1
Exhibit 10.13
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of February 2, 1996 (the "Agreement"),
between Global TeleSystems Group, Inc., a Delaware corporation (the "Company"),
and Capital International Emerging Markets Fund, a Luxembourg SICAV (the
"Initial Holder" and together with its permitted assignees, the "Holders" and
individually, a "Holder").
WHEREAS the Company proposes to issue and deliver its warrant
certificates ("Warrant Certificates") evidencing an aggregate of 277,778
warrants (the "Warrants"), each to purchase one share of common stock, par
value $0.0001 per share, of the Company ("Common Stock") in connection with the
Senior Promissory Note dated the date hereof (the "Initial Note") in the
aggregate principal amount of $3,750,000 dollars, issued by the Company to the
Initial Holder, pursuant to, and subject to the terms and conditions of, that
certain Senior Note Purchase Agreement, dated as of the date hereof (as it may
be amended, supplemented or otherwise modified from time to time, the "Note
Purchase Agreement"), between the Company and the Initial Holder.
NOW THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Warrants and the respective rights
and obligations thereunder of the Company and each Holder, the Company and the
Initial Holder agree as follows:
1. Certain Definitions. The following terms, as used in this
Agreement, have the following meanings:
(a) "Affiliate" has the meaning set forth in the Note
Purchase Agreement.
(b) "Business Day" means any day other than a Saturday,
Sunday or day on which banks in New York City are closed for general business.
(c) "Common Stock" has the meaning set forth in the
preamble.
(d) "Exercise Period" means the period beginning on the
date of issuance of the Warrants and ending at 5 p.m. New York City time on the
sixth anniversary of such date.
(e) "Exercise Price" means $15.40 per share subject to a
reduction to $14.00 per share if all amounts payable under the Notes have not
been repaid in full on or before December 31, 1996 and subject to further
adjustment as provided in Section 4.
2
(f) "Expiration Date" for the Warrants means the last day of
the Exercise Period.
(g) "Holder" has the meaning set forth in the preamble.
(h) "Notes" has the meaning set forth in the Note Purchase
Agreement.
(i) "Note Purchase Agreement" has the meaning set forth in
the Recital.
(j) "Person" means any individual, corporation, limited
liability company, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(k) "Register" has the meaning set forth in Section 7(b) of
this Agreement.
(l) "Transfer Restriction Termination Date" has the meaning
set forth in Section 7(a) of this Agreement.
(m) "Underlying Common Stock" means the shares of Common
Stock purchasable by a Holder upon the exercise of its Warrants.
(n) "Warrants" has the meaning set forth in the preamble.
(o) "Warrant Certificates" means the certificates evidencing
the Warrants.
2. Issue of Warrants. The Warrant Certificates shall be in
registered form only and substantially in the form attached hereto as Exhibit A
(including legends and endorsements as set forth in Exhibit A and as are not
inconsistent with the provisions of this Agreement, the Notes and the Note
Purchase Agreement) and shall be dated the date on which signed by an
authorized signatory of the Company. Warrant Certificates evidencing the
Warrants may be executed by any authorized officer of the Company. Warrant
Certificates evidencing 277,778 Warrants shall be delivered and registered in
the name of the Initial Holder upon execution of this Agreement.
3
3
3. Exercise Price, Exercise of Warrants.
(a) Exercise Price. Each Warrant shall entitle the
respective Holder of such Warrant, subject to the provisions of this Agreement,
to purchase one share of Common Stock at a purchase price per share equal to
the Exercise Price.
(b) Exercise of Warrants Generally.
(1) Exercise During Exercise Period. All Warrants not
exercised during the Exercise Period shall expire at 5 p.m. New York City time
on the Expiration Date.
(2) Liquidation Event. If, at any time prior to the
Expiration Date, the Company is to be liquidated, the Company shall give
written notice thereof to each Holder at the earliest practicable time;
provided, however, that, if the Company is to be liquidated in accordance with
the provisions of its Certificate of Incorporation, such notice shall be given
no less than 30 days prior to the date on which such liquidation is expected to
become effective.
