AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 2000
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
URSUS TELECOM CORPORATION
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
Florida 65-398306
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
440 SAWGRASS CORPORATE PARKWAY, SUITE 112, SUNRISE, FLORIDA 33325
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 846-7887
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Luca M. Giussani Copy to:
PRESIDENT AND CEO James R. Tanenbaum, Esq.
URSUS TELECOM CORPORATION Stroock & Stroock & Lavan LLP
440 Sawgrass Corporate Parkway First Union Financial Center
Suite 112 200 South Biscayne Boulevard
Sunrise, Florida 33325 Miami, Florida 3313`1-2385
(954) 846-7887 (305) 358-9900
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH CLASS MAXIMIUM MAXIMIUM
OF SECURITY TO BE AMOUNT TO BE AGGREGATE OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE(1) PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value 945,113 $19.28125 $18,220,960 $4,810.86
(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, based on the average of the high and low prices of the common stock on
the Nasdaq National Market on March 6, 2000.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 13, 2000
<PAGE>
PRELIMINARY PROSPECTUS - SUBJECT TO COMPLETION, DATED MARCH 13, 2000
945,113 SHARES
URSUS TELECOM CORPORATION
COMMON STOCK
This prospectus relates to the offer and sale of up to 945,113 shares of common
stock $.01 par value per share from time to time by holders of the Company's
common stock and common stock underlying warrants granted by the Company. The
selling shareholders identified on page 20 of this prospectus may offer and
sell from time to time an aggregate of up to 945,113 shares of common stock,
including 329,998 shares of common stock underlying warrants granted by us.
We will receive proceeds of $5,150,187 in the event that all the warrants are
exercised by the selling shareholders at exercise prices ranging from $12.9375
to $20.64 per share. We will not receive any proceeds from the sale to the
public of the 945,113 shares of Ursus common stock by the selling shareholders.
The exercise price and the other terms of the warrants were determined by
negotiation by Ursus and were based upon the then current market price of the
common stock and the general market conditions at that time. However, the
exercise price of the warrants should not to be deemed indicative of the current
value of the common stock.
The common stock is listed on the Nasdaq National Market under the symbol
"UTCC." On March 6, 2000, the last reported sales price as reported by the
Nasdaq National Market was $19.1875 per share.
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell the common stock covered by this prospectus
until the registration statement filed with the SEC is effective. This
prospectus is not an offer to sell the common stock and it is not soliciting an
offer to buy the common stock in any state where the offer or sale is not
permitted.
Investing in the common stock involves a high degree of risk. Consider carefully
the "Risk Factors" beginning on page 5.
Neither the SEC nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is March , 2000
<PAGE>
URSUS TELECOM CORPORATION
TABLE OF CONTENTS
PAGE
Where You Can Find More Information....................................... 1
Summary of Ursus' Business................................................ 2
Business Risks............................................................ 5
Recent Developments...................................................... 18
Special Note Regarding Forward-Looking Information....................... 19
Use of Proceeds.......................................................... 19
Selling Shareholders..................................................... 19
Plan of Distribution..................................................... 20
Legal Matters............................................................ 21
Experts.................................................................. 21
Reports to Shareholders.................................................. 22
Glossary of Terms........................................................ 23
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other documents with the
SEC. You may read and copy any document we file at the SEC's public reference
rooms at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the
SEC at 1-800-SEC-0330 for further information on public reference rooms. Our
reports, proxy statements and other information filed with the SEC are also
available to the public from our web sites at www.ursustele.com or
www.ursustel.net or at the SEC's web site at www.sec.gov.
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding Ursus and its common stock, including certain exhibits and schedules.
You can get a copy of the registration statement from the sources listed above.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until the selling shareholders sell all of the shares:
(1) Annual Report on Form 10-K for the year ended March 31, 1999
(File No. 333-46197);
(2) Quarterly Report on Form 10-Q for the three months ended
June 30, 1999;
(3) Quarterly Report on Form 10-Q for the three and six months
ended September 30, 1999;
(4) Quarterly Report on Form 10-Q for the three and nine months
ended December 31, 1999;
(5) Current Report on Form 8-K dated August 19, 1999; and
(6) Current Report on Form 8-K dated February 18, 2000.
You may request a copy of these and any future documents filed by Ursus,
at no cost, by writing or telephoning us at the following address:
Ursus Telecom Corporation
440 Sawgrass Corporate Parkway, Suite 112
Sunrise, Florida 33325
Attn: Investor Relations
(954) 846-7887
<PAGE>
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE SEC
(REGISTRATION NO. 333-___). YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED
BY REFERENCE OR PROVIDED IN THIS PROSPECTUS OR ANY SUPPLEMENT. WE HAVE
AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THE SELLING
SHAREHOLDERS WILL NOT MAKE AN OFFER OF THEIR SHARES OF URSUS COMMON STOCK IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
FOR YOUR CONVENIENCE, TECHNICAL TERMS AND ACRONYMS WHEN FIRST USED IN
THIS REGISTRATION STATEMENT ARE BOTH DEFINED WHEN FIRST USED AND DEFINED IN THE
GLOSSARY COMMENCING ON PAGE 23.
SUMMARY OF URSUS' BUSINESS
We are a provider of international telecommunications services and
offer a broad range of discounted international and enhanced telecommunication
services, including United States originated long distance service, direct-dial
international service, Internet telephony and voice over the Internet Protocol
("VOIP") typically to small and medium-sized businesses and travelers. We have
expanded our geographic coverage in Europe, Japan, Central and South America
through our acquisition of Access Authority, Inc. ("Access") in September 1998.
We intend to continue to capitalize on the increased demand for high-quality
international telecommunications services resulting from the globalization of
the world's economies and the worldwide trend toward telecommunications
deregulation.
Our primary service is call reorigination; however, we increasingly
have been migrating calls to direct access using Internet Protocol ("IP") and
other methods. We also provide service to other carriers and resellers. Our
retail customer base, which includes corporations and individuals, is primarily
located in South Africa, Latin America, the Middle East (Lebanon and Egypt),
Germany, Japan and New Zealand. We operate a switched-based digital
telecommunications network out of our primary switching hub located in Sunrise,
Florida.
We have also developed an e-commerce site known as theStream.com. Our
goal for theStream.com is to become a leading communications portal on the
Internet and a one-stop e-commerce shop for global telecommunications services.
The site is running on an IBM RS/6000 server system, which incorporates a series
of high quality and client-friendly service options such as VOIP, PC to phone,
phone to phone and other sophisticated web-centric applications. The site is
anticipated to facilitate access to a host of value-added telecommunications
products and services. We have completed the first two phases of the project and
anticipate that a full marketing effort will begin in the near future. Currently
the site is operating without strong marketing support, and, therefore, we have
not generated significant revenues as of the filing of this Form S-3.
We operate through a network of independent agents and wholesalers that
allow us to maintain a significant competitive advantage. Each agent uses a
proprietary agent support system developed and provided by us to provide
marketing, customer support, billing and collections, in local language and
time. We supply each of our agents with near real-time data for customer
management, usage analysis and billing from our local and wide area network.
Through our agent network, we are developing and maintaining close relationships
with vendors of telephone systems such as Siemens, Plessey and Alcatel in key
markets in order to promote our line of telecommunications services.
In addition, we provide an array of basic and value added services to
our customers, which include:
o long distance international telephone services.
o direct dial access for corporate customers.
o dedicated access via a leased line for high volume users.
o calling cards.
o abbreviated or speed dialing.
o international fax store and forward.
o switched Internet services.
o itemized and multicurrency billing.
o follow me calling or call forwarding.
o enhanced call management and reporting services.
o Web Centric PC to phone services.
o Web Centric phone to phone services.
