SERIES B COMMON STOCK WARRANT
THESE SECURITIES (A) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933 AND (B) ARE SUBJECT TO THE TERMS OF
AND PROVISIONS OF AN AGREEMENT AND PLAN OF MERGER, DATED AS OF APRIL
29, 1996 BY AND AMONG POLISH TELEPHONES AND MICROWAVE CORPORATION,
PTMC ACQUISITION SUB, INC., TELEREUNION, INC. AND CERTAIN OF
STOCKHOLDERS OF TELEREUNION, INC. (AS SUCH AGREEMENT MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). COPIES OF THE AGREEMENT IS AVAILABLE AT THE OFFICES OF
POLISH TELEPHONES AND MICROWAVE CORPORATION.
WARRANT TO PURCHASE SHARES OF COMMON STOCK, $0.001 PAR VALUE PER SHARE, OF
TELSCAPE INTERNATIONAL, INC.
THIS CERTIFIES that, for value received, SV Capital Partners, L.P., a
Texas limited partnership (the "Warrantholder"), is entitled, upon the terms
and subject to the conditions hereinafter set forth, to purchase from Telscape
International, Inc., a Texas corporation (the "Company"), that number of fully
paid and nonassessable shares of the Company's common stock, $0.001 par value
per share (the "Common Stock"), at the purchase price per share (the "Exercise
Price") as set forth in Section 1 below. The number of shares and Exercise
Price are subject to adjustment as provided in Section 10 below.
1. NUMBER OF SHARES; EXERCISE PRICE; TERM.
(a) This Warrant is exercisable for 11,000 shares (the "Shares") of
Common Stock at a purchase price of $2.19 per share (the "EXERCISE
PRICE").
(b) Subject to the terms and conditions set forth in this Warrant,
this Warrant will be exercisable (i) upon the attainment by the
Company of an increase in net shareholders equity of the Company of
at least $5,000,000 computed by comparing (A) the net shareholders
equity of the Company on a pro forma basis after giving effect to the
acquisition of Telereunion, Inc., a Delaware corporation
("Telereunion") by the Company as of the date of the consummation of
such acquisition to (B) the net shareholders equity of the Company as
set forth in a consolidated balance sheet of the Company as of any
date occurring during the 24-month period immediately following the
consummation of the acquisition of Telereunion by the Company, which
balance sheet shall be contained in any periodic report of the
Company on Form 10-KSB or Form 10-QSB as filed with the Securities
and Exchange Commission or (ii) if the closing price for a share of
Common Stock quoted on The NASDAQ Stock Market or other reliable
public market (e.g., either the New York Stock Exchange or the
American Stock Exchange) equals or exceeds $12.00 for any ninety (90)
consecutive trading days. If the condition for vesting is not
satisfied within the 24 month period immediately following the
consummation of the acquisition of Telereunion by the Company, this
Warrant will expire and no longer be exercisable. In any event, this
Warrant will expire on and no longer be exercisable after May 16,
2003.
2. TRANSFER AND EXCHANGE. This Warrant and all options and rights under
this Warrant are transferable, as to all or any part of the number of
Shares issuable under the terms of this Warrant, by the holder of this
Warrant, in person or by duly authorized attorney, on the books of the
Company upon surrender of the Warrant at the principal offices of the
Company, together with the attached, properly endorsed, Assignment Form.
Absent any such transfer, the Company may deem and treat the registered
holder of this Warrant at any time as the absolute owner of the Warrant
for all purposes and will not be affected by any notice to the contrary.
If this Warrant is transferred in part, the Company will, at the time of
surrender, issue to the transferee a Warrant covering the number of
issuable Shares transferred and to the transferor a Warrant covering the
number of issuable Shares not transferred.
3. EXERCISE.
(a) This Warrant may be exercised as to all or any of the Shares as
to which this Warrant has vested and become fully exercisable at any
time or from time to time on or after the date on which such vesting
of the Warrant occurs as to such Shares, on any Business Day (as
defined in Section 9 below). In order to exercise this Warrant, in
whole or in part, the holder will deliver to the Company at its
principal offices (i) a written notice of such holder's election to
exercise its Warrant, substantially in the form of the Warrant
Exercise Notice attached to this Warrant, (ii) payment of the
Exercise Price, in an amount equal to the aggregate purchase price
for all Shares to be purchased pursuant to such exercise, and (iii)
the Warrant. Upon receipt of such notice, the Company will, as
promptly as practicable, and in any event within ten (10) Business
Days, execute, or cause to be executed, and deliver to such holder a
certificate or certificates representing the aggregate number of full
shares of Common Stock issuable upon such exercise. The stock
certificate or certificates so delivered will be in such
denominations as may be specified in such notice and will be
registered in the name of such holder, or such other name as
designated in such notice. A Warrant will be deemed to have been
exercised, such certificate or certificates will be deemed to have
been issued, and such holder or any other person or entity so
designated or named in such notice will be deemed to have become a
holder of record of such shares for all purposes, as of the date that
such notice (together with payment of the Exercise Price and the
Warrant) is received by the Company. If the Warrant has been
exercised in part, the Company will, at the time of delivery of such
certificate of certificates, either deliver to such holder a new
Warrant evidencing the rights of such holder to purchase a number of
Shares with respect to which the Warrant has not been exercised,
which new Warrant will, in all other respects, be identical to this
Warrant, or, at the request of such holder, appropriate notation may
be made on the Warrant and the Warrant returned to such holder.