(3) Method of Exercise; Payment of Exercise Price. In
order to exercise any or all of the Warrants represented by a Warrant
Certificate, the Holder thereof must surrender the Warrant Certificate to the
Company for exercise, with the reverse side of the Warrant Certificate duly
executed, together with any required payment of the Exercise Price for each
share of Underlying Common Stock to which such Holder is entitled, each such
payment of the Exercise Price to be made by check or wire transfer in
immediately available funds to an account designated by the Company; provided
that such Holder, in its sole discretion, may deduct or offset from such
payment any amounts outstanding under the Notes (to the extent such amounts are
then due and payable (after giving effect to applicable grace periods) to such
Holder). If a Holder elects to deduct or offset from such payments all or a
portion of the principal amount outstanding under the Note held by such Holder,
such Holder shall surrender its Note to the Company and if, following such
deduction or offset, any principal amount remains outstanding to such Holder,
the Company shall simultaneously issue to such Holder a note payable to the
order of such Holder in a principal amount equal to such remaining outstanding
amount with terms and provisions otherwise identical to the terms and
provisions of such Holder's original Note. If a Holder elects to exercise only
a portion of the Warrants represented by the Warrant Certificate or
Certificates registered in the Register in its name, then the remaining portion
of such Warrants shall be registered in the Register in such name or names
(subject to the limitation set forth in Section 7) as may be directed in
writing by such Holder and shall be returned to such Holder in the form of a
new Warrant Certificate for the number of Warrants that were not surrendered
and with terms and provisions otherwise identical to the terms and provisions
of such Holder's original Warrant Certificate. Upon surrender of a Warrant
Certificate and
4
4
the payment of the Exercise Price in conformity with the foregoing provisions,
the Company shall promptly, but in no event later than five Business Days after
the payment of the Exercise Price of the Warrants by such Holder, issue to the
Holder of such Warrant Certificate share certificates representing the
Underlying Common Stock to which such Holder is entitled, registered in the
name of such Holder or the name or names of such Affiliates of such Holder as
may be directed in writing by the latter, and shall deliver such share
certificates to the Person or Persons entitled to receive the same. Such
shares shall be deemed issued and outstanding on the date the Warrant is
exercised and the Exercise Price is paid to the Company, and the share
certificates shall be dated as of such date and the Holder shall be entitled to
exercise all of the rights of a shareholder as of such date.
(c) Exercise by Surrender of Warrant; Cashless Exercise. In
addition to the method of exercise set forth in Section 3(b)(3) above and in
lieu of any cash payment required thereunder, each Holder, at its sole
discretion, shall have the right at any time and from time to time to exercise
the Warrants in full or in part (provided that any exercise in part shall be in
a minimum amount of 50,000 Warrants or such lesser number of Warrants as may
then be held by such Holder) by surrendering its Warrant Certificate in the
manner specified in Section 3(b)(3) in exchange for the number of shares of
Common Stock equal to the product of (x) the number of shares as to which the
Warrants are being exercised multiplied by (y) a fraction, the numerator of
which is the difference between the fair market value of a share at exercise
(as defined hereafter) of the Common Stock less the Exercise Price and the
denominator of which is such fair market value. As used herein, "fair market
value" shall mean (A) (x) the average of the closing prices of the Common Stock
sales on all domestic exchanges on which the Common Stock may at the time be
listed, or, (y) if, there shall have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, (B) if on any day the Common Stock shall
not be so listed, (x) the average of the representative bid and asked prices
quoted in the NASDAQ System as of 3:30 p.m. New York City time, or (y) if on
any day the Common Stock shall not be quoted in the NASDAQ System, the average
of the high and low bid and asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporation or any similar successor organization, in each case under (A) and
(B) above averaged over the period of 15 consecutive Business Days immediately
prior to the date of exercise; provided that if the Common Stock is listed on
any domestic exchange the term "Business Days" as used in this sentence shall
mean business days on which such exchange is open for trading. If at any time
the Common Stock is not listed on any domestic exchange or quoted in the NASDAQ
System or the domestic over-the-counter market, the fair market value shall be
the fair market value as of the date of exercise, determined by a reputable
investment banking firm selected by the Holder exercising its Warrants pursuant
to this Section 3(c) and acceptable to the Company.