On September 17, 1998, we purchased all the issued and outstanding common
stock of Access for $8 million in cash. Access provides international long
distance telecommunication services, including call reorigination, domestic
toll-free access and various value-added features to small and medium sized
businesses and individuals in over 38 countries. Access markets its services
through an independent and geographically dispersed sales force consisting of
agents and wholesalers. Access operated a switching facility in Clearwater,
Florida, which has since been integrated into our switch facility in Sunrise,
Florida.
We believe that our proprietary software system provides an efficient
infrastructure for back room processing, gives us a strategic advantage over our
competitors and will facilitate the rapid and economical consolidation of
acquired competitors, if any. To remain competitive, we plan to do the
following:
o Increase sales to existing customers.
o Expand the reach and distribution capabilities of our telephone
service through our e-commerce web site, theStream.com.
o Provide wholesale services to other carriers.
o Enter into selected acquisitions.
o Expand the business generated by our existing agents.
o Use a portion of the sale of proceeds from our sale of common stock
and shares of common stock underlying warrants granted by us to
the selling shareholders identified herein, which was consummated
on February 10, 2000 (the "Private Placement"), to expand our
primary digital switching platform and network access "nodes" by
using a hybrid network of Internet, Intranet and circuit-based
facilities.
o A "node" is a specially configured multiplexer which
provides the interface between the local public switched
telephone network where the node is located and a switch.
The local public switched telephone network can be accessed
by the public through private lines, wireless systems and
pay phones. A node collects and concentrates call traffic
from its local area and transfers it to a switch via
private line for call processing. Nodes permit us to extend
our network into new geographic locations by accessing the
local public switched telephone network without deploying a
switch.
o Enhance our capabilities as a "direct access" provider by locating
switching platforms at network centers of major telecommunications
providers, such as MCI WorldCom, Cable and Wireless and other
carriers by deploying smaller network access nodes in less
populated service areas.
o Direct access is a means of accessing a network through the
use of a permanent point-to-point circuit typically leased
from a facilities-based carrier. The advantages of direct
access include (1) simplified premises-to-anywhere calling,
(2) faster call set-up times and (3) potentially lower
access and transmission costs, provided there is sufficient
traffic over the circuit to generate economies of scale.
o Exploit our market penetration and technological sophistication by
using IP telephony technology, which processes data and/or voice
transmission over the Internet and Intranet.
o IP telephony creates the opportunity to bypass the switched
telephone network by using cost-effective packet switched
networks such as private Intranets and/or the public
Internet for the delivery of fax and voice communications.
o Use IP telephony technology concurrently with call reorigination.
o Deploy IP telephony technology where feasible in order to create a
hybrid network capable of carrying significant amounts of customer
traffic on a low cost platform with a modest initial capital
investment.
We currently operate points of presence located in the cities of New York,
New York, Ft. Lauderdale, Florida, Frankfurt, Germany, Prague, Czechoslovakia
and the countries of Argentina, Peru, South Africa, Greece and Lebanon. Some of
these points of presence are owned by us and others are leased. The points of
presence are scaleable and flexible platforms designed for interconnection with
the our network and are built primarily using tier-1 IP telephony vendor
equipment such as Nortel, VocalTec and Cisco. The scaleability of the points of
presence permits us to quickly increase capacity in discrete increments at
relatively low cost, either for a geographic region or a customer. In addition,
the point of presence architecture is flexible and designed to easily integrate
and support new services.
Our interactive communications portal, theStream.com, acts as a
single-source, on-line solution for our users and on-line marketing agents.
Through our interactive communications portal, our users can:
o view a description of all of our services, including pricing
information.
o sign up for any of our services, including PC-to-phone, Global
Roaming and phone-to-phone.
o download our software plug-in for our browser based PC-to-phone
application.
o recharge their account, either by entering their credit card
information or authorizing automatic recharging.
o send a PC-to-phone call.
o check real-time billing and usage information.
o communicate by e-mail with a theStream.com customer service
representative.
o view answers to frequently-asked questions through our interactive
communications portal.
o view a description of our on-line agent program.
o sign up to serve as an on-line agent.
o receive marketing tools to put on their own Web sites.
o monitor their daily results.
o view trends.
o view commissions by promotions.
TheStream.com is a fully integrated component of our global network,
connected and interfaced on a real-time basis with our switches, routers,
billing systems and other enterprise systems. Our customers are able to procure
telecom and enhanced services in virtually every country throughout the world,
view their account history and review their billing in a real-time environment.
In summary, we intend to become a significant provider of international
telecommunications services within emerging and deregulating markets. We plan to
maximize our profit potential by (1) leveraging our existing infrastructure and
market penetration, (2) expanding our customer base, (3) growing our Global IP
carrier to carrier business and (4) capitalizing on marketing channels such as
the Internet. We believe that we can gain strategic advantages while
capitalizing on the opportunities presented by deregulation and technological
advances in the global telecommunications industry by using our independent
agent network, efficient back office systems and favorable relationships with
some U.S. telecommunications carriers.
FACTORS AFFECTING URSUS'
BUSINESS, OPERATING RESULTS, AND FINANCIAL CONDITION
IN ADDITION TO OTHER INFORMATION IN THIS REGISTRATION STATEMENT AND
INFORMATION INCORPORATED BY REFERENCE, THE FOLLOWING RISK FACTORS SHOULD BE
CAREFULLY CONSIDERED IN EVALUATING URSUS AND OUR BUSINESS BECAUSE SUCH FACTORS
CURRENTLY MAY HAVE A SIGNIFICANT IMPACT ON OUR BUSINESS, OPERATING RESULTS, AND
FINANCIAL CONDITION. AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND
ELSEWHERE IN THIS REGISTRATION STATEMENT, ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS.
BUSINESS RISKS
OUR BUSINESS DEPENDS SUBSTANTIALLY UPON INDEPENDENT EXCLUSIVE AND NON EXCLUSIVE
AGENTS.
We provide our services through a network of independent exclusive and
non-exclusive agents which market our services on a commission basis. Our
international market penetration primarily reflects the marketing, sales and
customer service activities of our agents. We enter into exclusive relationships
with some of our agents. The success of our business within the exclusive
territory largely depends on the effectiveness of the local agent in conducting
its business.
As of December 31, 1999, we had approximately 207 active agents operating
in approximately 48 countries. Of our 207 agents, 6 were exclusive agents. The
use of agents exposes us to significant risks. We depend on the continued
viability and financial stability of our agents. For the nine months ended
December 31, 1999 and 1998, four major agents generated approximately 26.3% and
47.8% of our revenues, respectively. One single South African agent accounted
for approximately 14.2% and 24.5% of our revenues during the nine months ended
December 31, 1999 and 1998, respectively.
Our continuing success depends in substantial part on our ability to
recruit, maintain and motivate our agents. We are subject to competition in the
recruiting of agents from other organizations that use agents to market their
products and services. We could lose one or more significant agents in the
future. Our business may be harmed if one or more of these agents suffered
financial problems, terminated its relationship with us, or could not satisfy
customers. We could be exposed to lost revenues, bad debt expense, lost
customers, potential liability under contracts the agents commit us to perform,
and damage to our reputation.
Under certain local laws our exclusive arrangements with an agent might be
difficult or expensive to terminate. We have entered into non-compete agreements
with our agents which prohibit their competition with us during their engagement
and for a period of time after termination. However, we cannot assure you that
any particular non-compete agreement will be enforceable as a practical matter
or under the applicable laws of the jurisdiction in which an agent operates.
INCREASED COMPETITION AND DEREGULATION MAY LEAD TO LOWER PROFITS.
Historically, we have derived a significant portion of our revenues by
providing call reorigination services. We believe that our industry has reached
a stage of development where the higher gross profit margins associated with our
early stages have moved to more moderate gross profit margins. Deregulation and
increased competition may cause the pricing advantage of call reorigination
relative to conventional international long distance service to diminish and
disappear in certain markets. Increased competition is likely to cause
international rates to decrease.