(b) Payment of the Exercise Price will be made, at the option of the
holder, by (i) company or individual check (subject to collection),
certified or official bank check or (ii) cancellation of any debt
owed by the Company to the holder. If the holder surrenders a
combination of cash or cancellation of any debt owed by the Company
to the holder, the holder will specify the respective number of
shares of Common Stock to be purchased with each form of
consideration, and the foregoing provisions will be applied to each
form of consideration with the same effect as if the Warrant were
being separately exercised with respect to each form of
consideration; PROVIDED, HOWEVER, that a holder may designate that
any cash to be remitted to a holder in payment of debt be applied,
together with other monies, to the exercise of the portion of the
Warrant being exercised for cash.
(c) In lieu of exercising this Warrant in the manner set forth in
paragraph 3(b) above, this Warrant may be exercised by surrender of
the Warrant without payment of any other consideration, commission or
remuneration, together with the cashless exercise subscription form
at the end hereof, duly executed. The number of shares to be issued
in exchange for the Warrant shall be the product of (x) the excess of
the Market Price (as defined below) of the Common Stock on the date
of surrender of the Warrant and the exercise subscription form OVER
the Exercise Price per share and (y) the number of shares subject to
issuance upon exercise of the Warrant, divided by the Market Price of
the Common Stock on such date. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or
certificates in the name of the holder for the largest number of
whole shares of the Common Stock to which the holder shall be
entitled and, in lieu of any fractional share of the Common Stock to
which the Holder shall be entitled, pay cash equal to the fair value
of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine), and (ii) deliver
the other securities and properties receivable upon the exercise of
this Warrant, pursuant to the provisions of this Warrant.
(d) The market price of a share of the Common Stock (the "Market
Price") on any date of determination shall be (i) the average of the
last reported sale price of the Common Stock on the five business
days immediately preceding the date of determination as reported on
the Nasdaq Market ("NASDAQ") or (ii) if there is no such reported
sale on any of the dates in question, the average of the closing bid
and asked quotations as so reported on NASDAQ for such dates.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares will be issued upon the exercise of this
Warrant. In lieu of any fractional share to which a holder would
otherwise be entitled, such holder will be entitled to receive, at its
option, either (i) a cash payment equal to the excess of fair market value
for such fractional share above the Exercise Price for such fractional
share (as mutually determined by the Company and the holder) or (ii) a
whole share if the holder tenders the Exercise Price for one whole share.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares
upon the exercise of this Warrant will be made without charge to the
holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and
expenses will be paid by the Company.
6. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle the holder
to any voting rights, dividend rights or other rights as a shareholder of
the Company prior to exercise.
7. WARRANT REGISTER. The Company will, at all times while this Warrant
remains outstanding and exercisable, keep and maintain at its principal
office a register in which the registration, transfer, and exchange of the
Warrants will be provided for. The Company will not at any time, except
upon the dissolution, liquidation, or winding up of the Company, close
such register so as to result in preventing or delaying the exercise or
transfer of any Warrant.
8. LOST, STOLEN, MUTILATED, OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated, or destroyed, the Company will issue a new
Warrant of like denomination, tenor, and date upon receipt of and
appropriate affidavit and indemnity executed by the Holder. Any such new
Warrant will constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant
is at any time enforceable by any person or entity.
9. BUSINESS DAYS. A "Business Day" is any day other than Saturday,
Sunday, or legal holiday. If the last or appointed day for the taking of
any action or the expiration of any right required or granted in this
Warrant is not a Business Day, then such action may be taken or such right
may be exercised on the following Business Day.