5
5
4. Adjustments. The Exercise Price and the number of shares of
Common Stock issuable upon exercise of each Warrant shall be subject to
adjustment from time to time as follows:
(a) In the event, at any time and from time to time, the
Company shall issue additional shares of Common Stock (or securities
convertible into or exchangeable for Common Stock) in a stock dividend, stock
distribution or subdivision paid with respect to Common Stock, or declare any
dividend or other distribution payable with additional shares of Common Stock
(or securities convertible into or exchangeable for Common Stock) with respect
to Common Stock or effect a split or subdivision of the outstanding shares of
Common Stock, the Exercise Price shall, concurrently with the effectiveness of
such stock dividend, stock distribution or subdivision, or the earlier
declaration thereof, be proportionately decreased, and the number of Underlying
Common Stock shall be proportionately adjusted so that, to avoid dilution of
each Holder's position, each Holder shall thereafter be entitled to receive at
such adjusted price an additional number of shares of the Company's Common
Stock which such Holder would have owned or would have been entitled to receive
upon or by reason of any of the events described above, had the Warrants been
exercised immediately prior to the happening of such event. If a dividend is
declared and such dividend is not paid, the Exercise Price shall again be
adjusted to be the Exercise Price in effect immediately prior to such record
date.
(b) If, at any time, the Company issues any additional
shares of Common Stock (or other securities convertible into or exchangeable
for Common Stock) for a price lower than $15.40 per share, the Exercise Price
with respect to the Warrants shall be automatically and immediately reduced to
such lower price, without any action or request on the part of either Holder.
The Company shall notify each Holder of such reduced Exercise Price in writing
prior to any such issuance of additional shares of Common Stock (or other
securities convertible into or exchangeable for Common Stock); provided that,
if the Company should enter into any agreement in connection with such issuance
of additional shares of Common Stock (or other securities convertible into or
exchangeable for Common Stock), the Company shall immediately notify each
Holder in writing thereof and, upon such issuance of shares of Common Stock (or
other securities convertible into or exchangeable for Common Stock), the
Exercise Price shall be automatically reduced to such reduced Exercise Price,
effective retroactively to the effective date of such agreement, whether or not
the Warrants have been exercised during the time period between the effective
date of such agreement and the date of such issuance (and if the Warrants have
been exercised during such period, the Company shall promptly pay to such
Holder the difference between the payment made by such Holder on such exercise
and the payment that would have been required if the Warrants were exercised at
such reduced Exercise Price). Notwithstanding the foregoing, the Exercise
Price shall not be reduced as contemplated by this Section 4(b) in connection
with the issuance by the Company of compensatory stock options to the extent
that (i) the exercise price of such compensatory stock options is not more than
ten percent
6
6
(10%) lower than $15.40 and (ii) such compensatory stock options, in the
aggregate, shall represent a right to purchase not more than two percent (2%)
of the Common Stock in any year (provided that in fiscal year 1995/1996 such
compensatory stock options issued to the Company's employees shall represent a
right to purchase in total not more than 850,000 shares of the Common Stock.
(c) In the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, the Exercise Price shall, concurrently
with the effectiveness of such combination or consolidation, be proportionately
increased and the number of Underlying Common Stock shall be proportionately
adjusted so that each Holder of any Warrant exercised after such date shall be
entitled to receive, upon payment of the same aggregate amount as would have
been payable before such date, the aggregate number of shares of Common Stock
which each Holder would have owned upon such exercise and been entitled to
receive, if such Warrant had been exercised immediately prior to the happening
of such combination or consolidation.
