday
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or a day on which banks are required or permitted to be closed in the
State of New York.
"Close of Business" shall have the meaning set forth in
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Section 2(a).
"Commission" shall mean the Securities and Exchange Commission.
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"Class A Common Stock" shall mean the Class A Common Stock of the
Company, no par value per share.
"Class B Common Stock" shall mean the Class B Common Stock of the
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Company, no par value per share.
"Common Stock" shall mean (except where the context otherwise
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indicates) the Class A Common Stock and Class B Common Stock, as con-
stituted on the date hereof, and any capital stock into which any such
Common Stock may thereafter be changed, and any capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof
which is also not preferred as to dividends or assets over any other
class of capital stock of the Company and which is not subject to
redemption.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, and the rules and regulations of the Commission thereunder, as
in effect from time to time.
"Excluded Shares" means (without duplication) (i) all shares of
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Common Stock issued in a Public Offering, (ii) all newly issued shares
of Common Stock issued to any Person other than in a Public Offering to
the extent (and only to the extent) that such shares are issued for Fair
Market Value, (iii) all newly issued shares of Common Stock, up to the
Maximum Amount, issued or issuable pursuant to options granted to
employees of the Company (other than to Xxxx Xxxxxxx or Xxxxxxxx Xxxx)
to the extent (and only to the extent) that the exercise price for such
shares on the date of the grant of the related option was no less than
the Fair Market Value of such shares on such date of grant and (iv) all
newly issued shares of Common Stock, up to the Grand fathered Amount,
issued or issuable pursuant to options granted to employees of the
Company after a Public Offering (other than to Xxxx Xxxxxxx or Xxxxxxxx
Xxxx) to the extent (and only to the extent) that the exercise price for
such shares on the date of the grant of the related option was no less
than the Fair Market Value of such shares on such date of grant.
"Exercise Price" shall have the meaning set forth in Section 2(b)
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hereof.
"Expiration Date" shall have the meaning set forth in Section 2(a)
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hereof.
"Fair Market Value" of a share of Common Stock shall mean, as of
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any date of determination (the "Determination Date"):
(i) If the Determination Date is the date on which any
class of Common Stock is first sold to the public pursuant to a
Public Offering, then the initial public offering price (before
deducting commissions, discounts or expenses) at which such Common
Stock is sold in such Public Offering;
(ii) If the Determination Date is a date after the date on
which any shares of any class of Common Stock are first sold to the
public pursuant to a Public Offering, then the price per share of
such Common Stock equal to the average last sales price of such
Common Stock on each of the ten trading days prior to the
Determination Date on the principal exchange on which the Common
Stock may at the time be listed or, if there shall have been no
sales on such exchange on any such trading day, the average of the
closing bid and asked prices on such exchange at the end of such
trading day or if there is no such bid and asked price on such
trading day on the next preceding date when such bid and asked
price occurred or, if the Common Stock shall not be so listed, the
average of the closing sales prices as reported by NASDAQ at the
end of each of the ten trading days prior to the Determination Date
in the over-the-counter marked, provided that if one class of the
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Common Stock is listed or reported as described in this sentence
but the class of Common Stock with respect to which Fair Market
Value is being measured is not so listed or reported, then the Fair
Market Value per share with respect to such unlisted and unreported
class shall be identical to such listed or reported class;
(iii) If the Determination Date is prior to the date on which
any Class of Common Stock is first sold to the public pursuant to a
Public Offering, as determined in good faith by the Company's Board
of Directors upon a review of relevant factors, provided that if
such determination relates to any shares of Common Stock which,
together with all other shares of Common Stock for which a
determination of Fair Market Value was made under this Warrant
within the 12 months preceding the Determination Date in question,
exceed 3% of the Common Stock on a fully diluted basis, such
determination shall be supported by a written opinion of an
investment banking firm that is nationally recognized in the United
States;
it being understood and agreed that in no event will there be any
difference between the Fair Market Value of a share of Class A Common
Stock and the Fair Market Value of a share of Class B Common Stock, it
being the intention of the parties that the value of par share of Common
Stock shall constitute a pro rata portion of the Company's equity on a
fully diluted basis, valuing the Company as a going concern.
