STARTEC GLOBAL COMMUNICATIONS CORPORATION
UNDERWRITERS' WARRANT AGREEMENT
UNDERWRITERS' WARRANT AGREEMENT dated as of ___________, 1997
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 2,600,000
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 premises,
which are incorporated into the terms hereof, of the payment by Xxxxxx and
Boenning to the Company of $1,100 and $400 respectively for the Warrants to be
purchased 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 (as that term is defined in Section 3
hereof) of the Warrants issued hereunder are hereby granted the right to
purchase, by exercising the Warrants, 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 no later
than 5:00 p.m., Washington, DC time, on _________, 2002 (the fifth 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
Warrant 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 Section 8 hereof; provided, however, that if the fair
market value of one share of Stock is greater than the Exercise Price (at the
date of calculation as set forth below), in lieu of exercising a Warrant for
cash, the Holder may elect to receive Warrant Shares equal to the value (as
determined below) of the Warrant (or the portion thereof being canceled) by
surrender of the Warrant Certificate at the principal office of the Company
together with the properly completed and executed Form of Election to Purchase
in the form attached as Exhibit B, in which event the Company shall issue to the
Holder a number of Warrant Shares computed using the following formula:
Y(A-B)
X = ------
A
Where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of shares of 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
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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 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 (except for 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). 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,
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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, hypothecated or otherwise disposed of, in whole or in
part, to (i) any person who is an officer, director, employee, agent or other
affiliate of the Underwriters or (ii) such other person as may be approved by
counsel for the Company (a "Permitted Transferee"), provided such transfer,
assignment, hypothecation or other disposition is made in accordance with the
provisions of the Securities Act of 1933, as amended (the "1933 Act"). Any
transfer of a Warrant Certificate shall be effected by delivery of such Warrant
Certificate at the principal office of the Company, together with the properly
completed and executed Form of Assignment in the form attached as Exhibit C.
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
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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.
B. DEMAND REGISTRATION. On any one (1) occasion commencing
at any time one (1) year after the Effective Date and expiring five (5) 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) 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
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," or any stated percentage, in reference to
the Holders of the Warrants and/or Warrant Shares or any category thereof, shall
mean the Holders of Warrant Shares and Warrants or category thereof
representing, in the aggregate, in excess of fifty percent (50%) or such other
stated percentage of the then-outstanding Warrant Shares and Warrant Shares or
category thereof into which then-outstanding Warrants or category thereof 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. 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. No
registration statement filed pursuant to this demand registration provision
(without the consent of the Holders holding a Majority of the Warrant Shares
requested to be registered pursuant to such registration statement) may relate
to any securities other than the Warrant Shares, and no other securities may be
sold incidentally to any such underwritten public offering of Warrant Shares so
registered.
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C. PIGGYBACK REGISTRATION. If, at any time within seven (7)
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 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 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
Warrant Shares registered under such registration statement; provided, however,
that the Holders shall not be entitled to piggyback registration rights in
respect of any registration statement filed pursuant to the demand registration
rights granted to Signet Bank pursuant to that certain Warrants Agreement dated
as of July 1, 1997. 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
registration rights apply objects to such rights, such objection shall preclude
such inclusion. However, in the event (i) the Holders of Warrant Shares or
Warrants do not constitute at least forty percent (40%) of the Warrant Shares to
be sold by Holders requesting to sell shares in such offering, or (ii) such
offering is pursuant to a registration pursuant to a demand for registration
made by Signet Bank, the Company will, within one hundred eighty (180) days of
completion of such subsequent underwriting, file at its sole expense, a
registration statement relating to such excluded 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 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 Warrant Shares allocated among the
Underwriters and the Holders and any other selling securityholders in proportion
to the
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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 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 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 Warrant 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.
(3) The Company will take all necessary and
reasonable steps which may be required to
qualify or register the 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.
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(4) The Company shall indemnify the Holder(s) of
the 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 "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 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 is an underwriting, the Company
shall furnish to each Holder
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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 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' letters, 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
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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 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 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
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 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
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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 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
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
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adjustment by the Exercise Price in effect prior to such adjustment and dividing
the product so obtained by the applicable adjusted Exercise Price.
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 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 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.
Irrespective of any adjustments or changes in the Exercise Price or the number
of Shares 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
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the Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Exercise Price as so adjusted; (ii) the number of Shares purchasable upon
exercise of each Warrant, after such adjustment; and (iii) a brief statement of
the facts accounting for such 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
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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 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 charge, 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
Warrant 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 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
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Stock to be listed and quoted (subject to official notice of issuance) on all
securities exchanges or associations on which the Stock issued to the public in
connection with the Public Offering may then be listed or quoted.
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.
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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 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 (a) if
to a Holder of the Warrants, to the address of such Holder as shown on the books
of the Company or (b) 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 other than the Underwriters.
15. SUCCESSORS. All the covenants and provisions of this
Agreement 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 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 hereby irrevocably waives any objection to such exclusive
jurisdiction or inconvenient forum. Any such process or summons to be served
upon any of the
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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 provided for in Section 13 hereof. Such mailing
shall be 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 Holders 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
Agreement 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.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
STARTEC GLOBAL COMMUNICATIONS
CORPORATION
By:_________________________________
Print Name:_________________________
Title:______________________________
XXXXXX, XXXXX XXXXX, INCORPORATED
By:_________________________________
Print Name:_________________________
Title:______________________________
BOENNING & SCATTERGOOD, INC.
By:_________________________________
Print Name:_________________________
Title:______________________________
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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
(the "Company") at the initial 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.
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:____________________________
EXHIBIT B
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
Identifying Number of Holder)
EXHIBIT C
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
Identifying Number of Holder)