We may respond to the changing competitive environment by making certain
pricing, service or marketing decisions or entering into acquisitions or
strategic alliances. These actions could have a material adverse effect on our
business, financial condition and results of operations. To maintain our
customer base and attract new business we may have to offer direct access or IP
telephony services to certain destinations at prices significantly below the
current prices charged for call reorigination. In some markets, we may try to
maintain our existing call reorigination customers and attract new customers
through the use of direct access "call-through access methods," including IP
telephony. Call-through access methods provide international long distance
service through conventional long distance on "transparent" call origination.
Our overall gross profit margins may fluctuate in the future based on (1)
our mix of minutes sold to other carriers and international long distance
services sold directly to end-user customers and (2) our percentage of calls
using direct access compared to call reorigination. As a result of the foregoing
factors, we may experience materially adverse circumstances that could harm our
business and reduce our common stock price.
WE INTEND TO PURSUE NEW STREAMS OF REVENUE, WHICH WE HAVE NOT ATTEMPTED TO
GENERATE BEFORE AND WHICH MAY NOT BE PROFITABLE.
We intend to pursue revenue from new Web-based opportunities, such as
banner advertising, as well as revenue-sharing opportunities. We have not
previously attempted to generate this type of revenue. We intend to devote
significant capital and resources to create these new revenue streams and we
cannot ensure that these investments will be profitable.
IF WE FAIL TO ESTABLISH AND MAINTAIN REVENUE SHARING AND OTHER RELATIONSHIPS OUR
ABILITY TO INCREASE OUR SALES WOULD SUFFER.
We currently have strategic relationships with a number of Portals and
Internet service providers. We depend on these relationships to:
o distribute our products to potential customers.
o increase usage of our services.
o build brand awareness.
o cooperatively market our products and services.
We believe that our success depends, in part, on our ability to develop and
maintain strategic relationships with leading Internet companies and computer
hardware and software companies, as well as key marketing distribution partners.
In cases where our products and services are integrated into our strategic
partners' product and service offerings, our ability to increase sales depends
upon a timely release of these offerings. If any of our strategic relationships
are discontinued or if the release of these partners' products and services that
integrate our products and services are delayed, sales of our products and
services and our ability to maintain or increase our customer base may be
substantially diminished.
WE MAY NOT BE ABLE TO SUCCEED IN THE INTENSELY COMPETITIVE MARKET FOR OUR
SERVICES.
The market for Internet voice, fax and other value-added services is
extremely competitive and will likely become more competitive. IP and Internet
telephony service providers, such as IBASIS, GRIC Communications and ITXC Corp.,
route traffic to destinations worldwide and compete directly with us. Also,
Internet telephony service providers, such as Net2Phone and Delta Three that
focus on retail customers compete directly with us. In addition, major
telecommunications carriers, such as AT&T, Deutsche Telekom, MCI WorldCom and
Qwest Communications, have all entered or announced plans to enter the Internet
telephony market. Many of these companies are larger than we are and have
substantially greater managerial and financial resources than we do. Intense
competition in our markets can be expected to continue to put downward pressure
on prices and adversely affect our profitability. We offer no assurance that we
will be able to compete successfully against our competitors and we may lose
customers or fail to grow our business as a result of this competition.
IF THE MARKET FOR INTERNET TELEPHONY AND NEW SERVICES DOES NOT DEVELOP AS WE
HAVE PROJECTED, OR DEVELOP MORE SLOWLY THAN PROJECTED, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS WILL BE MATERIALLY AND ADVERSELY AFFECTED.
Our customers may be reluctant to use our services for a number of reasons,
including:
o perceptions that the quality of voice transmitted over the Internet
are low.
o perceptions that Internet telephony is unreliable.
o our inability to deliver traffic over the Internet with significant
cost advantages.
The growth of our business depends on carriers and other communications
service providers generating an increased volume of international voice and fax
traffic and selecting our network to carry at least some of this traffic. If the
volume of international voice and fax traffic fails to increase, or decreases,
and these third-parties do not employ our network, our ability to become
profitable will be materially and adversely affected.
IF OUR CUSTOMERS DO NOT PERCEIVE OUR SERVICE TO BE EFFECTIVE OR OF HIGH QUALITY,
OUR BRAND AND NAME RECOGNITION WOULD SUFFER.
We believe that establishing and maintaining a brand and name recognition
is critical for attracting and expanding our targeted client base. We also
believe that the importance of reputation and name recognition will increase as
competition in our market increases. Promotion and enhancement of our name will
depend on the effectiveness of our marketing and advertising efforts and on our
success in continuing to provide high-quality products and services, neither of
which can be assured. If our customers do not perceive our service to be
effective or of high quality, our brand and name recognition would suffer.
POLITICAL, ECONOMIC AND LEGAL RISKS IN EMERGING MARKETS COULD MATERIALLY AND
ADVERSELY EFFECT OUR OPERATIONS.
Historically, we have derived significant amounts of our revenues from
operations in emerging markets. Our business is subject to numerous risks and
uncertainties, including political, economic and legal risk in these markets.
These risks include:
o unexpected changes in regulatory requirements and telecommunication
standards.
o tariffs, customs, duties and other trade barriers.
o technology export and import restrictions or prohibitions.
o delays from customs brokers or government agencies.
o seasonal reductions in business activity.
o difficulties in staffing and managing foreign operations.
o problems in collecting accounts receivable.
o foreign exchange controls which restrict or prohibit repatriation
of funds.
o potentially adverse tax consequences resulting from operating in
multiple jurisdictions with different tax laws.
o the sensitivity of our revenues and cost of long distance services to
changes in the ratios between outgoing and incoming traffic, and our
ability to obtain international transmission facilities.
POLITICAL RISK
The political systems of many of the emerging market countries in which we
operate or plan to operate are slowly emerging from a legacy of totalitarian
rule. Political conflict and, in some cases, civil unrest and ethnic strife may
continue in some of these countries for a period of time. Many of the economies
of these countries are weak, volatile and reliant on substantial foreign
assistance. Expropriation of private businesses in such jurisdictions remains a
possibility. Expropriation can occur by an outright taking or by confiscatory
taxes or other policies. Our operations could be materially and adversely
impacted by these factors. In addition to the uncertainty regarding our ability
to generate revenue from foreign operations and expand our international
presence, there are certain risks inherent in doing business on an international
basis, including:
o changing regulatory requirements.
o increased bad debt and fraud.
o legal uncertainty regarding liability, tariffs and other trade
barriers.
o political instability.
o politically adverse tax consequences.
We cannot assure you that one or more of these factors will not materially
adversely affect the growth of our business or our customer base.
LEGAL RISK
Legal systems in emerging market countries frequently have little or no
experience with commercial transactions between private parties. The extent to
which contractual and other obligations will be honored and enforced in emerging
market countries is largely unknown. Accordingly, we cannot assure you that we
can protect and enforce our rights in emerging market countries. If we cannot
protect our rights, it may have a material adverse effect upon our operations.
Additionally, we operate in uncertain regulatory environments. The laws and
regulations applicable to our activities in emerging market countries are in
general, new, in some cases, incomplete, and subject to arbitrary change. The
local laws and regulations may not become stable in the future and any changes
could harm our business, financial condition or results of operations.
WE FACE COMPETITORS WITH GREATER RESOURCES IN MARKETS WITH LOW BARRIERS TO
ENTRY.
Many current or potential competitors have substantially greater financial,
marketing and other resources than us. If our competitors devote significant
additional resources to targeting our customer base in our geographic markets,
then our business, financial condition and results of operations could be
harmed.
We anticipate that the markets in which we operate or plan to operate will
continue to deregulate. Competitors with greater resources than us could enter
these markets and acquire our customers. We may have to (1) reduce our prices to
maintain our customer base, (2) increase our investments in telecommunications
infrastructure and (3) increase marketing expenditures to address the increased
competition. Competition could increase our operating costs in these markets and
adversely impact our business.