"Grand fathered Amount" means the number of shares of Common Stock
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equal to the excess of (i) 90,125 over (ii) the number of shares of
Common Stock which are granted to employees in respect of options,
warrants and other like arrangements subsequent to the date hereof and
prior to the Company's initial Public Offering.
"Holder" shall mean the Initial Holder and any person or persons in
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whose name or names the Warrant is registered from time to time on the
Warrant Register.
"Initial Date" shall mean NOVEMBER 27, 1996.
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"Initial Holder" shall mean the Purchaser or any direct or indirect
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wholly owned subsidiary of the Purchaser.
"Maximum Amount" means, as of any date of determination, the
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number of shares of Common Stock equal to 7.5% of all Excluded Shares of
a type referred to in clauses (i) and (ii) of the definition of Excluded
Shares which have been issued on or prior to such date.
"Office of the Company" shall mean the principal executive offices
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of the Company as notified from time to time pursuant to Section 13 or
the office or agency of the Company designated pursuant to Section 11.
"Other Holders" shall mean Greenwich Street Capital Partners, L.P.,
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Greenwich Street Capital Offshore Fund, Ltd., TRV Employees Fund, L.P.
and ____________________.
"Other Holders' Warrants" shall mean the warrants to purchase Class
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A Common Stock of common date herewith issued to the Other Holders and
all warrants issued upon transfer, division or combination of, or in
substitution for, such warrants.
"Outstanding" shall mean, when used with reference to Common Stock,
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at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned
or held by or for the account of the Company or any wholly-owned
subsidiary thereof.
"Public Offering" shall mean an underwritten public offering of
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newly issued shares of any class of Common Stock (whether alone or in
conjunction with any secondary public offering) which produces Net Cash
Proceeds (as defined in the Indenture) for the Company of at least
$25,000,000 and after which an established trading market exists for the
Common Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended,
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and the rules and regulations of the Commission thereunder, as in effect
from time to time.
"Stock Register" shall mean the register maintained by the Company
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to record ownership and transfer of Common Stock.
"Warrant" or "Warrants" shall mean this Warrant and all warrants
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issued upon transfer, division or combination of, or in substitution
for, thereof.
"Warrant Register" shall mean the register maintained by the
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Company to record ownership and transfers of this Warrant pursuant to
the terms hereof.
"Warrant Stock" shall mean the shares of Class A Common Stock
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purchased upon exercise of this Warrant.
2. Duration and Exercise of Warrant.
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(a) Duration. The Warrant shall expire at 5:00 p.m., New York
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City time (the "Close of Business"), on November 27, 2003 (the
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"Expiration Date"). The Warrant may be exercised on any business day
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prior to the Close of Business on the Expiration Date. After the Close
of Business on the Expiration Date, the Warrant will become wholly void
and of no value.
(b) Exercise. Subject to the provisions of this Agreement, the
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Holder of this Warrant shall have the right to purchase from the Company
(and the Company shall issue and sell to such Holder) the aggregate
number of fully paid and nonassessable shares of Class A Common Stock of
the Company set forth on the first page hereof (or such additional
number of shares as may be further provided in this Agreement) at the
price per share set forth on the first page hereof, as adjusted from
time to time as provided in this Agreement (such price, as so adjusted,
being referred to herein as the "Exercise Price"). The Exercise
Price shall be payable in cash or by bank cashier's check in New York
Clearing House funds payable to the order of the Company. The Warrant
shall be exercisable by (i) delivering to the Company the form of notice
of exercise attached hereto as Exhibit A duly completed and signed by
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the Holder or by the duly appointed legal representative or duly
authorized attorney thereof, and (ii) within five business days
thereafter, depositing with the Company the certificate evidencing the
Warrant and paying the aggregate Exercise Price for the number of shares
of Class A Common Stock in respect of which the Warrant is being
exercised; provided, that the Exercise Price must in any event be paid
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and the certificate representing the Warrant deposited with the Company
prior to the Close of Business on the Expiration Date.