10. ADJUSTMENTS.
(a) ADJUSTMENT EVENTS. The Warrant will be exercisable for the
number of shares of Common Stock in such manner that, following the
complete and full exercise of this Warrant, the amount of Common
Stock and other property issued to the holder of this Warrant will
equal the aggregate number of shares of Common Stock set forth in
Section 1(a), as adjusted, to the extent necessary, to give effect to
the following events:
(i) (A) The holder of this Warrant will be entitled to an
adjustment as set forth in Section 10(a)(i)(B), if at any time
or from time to time, the holders of any class of Common Stock
or any option, warrant, right, or similar security exercisable
into or exchangeable for Common Stock ("Common Stock
Equivalent") have received, or (on or after the record date
fixed for the determination of shareholders eligible to receive)
have become entitled to receive, without payment therefor, (I)
property (other than cash) by way of dividend or distribution;
or (II) property (including cash) by way of spin-off, split-up,
reclassification (including any reclassification in connection
with a consolidation or merger in which the Company is the
surviving corporation), recapitalization, combination of shares
into a smaller number of shares, or similar corporate
restructuring.
(B) In each such case, the holder of this Warrant will be
entitled to receive for each share of Common Stock issuable
under this Warrant as of the record date fixed for such
distribution, the greatest per share amount of property received
or receivable by any holder of any class of Common Stock or
Common Stock Equivalent. With respect to any subsequent
distribution, all such consideration receivable pursuant to this
Section 10(a)(i) will be deemed outstanding and owned by the
holder when determining the amount of consideration due to the
holder upon exercise of the Warrant.
(C) This Section 10(a)(i) does not apply to additional
shares of Common Stock issued as a stock dividend or in a stock-
split.
(ii) If at any time there occurs any stock split, stock
dividend, reverse stock split, or other subdivision of the
Common Stock, then the number of shares of Common Stock to
be received and the Exercise Price to be paid will be
proportionately adjusted.
(iii) (A) The following events will constitute
"Reorganization Events": (I) any reclassification or
change of outstanding shares of any class of Common
Stock or Common Stock Equivalent (other than a change
in par value, or from par value to no par value, or
from no par value to par value), or (II) any
consolidation of the Company with, or merger or share
exchange of the Company with or into, another entity,
or (III) any sale of all or substantially all of the
property, assets, business, income or revenue
generating capacity, or goodwill of the Company.
(B) Upon the occurrence of a Reorganization Event,
the Company, or the successor or other entity, as the
case may be, will provide that the holder of this
Warrant will receive the highest per share kind and
amount of consideration (including cash) received or
receivable upon such Reorganization Event by any
holder of any class of Common Stock or Common Stock
Equivalent for each Share issuable under this Warrant
immediately prior to such Reorganization Event (as
adjusted pursuant to Section 10(a)(i)). Any such
successor entity, which thereafter will be deemed to
be the Company for purposes of this Warrant, will
provide for adjustments that are as nearly equivalent
as may be possible to the adjustments provided for by
this Section 10.
(iv) In case any event occurs as to which the preceding
Sections 10(a)(i) through (iii) are not strictly
applicable, but as to which the failure to make any
adjustment would not fairly protect the purchase rights
represented by the Warrants in accordance with the
essential intent and principles of this Section 10, then,
in each such case, the holder and the Company will
negotiate for 30 days in good faith in an attempt to reach
a mutually agreeable solution. If, at the end of such 30-
day period the Company and the holder have not reached such
an agreement, the holder may appoint an independent
investment bank or firm of independent public accountants
reasonably acceptable to the Company, which will give its
opinion as to the adjustment, if any, on a basis consistent
with the essential intent and principles established in
this Section 10, necessary to preserve the purchase rights
represented by this Warrant. Upon receipt of such opinion,
the Company will promptly deliver a copy of such opinion to
the holder and will make the adjustments described in such
opinion. The fees and expenses of such investment bank or
independent public accountants will be borne equally by the
Company and the holder.
(b) ROUNDING. Any calculation under this Section 10 will be made to
the nearest one ten-thousandth of a share and the number of issuable
Shares resulting from such calculation will be rounded up to the next
whole share of Common Stock comprising issuable Shares.
(c) NOTICE OF EVENTS.