We offer or intend to offer new services or services that have previously
been provided only by the incumbent telecommunications operators ("ITOS") in
certain geographic areas. The ITO is the dominant carrier and is often
government owned or protected. We may be unable to react to any significant
international long distance rate reductions imposed by ITOs to counter external
competitive threats. We may also be unable to increase our traffic volume or
reduce our operating costs sufficiently to offset any resulting rate decreases.
This may negatively impact our business and profitability.
Our other competition and potential competition includes:
o various independent providers similar to us in size and resources.
o to a lesser extent, major international carriers and their global
alliances.
o cable television companies.
o wireless telephone companies.
o Internet access providers.
o large-end users which have dedicated circuits or private networks.
We cannot assure you that we will be able to compete successfully against new or
existing competitors. See "- Increased competition and deregulation may lead to
lower profits."
RAPID CHANGES IN TECHNOLOGY AND CUSTOMER REQUIREMENTS COULD PLACE US AT A
COMPETITIVE DISADVANTAGE.
Rapid and significant technological advancements and introductions of new
technological products and services characterize our industry. As new
technologies develop, we may be placed at a competitive disadvantage.
Competitive pressures may force us to implement new technologies at substantial
cost. In addition, competitors may implement new technologies before we do or
provide enhanced services at more competitive costs. We may not be able to
implement technologies on a timely basis or at an acceptable cost. One or more
of the technologies we currently use or implement in the future, may not be
preferred by customers or may become obsolete. If we cannot (1) respond to
competitive pressures, (2) implement new technologies on a timely basis, or (3)
offer new or enhanced services, then our business, financial condition and
results of operations could be harmed. See "- Increased competition and
deregulation may lead to lower profits," and "- We face competitors with
greater resources in markets with low barriers to entry."
A NETWORK FAILURE THAT INTERRUPTS OPERATIONS COULD HAVE A MATERIAL ADVERSE
EFFECT ON US.
Our success largely depends upon our ability to deliver high quality,
uninterrupted telecommunication services. We must protect our software and
hardware from loss and damage. A systems or hardware failure that interrupts our
operations could have a material adverse effect on our business. We currently
operate our primary switching facility in Sunrise, Florida. Physical damage to
the switch facility could not be remedied by using other facilities in a
different location. This could have a material adverse effect on our operations.
Our success also depends on our ability to handle a large number of
simultaneous calls, which our systems may not be able to accommodate. We expect
the volume of simultaneous calls to increase significantly as we expand our
operations. Our network hardware and software may not be able to accommodate
this additional volume. If we fail to maintain an appropriate level of operating
performance, or if our service is disrupted, our reputation could be hurt and we
could lose customers.
If we expand and call traffic grows as expected, there will be increased
stress on our hardware, circuit capacity and traffic management systems. Our
operations also require us to successfully expand and integrate new and emerging
technologies and equipment. This may also increase the risk of a systems or
hardware failure and result in further strains. We cannot guarantee that system
failures will not occur. We attempt to mitigate customer inconvenience in the
event of a system disruption by routing traffic to other circuits and switches
which may be owned by other carriers. We also maintain insurance in commercially
reasonable amounts. However, significant or prolonged system failures, or
difficulties for customers in accessing and maintaining connection would result
in uninsurable damage. Damage may include: harm to our reputation, attrition of
customers and financial loss.
OUR EXPOSURE TO CREDIT RISK AND BAD DEBTS WILL INCREASE AS WE GROW.
As we expand our business and move into new territories our exposure to
credit risk will increase. Many of the foreign countries that we operate in do
not have established credit bureaus. This makes it more difficult to determine
the creditworthiness of potential customers and agents. Under our exclusive
agency arrangements, the agent is responsible for analyzing the creditworthiness
of the customer and assuming the credit risk. We believe that this has minimized
our direct credit risk in the past, and, therefore, our bad debt expenses have
historically been minimal. However, as we continue to place less reliance on
these exclusive arrangements, our risk to bad debt losses will grow. In certain
circumstances, we have supported our agency relationships by bearing some credit
losses. We cannot assure you that our bad debt expense will not rise
significantly above current levels. Our experience indicates that a certain
portion of past due receivables will never be collected and that bad debt is a
necessary cost of conducting business in the telecommunications industry.
OUR ABILITY TO MANAGE AND RESPOND TO GROWTH WILL BE CRITICAL FOR SUCCESS.
We have experienced significant growth in the past. Our ability to manage
and respond to growth will be critical to our success. Interruptions of or a
decline in the quality of our services because of expansion difficulties or an
inability to effectively manage expanding operations could materially harm our
business. We plan to grow by expanding our service offerings in deregulating
markets in Africa, the Middle East, Latin America and targeted areas of Asia and
Europe. We anticipate that future growth will depend on a number of factors,
including (1) the effective and timely development of customer relationships,
(2) the ability to enter new markets and expand in existing markets, and (3) the
recruitment, motivation and retention of qualified agents and the establishment
of strategic alliances and revenue share agreements relating to the marketing
initiative of theStream.com. Our continued growth requires greater management,
operational and financial resources.
As we grow, we may have difficulty accurately forecasting our
telecommunications traffic. Inaccurate forecasts may cause us to:
o make investments in insufficient or excessive transmission facilities.
o incur disproportionate fixed expenses.
o force us to route excessive overflow traffic to other carriers where
the quality of services may not be commensurate with the transmission
quality we provide.
We cannot assure you that we can add services or expand our geographic
markets. Existing regulatory barriers to our current or future operations may
not be reduced or eliminated. Even if we add services or expand into new
markets, our administrative, operational, infrastructure and financial resources
and systems may not sustain our growth and success. See "- Rapid changes in
technology and customer requirements could place us at a competitive
disadvantage."
EXPANSION BY ACQUISITIONS, STRATEGIC ALLIANCES AND OTHER BUSINESS COMBINATIONS
COULD ADVERSELY IMPACT OUR OPERATING RESULTS.
We may acquire businesses and technologies that complement or augment our
existing businesses, services and technologies. Integrating any newly acquired
businesses or technologies could be expensive and time-consuming. We may not be
able to integrate any acquired business successfully. Moreover, we may need to
raise additional funds through public or private debt or equity financing to
acquire any businesses, which could dilute the value of shares already issued or
result in the Company's incurrence of additional indebtedness. We may not be
able to operate acquired businesses profitably or otherwise implement our growth
strategy successfully. In addition, we may face the following risks with any
business combination:
o the difficulty of identifying appropriate acquisition candidates or
partners.
o the difficulty of assimilating the operations of the respective
entities.
o the potential disruption of our ongoing business.
o possible costs associated with the development and integration of
such operations.
o the potential inability to maximize our financial and strategic
position by successfully incorporating licensed or acquired technology
into our service offerings.
o the failure to maintain uniform standards, controls, procedures and
policies.
o the impairment of relationships with employees, customers and agents
as a result of changes in management.
o higher customer attrition with respect to customers obtained through
acquisitions.
o diversion of management resources.
o difficulty in obtaining any required regulatory approvals.
o increased foreign exchange risk.
o risks associated with entering new markets.
Additionally, business combinations may not:
o result in increased sales or an expanded customer base.
o give us a presence in new territories.
o allow us to effectively penetrate our target markets.
We may not be successful in overcoming these risks or any other problems
encountered with business combinations. This could have a material adverse
effect on our operating results.
We have not entered into any investments or alliances, except with (1)
respect our investment and subsequent sale of Ursus Telecom France, (2) our
purchase of our Uruguayan Agent, (3) the purchase of Starcom S.A. and our
Argentine agent and (4) our acquisition of Access, all of which occurred in the
fiscal year ended March 31, 1999.