(c) Conversion Right. In lieu of the payment set forth in
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Section 2(b) above, the Holder shall have the right to convert this
Warrant (the "Conversion Right"), in its entirety, at any time prior to
the Expiration Date, into shares of Class A Common Stock as provided for
in this Sections 2(c)-2(f). Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of
any Exercise Price) that number of shares of Class A Common Stock equal
to the quotient obtained by dividing (x) the value of the Warrant at the
time the Conversion Right is exercised (determined by subtracting the
aggregate Exercise Price for the Warrant Stock in effect immediately
prior to the exercise of the Conversion Right from the aggregate Fair
Market Value, as defined below, for the Warrant Stock immediately prior
to the exercise of the Conversion Right) by (y) the Fair Market Value of
one share of the Warrant Stock immediately prior to the exercise of the
Conversion Right.
(d) Exercise of the Conversion Right. The Conversion Right may
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be exercised by the Holder, at any time prior to the Close of Business
on the Expiration Date. Such exercise shall be effected by (i) delivery
of the Notice of Conversion attached hereto as Exhibit B at the office
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of the
Company and (ii) within five business days thereafter, depositing with
the Company the certificate evidencing this Warrant; provided that the
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certificate representing this Warrant shall in any event be deposited
with the Company prior to the Close of Business on the Expiration Date.
(e) Effect of Conversion. This Warrant shall be deemed to have
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been converted immediately prior to the Close of Business on the date of
its surrender for conversion as provided above, and the person entitled
to receive the shares of Class A Common Stock issuable upon such
conversion shall be treated for all purposes as the holder of record of
such shares as of the Close of Business on such date. As promptly as
practicable on or after such date, the Company, at its expense, shall
issue and deliver to the person or persons entitled to receive the same
a certificate or certificates for the number of shares issuable upon
such conversion.
(f) Fair Market Value. Fair Market Value of a Warrant Share as
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of a particular date (the "Determination Date") shall mean the Fair
Market Value of a share of the Common Stock as of such Determination
Date.
3. Payment of Taxes and Expenses. The Company shall pay all
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expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issuance or delivery of
this Warrant and the Warrant Stock, unless such tax or charge is imposed
by law upon the Holder, in which case such taxes or charges shall be
paid by the Holder. The Company shall not be required, however, to pay
any tax or other charge imposed in connection with any transfer involved
in the issuance of any certificate for shares of Class A Common Stock in
any name other than that of the Holder, and in such case the Company
shall not be required to issue or deliver any stock certificate until
such tax or other charge has been paid or it has been established to the
satisfaction of the Company that no such tax or other charge is due.
4. Fractional Shares. The Company shall not be required to
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issue a fractional share of Class A Common Stock upon exercise of the
Warrant. As to any fraction of a share which the Holder would otherwise
be entitled to purchase upon any exercise of the Warrant, the Company
shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Fair Market Value of the Common Stock
on the date of exercise, less the portion of the Exercise Price
attributable to such fraction.
5. Transfer, Division and Combination.
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(a) Transfer. Subject to compliance with the provisions of
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Section 9, transfers of this Warrant, in whole or in part, shall be
recorded on the Warrant Register upon surrender of the Warrant at the
Office of the Company, together with (i) a written assignment
substantially in the form of Exhibit C hereto, duly completed and signed
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by the Holder or by the duly appointed legal representative or duly
authorized attorney thereof and (ii) funds sufficient to pay any
applicable transfer taxes or evidence that any such transfer taxes have
been paid or that no such transfer taxes are due. Upon such surrender
and, if required, such payment, the Company shall, subject to compliance
with Section 9, execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or
denominations specified in the instrument of assignment, and shall issue
to the assignor a new Warrant evidencing any portion of this Warrant not
so assigned, and this Warrant certificate shall promptly be canceled. A
Warrant, if properly assigned in its entirety in compliance with
Section 9, may be exercised by the new Holder without the issuance of a
new Warrant certificate.