(i) In the event of (A) any setting by the Company of a record
date with respect to the holders of any class of the capital
stock of the Company for the purpose of determining which of
such holders are entitled to dividends, repurchases of
securities or other distributions, or any right to subscribe
for, purchase or otherwise acquire any shares of such capital
stock or other property or to receive any other right; or (B)
any capital reorganization of the Company, or reclassification
or recapitalization of the capital stock of the Company or any
transfer of all or a majority of the assets, business, or
revenue or income generating capacity of the Company, or
consolidation, merger, share exchange, reorganization, or
similar transaction involving the Company; or (C) any voluntary
or involuntary dissolution, liquidation, or winding up of the
Company; or (D) any proposed issue or grant by the Company of
any capital stock of the Company, or any right or option to
subscribe for, purchase, or otherwise acquire any capital stock
of the Company (other than the issue of Issuable Warrant Shares
upon exercise of this Warrant), then, in each such event, the
Company will deliver or cause to be delivered to the holders a
notice specifying, as the case may be, (I) the date on which any
such record is to be set for the purpose of such dividend,
distribution, or right, and stating the amount and character of
such dividend, distribution, or right; (II) the date as of which
the holders of record will be entitled to vote on any
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding-up; (III) the date on which any such
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, share exchange, conveyance, dissolution,
liquidation, or winding-up is to take place and the time, if any
is to be fixed, as of which the holders of record of any class
of capital stock of the Company will be entitled to exchange
their shares of capital stock for securities or other property
deliverable upon such event; (IV) the amount and character of
any capital stock, property, or rights proposed to be issued or
granted, the consideration to be received therefor, and, in the
case of rights or options, the exercise price thereof, and the
date of such proposed issue or grant and the persons or class of
persons to whom such proposed issue or grant will be offered or
made; and (V) such other information as the holders may
reasonably request. Any such notice will be deposited in the
United States mail, postage prepaid, at least thirty (30) days
prior to the date therein specified, and notwithstanding
anything in this Agreement or this Warrant to the contrary the
holders may exercise this Warrant within thirty (30) days from
the receipt of such notice.
(ii) If there is any adjustment as provided above in Section
10(a), the Company will immediately cause written notice thereof
to be sent to the holder, which notice will be accompanied by a
certificate of the independent public accountants of the Company
setting forth in reasonable detail the facts requiring any such
adjustment in the number of shares receivable after such
adjustment. At the request of the holder and upon surrender of
this Warrant of such holder, the Company will reissue this
Warrant of such holder in a form conforming to such adjustments.
11. ASSURANCES. The Company will not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of the holder against impairment or dilution. Without limiting the
generality of the foregoing, the Company will, with respect to this
Warrant, (i) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of all liens,
encumbrances, equities, and claims and (ii) use its best efforts to obtain
all such authorizations, exemptions, or consents from any public
regulatory body having jurisdiction as may be necessary to enable the
Company to perform its obligations under this Warrant.
12. MISCELLANEOUS.
(a) EMPLOYMENT OF HOLDER. The parties hereto acknowledge and agree
that the issuance, vesting and exercise of this Warrant is in no way
tied to or conditioned upon the employment by the Company or any
affiliate of the Company of the holder hereof or any person
affiliated with or related to the holder hereof.
(b) SUCCESSORS. This Warrant will be binding upon any
successors or assigns of the Company.
(C) GOVERNING LAW. THIS WARRANT WILL CONSTITUTE A CONTRACT UNDER
THE LAWS OF TEXAS AND FOR ALL PURPOSES WILL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES OR ANY OTHER
PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
(d) ATTORNEY'S FEES. In any litigation, arbitration or court
proceeding between the Company and the holder relating hereto, the
prevailing party will be entitled to reasonable attorneys' fees and
expenses incurred in enforcing this Warrant.
(e) NOTICE. Any notice required or permitted under this Warrant
will be deemed effectively given upon personal delivery to the party
to be notified or upon deposit with the United States Post Office, by
certified mail, postage prepaid and addressed to the party to be
notified at the address indicated below for such party, or at such
other address as such other party may designate by ten-day advance
written notice.
IN WITNESS WHEREOF, TELSCAPE INTERNATIONAL, INC. has caused this Warrant
to be executed by its officer thereunto duly authorized.
Dated: October 24, 1997
TELSCAPE INTERNATIONAL, INC.
By:
Title:
Address: 0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: President
WARRANTHOLDER:
SV Capital Partners, L.P.
By:
Its:
WARRANT EXERCISE NOTICE
To: Telscape International, Inc.
1. The undersigned hereby elects to purchase shares of
Common Stock (the "SHARES"), of Telscape International, Inc. (the "COMPANY")
pursuant to the terms of the attached Warrant, and tenders payment of the
purchase price in cash or cancellation of indebtedness owed by the Company to
the undersigned, as provided in Section 3(b), and/or by surrender of this
Warrant (or a portion hereof) in accordance with Section 3(c) of such Warrant,
in each case as indicated in the accompanying instruction letter from the
undersigned.
2. Please issue a certificate or certificates representing said Shares
in the following names:
NAME NUMBER OF ISSUABLE SHARES
3. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the following names:
NAME NUMBER OF SHARES
Dated: , 19 .
By:
[Name]
[Title, if applicable]
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to (Please Print):
whose address is
Dated: , 19__.
Xxxxxx's Signature:
Holder's Address:
Signature Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