TERMINATION OF CARRIER SERVICE AGREEMENTS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.
We obtain most of our transmission capacity under volume-based resale
arrangements with facilities-based and other carriers, including ITOs. Two
carriers provide the majority of our transmission capacity. Under these
arrangements, we are subject to the risk of unanticipated price fluctuations,
service restrictions and cancellations. With the exception of the Bahamas,
Lebanon and Argentina, we have not experienced sudden or unanticipated price
fluctuations, service restrictions or cancellations. We believe that our
relationships with our carriers are generally satisfactory. However, the
deterioration or termination of our arrangements, or our inability to enter into
new arrangements with one or more of carriers, could have a material adverse
effect upon our cost structure, service quality, network coverage, results of
operations and financial condition.
WE RELY ON UNPATENTED TECHNOLOGY TO MAINTAIN OUR COMPETITIVE POSITION.
We rely on unpatented proprietary know-how and continuing technological
advancements to maintain our competitive position. A failure to protect our
rights to unpatented trade secrets and know-how could negatively impact our
business. We have entered into confidentiality and invention agreements with
certain of our employees and consultants. However, we cannot assure you that the
agreements will be honored or that we will be able to effectively protect our
rights to our unpatented trade secrets and know-how. We cannot assure you that
our competitors will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets and know-how.
We have not registered or trademarked "Ursus" and our logo in any
jurisdiction. We are filing registrations of our name and logo in the United
States. We may not obtain adequate trademark, service mark or similar protection
of our name and logo.
GOVERNMENT REGULATION, ENFORCEMENT AND INTERPRETATION OF TELECOMMUNICATION LAWS
AND REGULATIONS IS UNPREDICTABLE AND SUBJECT TO CHANGE.
Our business may be harmed if we do not obtain or retain the necessary
governmental approvals for our services and transmission methods. Regulatory
compliance problems could adversely impact our business. Our interstate and
international facilities-based and resale services are regulated by the Federal
Communications Commission ("FCC"). Regulations promulgated by the FCC could
change. In addition, the international telecommunications industry is subject to
international treaties and agreements, and to laws and regulations that vary
from country to country. Enforcement and interpretation of these laws and
regulations can be unpredictable and are often subject to informal views of
government officials and ministries in each country. In some cases, government
officials and ministries may be influenced by ITOs.
We may be presented with the following potential risks and problems:
o In some countries, we may need government approval to provide
international telecommunications service that will compete with
state-authorized carriers.
o Our operations may be affected by increased regulatory requirements in
a foreign jurisdiction.
o Transit agreements or arrangements may be affected by laws or
regulations in either the transited or terminating foreign
jurisdiction.
o Future regulatory, judicial, legislative or political changes could
prohibit us from offering services.
o Regulators or third parties could raise material questions about our
compliance with applicable laws or regulations.
We have pursued, and expect to continue to pursue, a strategy of providing
our services to the maximum extent we believe to be permissible under applicable
laws and regulations. To the extent that the interpretation or enforcement of
applicable laws and regulations is uncertain or unclear, our aggressive strategy
may result in our (1) providing services or using transmission methods that are
found to violate local laws or regulations or (2) failing to obtain required
approvals in violation of local laws and regulations. If we believe we will be
subject to enforcement actions by the FCC or the local authority, we will seek
to modify our operations or discontinue operations to comply with laws and
regulations. However, even if violations are corrected, we may be subject to
fines, penalties or other sanctions. If our interpretation of applicable laws
and regulations proves incorrect, we could lose, or be unable to obtain,
regulatory approvals necessary to provide certain of our services or to use
certain of our transmission methods. We could also have substantial monetary
fines and penalties imposed against us.
RISKS RELATED TO THE INTERNET AND INTERNET TELEPHONY INDUSTRY
IF THE INTERNET DOES NOT CONTINUE TO GROW AS A MEDIUM FOR VOICE AND FAX
COMMUNICATIONS, OUR BUSINESS WILL SUFFER.
The technology that allows voice and fax communications over the Internet,
and the delivery of other value-added services, is still in its early stages of
development. Historically, the sound quality of calls placed over the Internet
was poor. As the Internet telephony industry has grown, sound quality has
improved, but the technology requires further refinement. Additionally, as a
result of the Internet's capacity constraints, callers could experience delays,
errors in transmissions or other interruptions in service. Transmitting
telephone calls over the Internet must also be accepted as an alternative to
traditional voice and fax service by communications service providers. Because
the Internet telephony market is new and evolving, predicting the size of this
market and its growth rate is difficult. If our market fails to develop, then we
will be unable to grow our customer base and our results of operations will be
adversely affected.
IF THE INTERNET INFRASTRUCTURE IS NOT ADEQUATELY MAINTAINED, WE MAY BE UNABLE TO
MAINTAIN THE QUALITY OF OUR SERVICES AND PROVIDE THEM IN A TIMELY AND CONSISTENT
MANNER.
Our future success will depend upon the maintenance of the Internet
infrastructure, including a reliable network backbone with the necessary speed,
data capacity and security for providing reliability and timely Internet access
and services. To the extent that the Internet continues to experience increased
numbers of users, frequency of use or bandwidth requirements, the Internet may
become congested and be unable to support the demands placed on it and its
performance. The reliability of the Internet may also decline thereby and impair
our ability to complete calls using the Internet at consistently high quality.
The Internet has experienced a variety of outages and other delays as a result
of failures of portions of its infrastructure or otherwise. Any future outages
or delays could adversely affect our ability to complete calls. Moreover,
critical issues concerning the commercial use of the Internet, including
security, cost, ease of use and access, intellectual property ownership and
other legal liability issues, remain unresolved and could materially and
adversely affect both the growth of Internet usage generally and our business in
particular.
WE CANNOT BE CERTAIN THAT OUR ABILITY TO PROVIDE OUR COMMUNICATIONS SERVICES
USING THE INTERNET WILL NOT BE ADVERSELY AFFECTED BY COMPUTER VANDALISM.
Recently, computer vandals have caused certain leading Internet sites to
shut down temporarily and have materially affected the performance of the
Internet during key business hours by bombarding targeted sites with numerous
false requests for data. While we do not operate any websites like those
recently affected, we do rely on the Internet to deliver our international
communications services. If the overall performance of the Internet is seriously
harmed by such website attacks or other acts of computer vandalism, our ability
to deliver our communication services over the Internet could be adversely
impacted and we may have to increase the amount of traffic we have to carry over
alternative networks, including the more costly public-switched telephone
network. In addition, traditional business interruption insurance may not cover
losses we could incur because of any such disruption of the Internet. While some
insurers are beginning to offer insurance products purporting to cover these
losses, we do not maintain any such insurance at this time.
INTERNATIONAL GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES COULD LIMIT OUR
ABILITY TO PROVIDE OUR SERVICES OR MAKE THEM MORE EXPENSIVE.
The regulatory treatment of Internet telephony outside of the United States
varies widely from country to country. A number of countries currently prohibit
or limit competition in the provision of traditional voice telephony services.
Some countries prohibit, limit or regulate how companies provide Internet
telephony. Some countries have indicated they will evaluate proposed Internet
telephony service on a case-by-case basis and determine whether to regulate it
as a voice service or as another telecommunications service, and in doing so
potentially imposing settlement rates on Internet telephony providers. Finally,
many countries have not yet addressed Internet telephony in their legislation or
regulations. Increased regulation of the Internet and/or Internet telephony
providers, or the prohibition of Internet telephony in one or more countries,
could limit our ability to provide our services or make them more expensive.