(b) Division and Combination. Subject to compliance with
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Section 9, this Warrant may be divided or combined with other Warrants
upon presentation thereof at the Office of the Company, together with a
written notice specifying the name or names and denomination or
denominations in which a new Warrant or new Warrants are to be
issued, signed by the Holder or by the duly appointed legal
representative or duly authorized attorney thereof. Subject to
compliance with Section 9 as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a
new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
(c) Maintenance of Warrant Register. The Company agrees to
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maintain the Warrant Register at all times prior to the Expiration Date
at the Office of the Company, and to cause the Warrant Register to be
available for inspection during normal working hours by any Holder or
its representatives or any prospective purchaser of a Warrant designated
by a Holder or its representatives.
(d) Maintenance of Stock Register. The Company agrees to
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maintain the Stock Register at all times at the Office of the Company,
and to cause the Stock Register to be available for inspection during
normal working hours by any Holder or owner of Warrant Stock or their
representatives.
6. Adjustments.
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(a) Adjustment. The number of shares of Class A Common Stock
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for which this Warrant is exercisable and the Exercise Price at which
such shares may be purchased shall be subject to adjustment from time to
time as set forth in this Section 6.
(b) (i) If the Company has not consummated an initial Public
Offering prior to July 2, 1997, this Warrant shall thereafter be
immediately exercisable for such number of shares of Class A Common
Stock such that the aggregate number of shares held upon exercise of
this Warrant and the Other Holders' Warrants in full on such date would
equal the Applicable Percentage on such date (divided pro rata based on
the number of shares of Class A Common Stock into which this Warrant and
each such warrant are initially
exercisable), and such shares shall be subject to further adjustment as
set forth in this Section 6.
(ii) In addition, if the Company has not consummated an initial
Public Offering on or prior to January 2, 1998, this Warrant shall
thereafter be immediately exercisable for such number of shares of Class
A Common Stock such that the aggregate number of shares held upon
exercise of this Warrant and the Other Holders' Warrants in full on such
date would equal the Applicable Percentage on such date (divided pro
rata based on the number of shares of Class A Common Stock into which
this Warrant and each such warrant are initially exercisable), and such
shares shall be subject to further adjustment as set forth in this
Section 6.
(c) Stock Dividends, Subdivisions and Combinations. If at any
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time the Company shall:
(i) declare, order, pay or make a dividend payable in, or
other distribution of, Additional Shares of Common Stock;
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock; or
(iii)combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then (A) the number of shares of Class A Common Stock for which this
Warrant is exercisable immediately after the happening of such event
shall be adjusted to equal the number of shares of Common Stock which a
record holder of the same number of shares of Class A Common Stock
immediately prior to the happening of such event would own or be
entitled to receive after the happening of such event, and (B) the
Exercise Price shall be adjusted to equal (1) the Exercise Price in
effect immediately prior to such event multiplied by the number of
shares of Class A Common
Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (2) the number of shares for which this Warrant is
exercisable immediately after such adjustment.
(d) Dividends and Distributions. If the Company shall
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distribute to all holders of its outstanding shares of Common Stock
evidence of indebtedness of the Company, cash (including cash dividends
payable out of consolidated earnings or earned surplus) or assets or
securities other than Additional Shares of Common Stock, including stock
of a subsidiary but excluding dividends or distributions referred to in
Section 6(c) above (any such evidences of indebtedness, cash, assets or
securities, the "assets or securities"), then, in each case, the
Exercise Price shall be adjusted by subtracting from the Exercise Price
then in effect the value of the assets or securities that a Holder would
have been entitled to receive as a result of such distribution had this
Warrant been exercised with respect to all shares of Class A Common
Stock for which this Warrant is then exercisable and all such shares of
Class A Common Stock issued in the name of such Holder immediately prior
to the record date for such distribution; provided that if, after giving
effect to such adjustment, the Exercise Price would be less than zero,
the Company shall distribute such assets or securities to such Holder as
if such Holder had exercised this Warrant and the shares of Class A
Common Stock had been issued in the name of such Holder immediately
prior to the record date for such distribution. Any adjustment required
by this Section 6(d) shall be made whenever any such distribution is
made, and shall become effective on the date of distribution retroactive
to the record date for the determination of shareholders entitled to
receive such distribution.