(d) In the event of any consolidation or merger of the
Company with or into another corporation or the conveyance of all or
substantially all of the assets of the Company to another corporation or entity
(other than any merger or sale which does not result in any reclassification or
change in the relative right or preference of the outstanding shares), the
Warrants shall thereafter be exercisable for the number of shares of capital
stock or other securities or property that was delivered at the time of such
consolidation, merger or conveyance to a holder of shares of Common Stock equal
in number to the shares of Underlying Common Stock that would have been
deliverable to such Holder if such Holder had exercised the Warrants
immediately prior to such consolidation, merger or conveyance; and, in any such
case, appropriate adjustment shall be made in the application of the provisions
herein set forth with respect to the rights and interests of each Holder
thereafter, to the end that the provisions set forth herein (including
provisions with respect to adjustments in the Exercise Price) shall thereafter
be applicable, as nearly as may be practicable, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of Warrants.
At the request of either Holder, the resulting or surviving entity in any such
consolidation or merger, if other than the Company, shall acknowledge in
writing such Holder's rights hereunder.
5. Loss or Mutilation. Upon receipt by the Company of a notice
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant Certificate and of indemnity satisfactory to the Company, and (in the
case of mutilation) upon surrender and cancellation thereof, then, in the
absence of notice to the Company that the Warrants represented thereby have
been acquired by a bona fide purchaser, the Company shall deliver to the Holder
of such Warrant Certificate, in exchange for or in lieu of the lost, stolen,
destroyed
7
7
or mutilated Warrant Certificate, a new Warrant Certificate of the same tenor
and for a like aggregate number of Warrants.
6. Reservation and Authorization of Common Stock. The Company
shall, at all times until the Warrants have been exercised or have expired,
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as is sufficient for the
purpose of permitting the exercise in full of all outstanding Warrants.
7. Limitations on Transfer; Warrant Transfer Books.
(a) Subject to the following provisions of this Section 7,
the Warrants may be sold, transferred, pledged, assigned, hypothecated or
otherwise disposed of (collectively, "transferred") to Affiliates of the Holder
of the Warrants at any time; provided that if at any time prior to the Transfer
Restriction Termination Date, any such transferee ceases to be an Affiliate of
such Holder, it shall promptly transfer the Warrants to such Holder or an
Affiliate of such Holder. In addition to such transfers, but subject to the
following provisions of this Section 7, the Warrants may be transferred by any
Holder thereof to any Person, whether or not such Person is an Affiliate of
such Holder after the earlier of (A) February 2, 1999, or (B) the date on which
the Underlying Common Stock has been registered under an effective registration
statement with the Securities and Exchange Commission ("SEC") (such earlier
date being the "Transfer Restriction Termination Date"). Transfers of the
Warrants under this Section 7 shall be in a minimum amount of 50,000 Warrants
or such lesser number of Warrants as may then be held by the Holder thereof.
(b) The Company shall cause to be kept at the principal
executive office of the Company a register (the "Register") in which the
Company shall provide for the registration of Warrant Certificates and
transfers or exchanges of Warrants as herein provided.
(c) In order to effect any transfer of any Warrants under
this Section 7, the Warrant Certificate evidencing such Warrants shall be
surrendered at the principal executive office of the Company for registration
of transfer in the Register. Every Warrant Certificate surrendered for
registration of transfer shall be duly endorsed and the Form of Assignment
contained therein completed and duly executed by the Holder thereof. In
addition, upon the surrender of a Warrant Certificate for registration of
transfer prior to the Transfer Restriction Termination Date, there shall be
delivered to the Company a certificate of an officer of the surrendering Holder
certifying (i) that the transferee is an Affiliate of such Holder, (ii) that
the transfer is not in violation of this Agreement and (iii) that the transfer
is pursuant to an exemption from registration under the Securities Act of 1933.