In addition, as we make our services available in foreign countries, such
countries may claim that we are required to qualify to do business in that
particular country, that we are otherwise subject to regulation, including
requirements to obtain authorization, or that we are prohibited in all cases
from conducting our business in that foreign country. Our failure to qualify as
a foreign corporation in a jurisdiction in which we are required to do so or to
comply with foreign laws and regulations could seriously restrict our ability to
provide services in such jurisdiction, or limit our ability to enforce contacts
in that jurisdiction. We cannot assure you that our customers are currently in
compliance with any such requirements or that they will be able to continue to
comply with any such requirements. The failure of our customers to comply with
applicable laws and regulations could prevent us from being able to conduct
business with them. Additionally, it is possible that laws may be applied by the
United States and/or other countries to transport services provided over the
Internet, including laws governing:
o sales and other taxes.
o user privacy.
o pricing controls.
o characteristics and quality of products and services.
o consumer protection.
o cross-border commerce, including laws that would impose tariffs,
duties and other import restrictions.
o copyright, trademark and patent infringement.
o claims based on the nature and content of Internet materials,
including defamation, negligence and the failure to meet necessary
obligations.
If foreign governments or other bodies begin to regulate or prohibit
Internet telephony, this regulation could have a material adverse effect on our
ability to attain or maintain profitability.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO DOMESTIC GOVERNMENTAL REGULATION
AND LEGAL UNCERTAINTIES WHICH COULD PREVENT US FROM EXECUTING OUR BUSINESS PLAN.
While the FCC has tentatively decided that information service providers,
including Internet telephony providers, are not telecommunications carriers for
regulatory purposes, various companies have challenged that decision. Congress
is not compability satisfied with the conclusions of the FCC and the FCC could
impose greater or lesser regulation on our industry. The FCC is currently
considering, for example, whether to impose surcharges or other regulations upon
certain providers of Internet telephony, primarily those which provide Internet
telephony services to end-users located within the United States.
Aspects of our operations may be, or become, subject to state or federal
regulations governing universal service funding, disclosure of confidential
communications, copyright and excise taxes. We cannot assure you that government
agencies will not increasingly regulate Internet-related services. Increased
regulation of the Internet may slow its growth. This regulation may also
negatively impact the cost of doing business over the Internet and materially
adversely affect our ability to attain or maintain profitability.
WE ALSO FACE THE FOLLOWING SPECIFIC REGULATORY RISKS:
RESTRICTION OF CALL REORIGINATION BY CERTAIN COUNTRIES MAY PREVENT US FROM
PROVIDING SERVICES.
Some countries restrict or prohibit call reorigination. A substantial
number of countries have prohibited certain forms of call reorigination. These
prohibitions have caused us to stop providing call reorigination services in the
Bahamas and may require us to do so in other jurisdictions in the future. As of
December 1, 1999, reports had been filed with the ITU stating that the laws of
100 countries prohibit call reorigination.
If a foreign jurisdiction expressly prohibits call reorigination using
uncompleted call signaling, and has attempted but failed to enforce its laws
against U.S. service providers, the FCC may require U.S. carriers to stop
providing call reorigination services. In extreme circumstances, the FCC may
revoke the U.S. carrier's authorization. To date, the FCC has ordered carriers
to cease providing call reorigination using uncompleted call signaling to
customers in the Philippines. Except as discussed in this Registration
Statement, we have not been notified by any regulator or government agency that
we are not in compliance with applicable regulations.
THE PROVISION OF CALL ORIGINATION IN SOUTH AFRICA WITHOUT A LICENSE MAY
VIOLATE THE TELECOMMUNICATIONS ACT OF 1996.
For the fiscal year ended March 31, 1999, South Africa comprised our most
significant single market and accounted for approximately 24% of our total
revenues. In South Africa, our agent's provision of certain call reorigination
services may be subject to the Telecommunications Act of 1996 (the "SA
Telecommunications Act") and the Post Office Act of 1958. The SA
Telecommunications Act permits a party, who is issued a telecommunications
license, to provide services other than public switched services. We believe
that our agent may provide call reorigination services to customers in South
Africa without a license. However, the telecommunications regulator in South
Africa ("SATRA") has ruled that the provision of call reorigination services to
customers in South Africa without a license violates the SA Telecommunications
Act. Several entities, including our agent, filed a lawsuit to stay and reverse
SATRA's ruling on the basis that SATRA lacks the authority to issue such a
ruling and that the SA Telecommunications Act does not prohibit the provision of
call reorigination services. SATRA has agreed not to prosecute any person in the
call reorigination industry unless the South African courts rule that it may. It
is anticipated that final adjudication of this lawsuit could take up to four
years. If our agent is found to be providing telecommunications service without
a required license, it could be subject to (1) fines, (2) termination of its
call reorigination service to customers in South Africa and (3) possible denial
of license applications to provide services. We cannot guarantee that the courts
in South Africa will not rule that call reorigination is illegal, or that the
South African legislature will not promulgate an explicit prohibition on call
reorigination. Any adverse legal action could harm our business.
THE FCC MAY LIMIT REFILING.
The FCC is currently considering a 1995 request (the "1995 Request") to
limit or prohibit the practice where a carrier routes traffic originating from
Country A and destined for Country B through its facilities in Country C. The
FCC has permitted third country calling where all countries involved consent to
the routing arrangements. This is called "transiting." Under certain
arrangements referred to as "refiling," the carrier in Country B does not
consent to receiving traffic from Country A and does not realize the traffic it
receives from Country C is originating from Country A. While our revenues
attributable to refiling arrangements are minimal, refiling may constitute more
of our operations in the future. The FCC has not stated whether refiling
arrangements are inconsistent with U.S. or International Telecommunications
Union ("ITU") regulations. If the FCC determines that refiling violates U.S.
and/or international law, it could negatively impact our future operations.
WE COULD FACE PENALTIES IF WE VIOLATE THE FCC'S INTERNATIONAL SETTLEMENTS
POLICY.
We are also required to conduct our facilities-based international business
in compliance with the FCC's international settlements policy (the "ISP"). The
ISP establishes the permissible arrangements for facilities-based carriers that
are based in the U.S. and their foreign counterparts for the termination of
traffic over each respective network. Although not yet effective, the FCC
recently adopted new rules that remove the ISP for arrangements between U.S.
carriers and non-dominant foreign carriers (I.E., foreign carriers that lack
market power). In addition, the FCC removed the ISP for arrangements with any
carrier (dominant or non-dominant) to certain competitive routes, where
settlement rates are at least 25 percent below the FCC's applicable benchmark
settlement rates. These routes currently include Canada, the United Kingdom,
Sweden, Germany, Hong Kong, the Netherlands, Denmark and Norway. Certain
confidential filing requirements still apply to dominant carrier arrangements.
Several of our arrangements with foreign carriers are subject to the ISP. The
FCC could take the view that one or more of these arrangements do not comply
with the existing ISP rules. A traffic arrangement that does not comply with the
ISP may need FCC approval. If the FCC, on its own initiative or in response to a
challenge filed by a third party, determines that our foreign carrier
arrangements do not comply with FCC rules, it may (1) issue a cease and desist
order, (2) impose fines or (3) in extreme circumstances, revoke or suspend our
FCC authorizations. This could have a material adverse effect on our business,
financial condition and results of operations.
WE COULD FACE PENALTIES IF WE VIOLATE THE FCC'S TARIFF REQUIREMENTS FOR
INTERNATIONAL LONG DISTANCE SERVICES.
We are required to file with the FCC a tariff containing the rates, terms
and conditions for our international telecommunications services. We are also
required to file with the FCC any agreements with customers that have rates,
terms, or conditions that are different from our tariff. The FCC or a third
party could bring an action against us if we (1) charge rates other than those
set forth our tariff or a customer agreement filed with the FCC, (2) violate our
tariff or filed customer agreement or (3) fail to file with the FCC
carrier-to-carrier agreements. Any actions could result in fines, judgments or
penalties and could have a material adverse impact on our business, financial
condition and results of operation.
RECENT AND POTENTIAL FCC ACTIONS MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS.