(e) Reorganization, Reclassification, Consolidation or Merger.
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If the Company shall (i) effect any reorganization or reclassification
of its capital stock or (ii) consolidate or merge with or into, or
transfer all or substantially all of its properties and assets to, any
other
person, in either case in a transaction in connection with which a
Holder has not exercised this Warrant, then, upon any exercise of this
Warrant subsequent to the consummation thereof, such Holder shall be
entitled to receive, in lieu of the Class A Common Stock issuable upon
exercise immediately prior to such consummation, the highest amount of
stock, other securities or property (including cash) to which such
Holder would have been entitled upon such consummation if such Holder
had exercised this Warrant immediately prior thereto, all subject to
further adjustments thereafter as provided in this Section 6.
(f) Other Adjustments. The Company and the Holder intend that
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the aggregate shares exercisable upon exercise of this Warrant (together
with the Other Holders' Warrants) shall at all times equal the
Applicable Percentage at such time (after giving effect to the exercise
of this Warrant). Accordingly, if, at any time, the number of shares of
Warrant Stock issuable upon the exercise of this Warrant (when taken in
the aggregate with the Other Holders' Warrants) would not equal the then
Applicable Percentage of Common Stock (or the equivalent thereof)
immediately following such exercise, the Company shall make such adjust-
ments to the number of shares of Warrant Stock issuable upon the
exercise of this Warrant as may be required such that the aggregate
shares exercisable upon exercise of this Warrant and the Other Holders'
Warrants equal such Applicable Percentage (divided pro rata based on the
number of shares of Class A Common Stock into which this Warrant and
each such warrant are initially exercisable).
7. Notices.
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(a) Notice of Adjustment. Whenever the number of shares of Class
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A Common Stock for which this Warrant is exercisable or the Exercise
Price shall be adjusted pursuant to Section 6, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment, the method by which the adjustment
was calculated and describing the number of shares of Common Stock for
which this Warrant is exercisable and the Exercise Price after giving
effect to such adjustment or change. The Company shall promptly cause a
signed copy of such certificate to be delivered to each Holder. The
Company shall keep at the Office of the Company copies of all such
certificates and cause the same to be available for inspection during
normal business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder.
(b) Notice of Extraordinary Distributions. In the event that the
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Company proposes to set a record date for the purpose of entitling
holders of its Common Stock to receive any dividend or other
distribution of:
(i) cash in an amount in excess of the previous regular cash
dividend; or
(ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever,
including any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any
other securities or property;
(iii) then the Company shall deliver to each Holder written
notice of such proposed dividend or distribution at least 30 days
prior to such proposed record date. A reclassification of Common
Stock (other than a change in par value, or from par value to no
par value or from no par value to par value) into shares of Common
Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of this
Section 7(b) and, if the outstanding shares of Common Stock shall
be changed into a larger or smaller number of shares of Common
Stock as a part of such reclassification, shall be deemed a
subdivision or combination, as the case may be, of the outstanding
shares of Common Stock within the meaning of Section 6(c).
(c) Notice of Certain Mergers and Asset Dispositions. In the
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event that the Company proposes to consolidate with or merge into
another corporation in a transaction in which the Common Stock will be
changed or converted into other securities, cash or property, or to
sell, transfer or otherwise dispose of all or substantially all of its
property, assets or business to another corporation or other entity, the
Company shall deliver to each Holder written notice of such proposed
transaction at least 15 days prior to the earlier of its consummation or
the taking of any record of the holders of its Common Stock for the
purpose of determining their rights pursuant to such transactions.