Prior to the registration of the Underlying Common Stock pursuant to an
effective registration statement filed with the SEC, the Company may also
require, upon the surrender
8
8
of a Warrant Certificate for registration of transfer to any Person other than
an Affiliate of the Holder thereof, delivery of an opinion of counsel,
reasonably satisfactory to the Company, stating that an exemption from
registration under the Securities Act of 1933, as amended, is available in
connection with such transfer and that the proposed transferee is not an (i) an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" or a "subsidiary" of a "holding company," or an "affiliate"
of a "holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (iii) a "public utility," as such term is
defined in the Federal Power Act, as amended.
(d) Upon the Company's receipt of a duly endorsed Warrant
Certificate (with the Form of Assignment contained therein duly executed),
together with any certificate or opinion required to be delivered therewith to
the Company pursuant to Section 7(c), the Company shall (i) accept such Warrant
Certificate and (ii) record the information contained therein in the Register.
Within five Business Days after such receipt, the Company, at its own expense,
shall execute and deliver to the transferee thereof, in exchange for the
surrendered Warrant Certificate, a new Warrant Certificate registered in the
name of such transferee and evidencing the number of Warrants transferred to
such transferee, and if the transferring Holder has retained any Warrants, a
new Warrant Certificate registered in the name of such transferring Holder and
evidencing the number of Warrants retained by it hereunder. Such new Warrant
Certificate shall be signed by an authorized officer of the Company, shall be
dated and effective as of the effective date specified in the Form of
Assignment for such transfer and shall otherwise be in substantially the form
of Exhibit A hereto. Upon surrender for registration of transfer of any
Warrant Certificate in accordance with Section 7(c) and acceptance and
recording thereof by the Company in the Register in accordance with this
Section 7(d), (x) the transferee thereunder shall be a party hereto, and shall
have all the rights and obligations of a Holder hereunder and shall be entitled
to the benefits of a Holder under this Agreement and (y) the Holder transferor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it, relinquish the rights and be released from the obligations
under this Agreement (and, in the case of a transfer of all or the remaining
portion of a transferring Holder's rights and obligations under this Agreement,
such Holder shall cease to be a party hereto).
(e) At the option of any Holder, Warrant Certificates may be
exchanged by surrendering such Warrant Certificate, duly endorsed by the Holder
thereof, at the principal executive office of the Company. Whenever any
Warrant Certificate is so surrendered for exchange by a Holder, the Company, at
its own expense, shall execute and deliver to such Holder a new Warrant
Certificate registered in the name of such Holder and evidencing the same
number of Warrants as the surrendered Warrant Certificate. Each new Warrant
Certificate issued under this Section 7(e) upon surrender of a Warrant
Certificate for exchange shall be the valid obligation of the Company,
evidencing the same obligations, and
9
9
entitled to the same benefits under this Agreement, as the Warrant Certificate
surrendered for exchange.
(f) No service charge shall be made for any registration of
transfer of, or exchange of, any Warrant Certificate; provided, however, that
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection such registration of
transfer or exchange.
8. No Voting or Dividend Rights. Prior to the exercise of the
Warrants, the Holder shall not be entitled to any rights of a shareholder of
the Company, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive right, but the
Holder shall receive all notices sent to shareholders of the Company, including
any notice of meetings of shareholders, and shall have the right to attend or
observe such meetings and the Holder shall be entitled to the full benefit of
and to exercise all rights of first offer as set forth in the Registration
Rights Agreement (as defined in the Note Purchase Agreement).