Regulatory action that has been and may be taken in the future by the FCC
may enhance the intense competition faced by Ursus. The FCC has established
lower ceilings for the rates that U.S. carriers will pay foreign carriers for
the termination of international services. The FCC also recently changed its
rules to implement a World Trade Organization agreement, which in part allows
U.S. carriers to accept certain exclusive arrangements with certain foreign
carriers. The implementation of these changes could have a material adverse
effect on our business, financial condition and results of operations.
WE COULD FACE PENALTIES IF WE VIOLATE U.S. DOMESTIC LONG DISTANCE SERVICE
REGULATIONS.
Our ability to provide domestic long distance service in the United States
is regulated by the FCC and state Public Service Commissions ("PSCs"). The FCC
and PSCs regulate interstate and intrastate rates, respectively, ownership of
transmission facilities, and the terms and conditions under which our domestic
U.S. services are provided. In general, neither the FCC nor the relevant state
PSCs exercise direct oversight over prices charged for our services or our
profit levels. However, either or both may do so in the future. Federal and
state law and regulations require that we file tariffs listing the rates, terms
and conditions of services provided. Any failure to (1) maintain proper federal
and state tariffs or certifications (2) file required reports or (3) any
difficulties or delays in obtaining required authorizations, could have a
material adverse effect on our business financial condition and results of
operation. The FCC also imposes some requirements for marketing of telephone
services and for obtaining customer authorization for changes in the customer's
primary long distance carrier. If these requirements are not met, we may be
subject to fines and penalties.
POSSIBLE FCC REGULATIONS MAY PUT US AT A COST DISADVANTAGE.
Long distance carriers, such as Ursus, may have to purchase access services
from local exchange carriers ("LECs") to originate and terminate calls in
connection their services. Access charges represent a significant portion of our
cost of U.S. domestic long distance services. Generally, access charges are
regulated by the FCC for interstate services and by PSCs for intrastate
services. The FCC is reviewing its regulation of LEC access charges to better
account for increasing levels of local competition. If these proposed rate
structures are adopted, we could be placed at a significant cost disadvantage
compared to larger competitors.
The FCC has also adopted certain measures to implement the 1996
Telecommunications Act that will impose new regulatory requirements. One
requirement is the contribution of some portion of telecommunications revenues
to a universal service fund designated to fund affordable telephone service for
consumers, schools, libraries and rural healthcare providers. These
contributions became payable beginning in 1998 for all interexchange carriers
but not for providers of solely international services. We are a provider of
international services and are therefore, generally not subject to the
contribution requirements. However, with the acquisition of Access, some of our
business is subject to the contribution requirements at a rate of approximately
$10,000 per month.
The FCC issued an order on October 9, 1997, concluding that interexchange
carriers must compensate payphone owners at a rate of $.284 per call for all
calls using their payphones. On January 28, 1999, the U.S. Court of Appeals for
the D.C. Circuit agreed with the ruling, but reduced the rate to $.24 per call.
As this ruling applies only to domestic payphones, our costs are not
significant.
FCC APPROVAL FOR TRANSFERS OF CONTROL COULD DELAY OR PREVENT CHARGES OF
CONTROL.
The FCC and certain state agencies must approve assignments and transfers
of control. An assignment is a transaction in which an authorization is moved
from one entity to another. A transfer of control is a transaction in which the
authorization remains held by the same entity, but there is a change in the
entities that control the authorized carrier. The approval requirements may
delay, prevent or deter a change in control or an acquisition of another
company. The FCC also imposes certain restrictions on U.S.-licensed
telecommunications companies that are affiliated with foreign telecommunications
carriers. The FCC could restrict our ability to provide service on certain
international routes if we (1) become controlled by or under common control with
a foreign telecommunications carrier or (2) obtain a greater than 25% interest
in or control over a foreign telecommunications carrier.
ACTIONS BY BATELCO BLOCK OUR ABILITY TO SERVICE BAHAMIAN CUSTOMERS.
We entered into an operating agreement with the Bahamas Telephone Company
("Batelco") to provide international telecommunications services to customers in
the Bahamas. In the past Batelco has taken several actions designed to block our
ability to offer services to customers in the Bahamas. We believe Batelco's
actions violate the terms of our operating agreement and are inconsistent with
U.S. policy. For the fiscal year ended March 31, 1999 and 1998, we derived
approximately 2.9% and 4.2% of our revenues, respectively from services we
provided in the Bahamas.
FRAUD LOSS COULD MATERIALLY HARM OUR BUSINESS.
The telecommunications industry has historically been exposed to fraud
losses. We have implemented anti-fraud measures. In order to minimize losses
relating to fraudulent practices, we: (1) enter into employment agreements with
our employees, (2) limit and monitor access to our information systems and (3)
monitor use of our services. A failure to control fraud could materially harm
our business, financial condition and results of operations. Fraud has
historically been a more significant problem for large providers of
telecommunications services than it has for us, because our few employees and
switching facilities are relatively easier to monitor than those of the large
providers. We have recently seen an increase in fraud losses from individuals
who have obtained authorization codes and credit card information illegally. We
anticipate that this will continue to be a problem especially with our entrance
into the Internet e-commerce market. We have been working closely with our third
party credit card processors and our internal MIS staff in an attempt to limit
our exposure. We cannot assure you that we will be successful in limiting our
losses, which could have a material impact on our results of operations and cash
flows.
WE MAY HAVE DIFFICULTY ENHANCING OUR SYSTEMS OR INTEGRATING NEW TECHNOLOGY INTO
IT.
We believe our information systems are sufficient for our current
operations. However, our systems will require enhancements, replacements and
additional investments to continue their effectiveness and enable us to manage
an expanded Network. We may have difficulty enhancing our systems or integrating
new technology into them. If we are unable to implement any required system
enhancement, acquire new systems or integrate new technology in a timely and
cost effective manner, it could have a material adverse effect on our business,
financial condition and results of operations.
THE LOSS OF KEY PERSONNEL COULD ADVERSELY EFFECT OUR BUSINESS.
We depend on the efforts of our senior officers and on our ability to hire
and retain qualified management personnel. The loss of any key personnel could
materially and adversely effect our business and our future prospects. We have
entered into employment agreements with certain of our senior officers. We have
obtained key person life insurance, of which we are the beneficiaries, on the
lives of each of Messrs. Giussani and Chaskin in the amount of $2 million. Our
future success will depend on our ability to attract and retain key personnel to
help us with the growth and development of our business.
FOREIGN EXCHANGE RATE RISKS THAT ARE NOT OFFSET COULD HARM OUR BUSINESS.
We bill primarily in United States Dollars and are generally paid by
customers outside of the United States either in United States Dollars or in
local currency at predetermined exchange rates. Substantially all of the costs
to develop and improve our operations have been, and will continue to be,
denominated in United States Dollars. Both increases and decreases in the United
States Dollar create risks for us that could harm our business. For example, if
the United States Dollar appreciates relative to the local currency, our
services will grow more expensive relative to our competitors, such as the ITOs,
that use the local currency. Any depreciation of the value of the United States
Dollar relative to the local currency increases the cost of our capital
expenditures made in the local currency.
Our focus on emerging markets increases the risks that currency
fluctuations pose. Currency speculation and fluctuation could impact our
operations in Latin America, South Africa, the Middle East or our other emerging
markets. We monitor exposure to currency fluctuations, and may, as appropriate,
use certain financial hedging instruments in the future. However, we cannot
assure you that the use of financial hedging instruments will successfully
offset exchange rate risks, or that such currency fluctuations will not harm our
business and financial condition.
WE MAY NOT BE ABLE TO RAISE ADDITIONAL MONEY IF WE NEED IT.
We expect that the remaining proceeds from the Private Placement, together
with other existing and anticipated sources of liquidity, will provide
sufficient capital for us to fund anticipated growth for the next 12 months.