(d) Notice of Registration Statement. In the event that the
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Company shall propose to file a registration statement under the
Securities Act after the Initial Date with respect to any shares of
Common Stock of the Company, it shall deliver to each Holder (i) at
least 15 days' advance notice of its intention to file such registration
statement and the anticipated range of prices at which the shares of
Common Stock are proposed to be offered; (ii) prompt notice of any
change in such anticipated range of prices; and (iii) notice by 10:00
a.m., New York City time, on the day prior to the date on which the
registration statement is expected to become effective.
(e) Financial Statements of the Company. The Company shall
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promptly deliver to the Holders any annual, quarterly or other financial
statements that are provided to any holders of equity or debt (other
than bank debt) securities of the Company in their capacity as holders
of such securities.
8. Reservation and Authorization of Class A Common Stock.
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(a) The Company shall at all times reserve and keep available
for issuance upon the exercise of the Warrant the maximum number of its
authorized but unissued shares of Class A Common Stock as could then
potentially be required
to permit the exercise in full of all outstanding Warrants. All shares
of Class A Common Stock issuable upon exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant shall be
duly and validly issued and fully paid and nonassessable, and not
subject to preemptive rights.
(b) Before taking any action which would cause an adjustment
reducing the Exercise Price below the then par value, if any, of the
shares of Class A Common Stock issuable upon exercise of the Warrants,
the Company shall take any corporate action which may be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of such Class A Common Stock at such adjusted
Exercise Price.
9. Legends.
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(a) Warrant Restrictive Legend. Except as otherwise provided in
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this Section 9, each Warrant shall be stamped or otherwise imprinted
with a legend in substantially the following form:
THIS WARRANT AND THE SHARES OF Class A Common Stock
PURCHASABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHE
CATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
UNLESS THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL TO THE
HOLDER OF THIS WARRANT IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, THAT SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM
REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND
SUCH LAWS. THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT ARE SUBJECT TO CERTAIN RIGHTS AND
OBLIGATIONS AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT,
DATED AS OF NOVEMBER 27, 1996, A COPY OF WHICH IS ON FILE AT
THE OFFICES OF THE COMPANY.
(b) Warrant Stock Restrictive Legend. Except as otherwise
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provided in this Section 9, each certificate for Warrant Stock initially
issued upon the exercise of this Warrant, and each certificate for
Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE ISSUER HAS RECEIVED AN OPINION
OF COUNSEL TO THE HOLDER OF THESE SHARES IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER, THAT SUCH OFFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER
DISPOSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH THE ACT AND SUCH LAWS. THE SHARES ARE
SUBJECT TO THE CONDITIONS SPECIFIED IN A CERTAIN WARRANT,
DATED NOVEMBER 27, 1996. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF SUCH WARRANT.
(c) Termination of Restrictions. The legend requirements of
---------------------------
Sections 9(a) and 9(b) shall terminate (i) when and so long as the
security in question shall have been effectively registered under the
Securities Act and disposed of pursuant thereto or (ii) when the Company
shall have received an opinion of counsel reasonably satisfactory
to it that such legend is not required in order to insure compliance
with the Securities Act.
10. Loss or Mutilation. Upon receipt by the Company from any
-------------------
Holder of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of this Warrant and an
indemnity reasonably satisfactory to it (and in case of mutilation upon
surrender and cancellation hereof), the Company will execute and deliver
in lieu hereof a new Warrant of like tenor to such Holder; provided, in
the case of mutilation, no indemnity shall be required if this Warrant
in identifiable form is surrendered to the Company for cancellation.
11. Office of the Company. As long as any of the Warrants
---------------------
remain outstanding, the Company shall maintain an office or agency
(which may be the principal executive offices of the Company) where the
Warrants may be presented for exercise, registration of transfer,
division or combination as provided in this Warrant, and where the
Warrant Register shall be maintained.
12. No Rights or Liabilities as Stockholder. Nothing contained
---------------------------------------
in this Warrant shall be construed as conferring upon any Holder any
rights as a stockholder of the Company or as imposing any liabilities on
such Holder to purchase any securities or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by
creditors or stockholders of the Company or otherwise.