9. Notices. Any notice, demand or delivery authorized by this
Agreement shall be in writing and shall be sufficiently given or made upon
receipt thereof, if made by personal delivery or facsimile transmission (with
confirmed receipt thereof) followed by a hard copy, or four Business Days after
mailed, if sent by first-class mail, postage prepaid, or on the next Business
Day, if sent by overnight courier, addressed to the Holder or the Company, as
the case may be, at their respective addresses below, or such other address as
shall have been furnished in accordance with this Section 9 to the party giving
or making such notice, demand or delivery:
(a) If to the Company, to it at:
Global TeleSystems Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx 00xx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: General Counsel
(b) If to the Initial Holder, at:
Capital International Emerging
Markets Fund
0 Xxxxxxxxx xx xx Xxxxx
Xxxxxxxxxx L-2013; and
10
10
(c) If to any other Holder, at the address
specified in the Form of Assignment
contained in the Warrant Certificate
surrendered for registration of transfer in
connection with the transfer of Warrants
pursuant to which it became a Holder
hereunder;
provided, that all such notices and communications to the
Initial Holder and any other Holder shall be deemed to have
been delivered to such Holder if sent to Capital Group
Companies, Inc. in accordance with the provisions of this
Section 9, at:
Capital Group Companies, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
10. Applicable Law. This Agreement and each Warrant Certificate
issued hereunder shall be governed by, the laws of the State of New York
excluding (to the greatest extent a New York court would permit) any rule of
law that would cause application of the laws of any jurisdiction other than the
State of New York. The Company and the Holders hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. The Company irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
11. Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12. Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement in any number of separate counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11
11
13. Captions and Headings. The captions and headings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
14. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each Holder.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon the Holders, each future holder of the Warrants and the Company.
15. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
12
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By /s/ X. X. Xxxxxxxxx
----------------------------
Name: X. X. Xxxxxxxxx
CAPITAL INTERNATIONAL EMERGING
MARKETS FUND
By /s/ Xxxxx Xxxxxxx
----------------------------
Name: Xxxxx Xxxxxxx
Director
and /s/ Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx
Director
13
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE PURSUANT TO RULE 144 UNDER THE ACT
(OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT.
THIS WARRANT CERTIFICATE AND THE WARRANTS
REPRESENTED HEREBY ARE TRANSFERABLE ONLY
IN ACCORDANCE WITH THE PROVISIONS SET FORTH IN
THE WARRANT AGREEMENT REFERRED TO BELOW
(INCLUDING, WITHOUT LIMITATION,
REGISTRATION OF THE TRANSFER TO THE
TRANSFEREE IN THE COMPANY'S REGISTER)
WARRANTS TO PURCHASE COMMON STOCK
OF GLOBAL TELESYSTEMS GROUP, INC.
No. __ ___________ Warrants
This certifies that _________________________ is the owner of the
number of Warrants set forth above, each of which represents the right to
purchase from GLOBAL TELESYSTEMS GROUP, INC., a Delaware corporation (the
"Company"), one share of common stock, par value $0.0001 per share, of the
Company ("Common Stock"), subject to adjustment as set forth in the Warrant
Agreement referred to below, at the exercise price (the "Exercise Price") of
$15.40, subject to a reduction to $14.00 if all amounts payable under the Notes
have not been repaid in full on or before December 31, 1996 and subject to
further
14
A-2
adjustment as set forth in the Warrant Agreement. As provided in the Warrant
Agreement and subject to the terms and conditions set forth therein, the
Warrants are exercisable by surrender of this Warrant Certificate at the office
of the Company at Global TeleSystems Group, Inc., 0000 Xxxxxxxx Xxxxx, Xxxxx
Xxxxx, 00xx Xxxxx, XxXxxx, Xxxxxxxx 00000, with the Exercise Subscription Form
on the reverse hereof duly executed and with payment in full (by check or wire
transfer in immediately available funds to an account designated by the
Company) of the Exercise Price for the number of shares of Common Stock as to
which the Warrant(s) represented by this Warrant Certificate are exercised, or
by surrender of this Warrant Certificate at the same address in lieu of cash
payment. The Warrants will expire at 5 p.m. New York City time, and this
Warrant Certificate shall be void and all rights represented hereby shall
cease, on the Expiration Date.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of February 2, 1996, as it may be amended,
supplemented or otherwise modified from time to time (as so amended,
supplemented or modified, the "Warrant Agreement"), between the Company and
Capital International Emerging Markets Fund and subject to the terms and
provisions contained therein, to all of which terms and provisions the holder
of this Warrant Certificate consents by acceptance hereof. The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations,
15
A-3
duties and immunities thereunder of the Company and the Holders of the
Warrants. Capitalized defined terms used herein have the same meanings as in
the Warrant Agreement. Copies of the Warrant Agreement are on file at the
office of the Company and may be obtained by writing to the Company at the
following address: Global TeleSystems Group, Inc., 0000 Xxxxxxxx Xxxxx, Xxxxx
Xxxxx, 00xx Xxxxx, XxXxxx, Xxxxxxxx 00000, attention of the General Counsel.
The number of shares of Common Stock of the Company purchasable upon
the exercise of each Warrant and the Exercise Price are subject to adjustment
as set forth in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise
of Warrants and the payment of the Exercise Price therefor shall be validly
issued, fully paid and nonassessable.
Subject to the terms of the Warrant Agreement, this Warrant
Certificate and all rights hereunder are transferable by the Holder hereof, in
whole or in part, upon surrender of this Warrant Certificate duly endorsed and
with the Form of Assignment contained herein completed and duly executed by
such Holder, together with certificates and opinions as are required by the
Warrant Agreement, and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. As set forth in the Warrant
16
A-4
Agreement, upon any partial transfer, the Company shall issue and deliver to
such Holder a new Warrant Certificate or Certificates with respect to any
portion not so transferred. Dated: February 2, 1996
GLOBAL TELESYSTEMS GROUP, INC.
By___________________________
Name:
Title:
00
X-0
XXXX XX XXXXXXX XX XXXXXXX CERTIFICATE
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: Global TeleSystems Group, Inc.
The undersigned irrevocably exercises ____________ of the Warrants
evidenced by this Warrant Certificate for the purchase of shares of Common
Stock, par value $0.0001 per share, of GLOBAL TELESYSTEMS GROUP, INC. and
herewith:
____ (a) makes payment of $___________ (such payment being made by bank
check or wire transfer in immediately available funds to the account
designated by Global TeleSystems Group, Inc. and constituting the
Exercise Price (as defined in the Warrant Agreement) for the shares as to
which the Warrants evidenced by this Warrant Certificate are exercised);
or
____ (b) surrenders this Warrant Certificate in lieu of cash payment in
accordance with the terms of Section 3(c) of the Warrant Agreement, all
on the terms and conditions specified in this Warrant Certificate and the
Warrant Agreement herein referred to.
The undersigned hereby irrevocably surrenders this Warrant
Certificate and all right, title and interest therein to Global TeleSystems
Group, Inc. and directs that the shares
18
A-6
of Common Stock deliverable upon the exercise of said Warrants be registered or
placed in the name and at the address specified below and delivered thereto.
Date:___________, ____.
1
-------------------------------------
Signature of Owner
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
Securities and/or check to be issued to:
Please insert identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by
the within Warrant Certificate to be issued to:
Please insert identifying number:
Name:
Street Address:
City, State and Zip Code:
____________________
1 The signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
19
A-7
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of this
Warrant Certificate hereby sells, assigns and transfers, effective as of
___________, unto the Assignee(s) named below (including the undersigned with
respect to any Warrants constituting a part of the Warrants evidenced by this
Warrant Certificate not being assigned hereby) all of the right of the
undersigned under this Warrant Certificate, with respect to the number of
Warrants set forth below:
Names of Identifying Number of
Assignees Address Number of Assignee(s) Warrants
--------- ------- --------------------- --------
and does hereby irrevocably constitute and appoint _______________ the
undersigned's attorney to make such transfer on the books of Global TeleSystems
Group, Inc. maintained for that purpose, with full power of substitution. The
assignment is subject in all respects to the terms of the Warrant Agreement
referred to in the Warrant Certificate of which this Form of Assignment is a
part.
The Assignee represents and warrants that it is not (a) an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended, (b) a
"holding company" or a "subsidiary" of a "holding company", or an "affiliate"
of a "holding company", as such
20
A-8
terms are defined in the Public Utility Holding Company Act of 1935, as amended
or (c) a "public utility", as such term is defined in the Federal Power Act, as
amended.
Dated: ___________, ____
1
---------------------------------
[Assignor]
----------------------------------
[Assignee]
____________________
1 The signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