13. Notice. All notices, requests, demands, letters, waivers
------
and other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given if
(a) delivered personally, (b) mailed, certified or registered mail with
postage prepaid, (c) sent by next-day or overnight mail or delivery or
(d) sent by telecopy or telegram, as follows:
(i) If to the Initial Holder:
-------------------------
-------------------------
-------------------------
Telecopier No.:
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
(ii) If to any other Holder, at its last known address appearing
on the Warrant Register
(iii) If to the Company:
Telegroup, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Berlin
0000 X Xxxxxx
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxx Xxxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
All such notices, requests, demands, letters, waivers and other
communications shall be deemed to have been received (w) if by personal
delivery on the day after such delivery, (x) if by certified or
registered mail, on the fifth
business day after the mailing thereof, (y) if by next-day or overnight
mail or delivery, on the day delivered or (z) if by telecopy or tele-
gram, on the next day following the day on which such telecopy or
telegram was sent, provided that a copy is also sent by certified or
registered mail.
14. Successors and Assigns. This Warrant and the rights
----------------------
evidenced hereby shall be binding upon and shall inure to the benefit of
the successors of the Company and the successors and assigns of the
Holder. In addition, and provided that an express assignment shall have
been made, a copy of which shall have been delivered to the Company, the
provisions of this Warrant shall be for the benefit of and enforceable
by all Holders from time to time of this Warrant and shall be
enforceable by any Holder.
15. Amendment. This Warrant may be amended, modified or
---------
supplemented or the provisions hereof waived with the written consent of
the Company, on the one hand, and the Holder and the Other Holders who
hold warrants exercisable for more than 50% of the aggregate number of
shares of Class A Common Stock then purchasable upon exercise of all
such warrants, on the other hand; provided, that no Warrant may be
modified or amended to reduce the number of shares of Class A Common
Stock for which the Warrant is exercisable or to increase the Exercise
Price (before giving effect to any adjustment as provided therein)
without the prior written consent of the Holder thereof.
16. Headings. The headings and captions contained in this
--------
Warrant are for convenience of reference only and shall not control or
affect the meaning or construction of any provision hereof.
17. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and attested by its Secretary or an Assistant Secretary.
Dated: November 27, 1996
TELEGROUP, INC.
By:
--------------------------
Attest:
By:
----------------------------------
Secretary
EXHIBIT A
NOTICE OF EXERCISE
------------------
[To be executed only upon exercise of the Warrant]
The undersigned registered owner of Warrant No. 5 dated November
27, 1996, to purchase Class A Common Stock of Telegroup, Inc. (the
"Company"), irrevocably exercises such Warrant for the purchase of 3,825
shares of Class A Common Stock of the Company, and hereby undertakes to
make payment therefor and to deposit with the Company the certificate
representing such Warrant, in each case as set forth in Section 2(b)
thereof and at the price and on the other terms and conditions specified
therein. The undersigned requests that certificates for the shares of
Class A Common Stock to be purchased pursuant hereto be issued in the
name of and delivered to ___________________ whose address is
--------------------------------------------------------------------.
and, if such shares of Class A Common Stock shall not include all of the
shares of Class A Common Stock issuable as provided in such Warrant,
that a new Warrant of like tenor and date for the balance of the shares
of Class A Common Stock issuable thereunder be delivered to the
undersigned.
-------------------------------
(Name of Registered Owner)
---------------------------------
(Signature of Registered Owner)
----------------------------------
(Street Address)
-----------------------------------
(City)(State)(Zip Code)
NOTICE: The signature on this notice of exercise must correspond with
the name as written upon the face of the Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named
below all of the rights of the undersigned under this Warrant, with
respect to the number of shares of Class A Common Stock set forth below:
No. of Shares of
Name and Address of Assignee Class A Common Stock
----------------------------- ----------------------
----------------------------
----------------------------
and does hereby irrevocably constitute and appoint
attorney-in-fact to register such transfer on
--------------------------
the Warrant Register of Telegroup, Inc. maintained for the purpose, with
full power of substitution in the premises.
Dated: Print Name:
------------------------- --------------------
Signature:
---------------------
Witness:
---------------------
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