Based on our current business model, we will be actively seeking new sources of
equity or other financing to support our increased capital requirements due to
the continued development of theStream.com and the ongoing development and
migration to IP telephony. There are no guarantees that sufficient funding will
occur in time to fulfill our business model. If there is any delay in obtaining
this additional financing we will implement our contingency plans, which could
affect our future growth. The amount of our future capital requirements will
depend upon may factors, business, the rate and manner in which it expands,
staffing levels and customer growth, as well as other factors not within the
Company's control, including competitive conditions and regulatory or other
government actions. If our plans or assumptions change or prove to be inaccurate
or the net proceeds from the Private Placement, together with the existing and
anticipated sources of liquidity, prove to be insufficient to fund our growth
and operations, then some or all of our development and expansion plans could be
delayed or abandoned.
WE MAY FACE AN INCREASED RISK OF VIOLATING THE FOREIGN CORRUPT PRACTICES ACT AS
WE FOCUS ON EMERGING MARKETS.
We must comply with the Foreign Corrupt Practices Act ("FCPA"). The FCPA
generally prohibits U.S. companies and their intermediaries from bribing foreign
officials for the purpose of obtaining or keeping business. We may be exposed to
liability under the FCPA as a result of past or future actions taken without our
knowledge by agents, strategic partners or other intermediaries. Violations of
the FCPA may also call into question the credibility and integrity of our
financial reporting systems. Our focus on certain emerging markets may tend to
increase this risk. Liability under the FCPA could have a material adverse
effect on our business, financial condition and results of operation.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS COULD MATERIALLY IMPACT
OUR STOCK PRICE.
Our quarterly operating results have fluctuated and may continue to
fluctuate due to various factors. The factors include the following:
o the timing of investments.
o general economic conditions.
o specific economic conditions in the telecommunications industry.
o the effects of governmental regulation and regulatory changes.
o user demands.
o capital expenditures.
o costs relating to the expansion of operations.
o the introduction of new services by us or our competitors.
o the mix of services sold and the mix of channels through which our
services are sold.
o changes in prices charged by our competitors.
Variations in our operating results could materially affect the price of
our common stock.
OUR CONTROLLING SHAREHOLDERS CAN ELECT A MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS AND APPROVE FUNDAMENTAL CORPORATE TRANSACTIONS.
A group of shareholders (the "Controlling Shareholders") beneficially own
an aggregate of 62.1% of the outstanding shares of our common stock and 100% of
our Series A Preferred Stock. The Controlling Shareholders can elect a majority
of the board of directors and approve certain fundamental corporate transactions
including mergers, consolidations and sales of assets. As long as the
Controlling Shareholders hold the shares of Ursus, third parties cannot gain
control of Ursus except through purchases of common stock beneficially owned or
otherwise controlled by the Controlling Shareholders.
Owners of the Series A Preferred Stock have the exclusive right to elect
two (2) of the five (5) members of our board of directors, and one member less
than a numerical majority of any expanded board of directors. The common stock
votes cumulatively for the election of directors. Therefore, the Controlling
Shareholders can elect at least one member of the board of directors so long as
they control at least 33.3% of the outstanding common stock. A smaller
percentage would be required if the size of our board of directors is expanded.
Each of the Controlling Shareholders has advised us that their current intention
is to continue to hold all of the shares of Series A Preferred Stock and
substantially all of the common stock beneficially owned by them. However, we
cannot guarantee that any of the Controlling Shareholders will not decide to
sell all or a portion of their holdings at some future date. We also cannot be
certain that holders of common stock, will be allowed to participate in a
transfer by any of the Controlling Shareholders of a controlling interest in the
Ursus or will realize any premium with respect to shares of common stock.
RISKS ASSOCIATED WITH THE YEAR 2000
As a result of completing our Year 2000 readiness project prior to year
end, we were able to avoid any significant problems that may have resulted due
to the impact of the Year 2000. These problems, which were widely reported in
the media, could have caused malfunctions in certain software and databases that
use date sensitive processing relating to the Year 2000 and beyond. To date we
are not aware of the occurrence of any significant Year 2000 problem.
We did not incur any significant costs in completing our Year 2000
readiness project. No significant costs are expected as we continue to monitor
our systems for any undiscovered Year 2000 problems.
RECENT DEVELOPMENTS
On August 19, 1999, Ursus entered into a network agreement with Global
Crossing USA Inc. ("Global Crossing") pursuant to which we will purchase a
minimum of $30 million of capacity in Global Crossing's fiber optic cable
systems over a prescribed period of time.
On February 10, 2000, as part of the Price Placement, Ursus entered into a
purchase agreement to sell 615,115 shares of our common stock for $7 million to
an institutional group of investors. The net proceeds to Ursus after deducting
expenses was approximately $6.6 million. Ursus also granted the investors
279,998 five year warrants to buy common stock at $15.3956 per share. Ursus has
provided the investors with certain anti-dilution protections for a maximum of
30 months with respect to the shares sold and warrants issued. However, except
for the warrants, the anti-dilution protection period will end on the completion
of a firm commitment underwritten primary public offering of stock during
calendar year 2000. Under the terms of the anti-dilution clause, the investors
would receive a share price adjustment in the event of a subsequent issuance of
common stock at a price which is less than the price they paid. Existing
employee stock options, warrants and certain other future issuances as defined
in the purchase agreement would be excluded from the anti-dilution adjustment.
In connection with the Private Placement, Ursus entered into a registration
rights agreement with the investors which provides for the registration of the
common stock and the common stock underlying the warrants with the SEC, which is
the subject of this registration statement. We also agreed that such
registration will become effective within three months of the consummation of
the Private Placement, or within four months of the consummation of the Private
Placement if the registration statement becomes the subject of SEC review. If
there is a delay in the effectiveness of registration, we will have to pay the
Private Placement investors liquidated damages in the amount of 2% per month of
the aggregate amount paid by each such investor at the time the Private
Placement was consummated.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
THIS REGISTRATION STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS MADE WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED ("THE
"ACT") AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). WORDS SUCH AS "MAY," "WILL," "CONTINUE," "PROJECT,"
"ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES,"
AND SIMILAR EXPRESSIONS IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO KNOWN AND
UNKNOWN RISKS AND UNCERTAINTIES. THESE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES
COULD CAUSE ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND
PROSPECTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED. YOU SHOULD
NOT RELY ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT ONLY OUR OPINION AS
OF THE DATE OF THIS REGISTRATION STATEMENT. WE DO NOT ASSUME ANY OBLIGATION TO
REVISE FORWARD-LOOKING STATEMENTS. YOU SHOULD ALSO CAREFULLY REVIEW THE RISK
FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS WE FILE FROM TIME TO TIME WITH
THE SEC, PARTICULARLY OUR ANNUAL REPORT ON FORM 10-K, THE QUARTERLY REPORTS ON
FORM 10-Q AND ANY CURRENT REPORTS ON FORM 8-K.
USE OF PROCEEDS
Other than the payment to us by the selling shareholders of the warrant
exercise prices ranging from $12.9375 to $20.64 per share with respect to the
329,998 warrants, we will not receive any proceeds from the sale to the public
of the 945,113 shares of Ursus common stock by the selling shareholders. If all
the warrants are exercised, the proceeds to us will be approximately $5.2
million which will be used for the continued expansion of theStream.com, the
expansion of the IP network and working capital purposes.
SELLING SHAREHOLDERS
We issued 615,115 shares of common stock and 329,998 warrants to the
selling shareholders, listed in the table below. We are registering the 615,115
shares of common stock and 329,998 shares of our common stock underlying the
warrants to permit the selling shareholders to resell the common stock when they
deem appropriate and to permit the selling shareholders' pledgees, donees,
transferees or other successors-in-interest that receive their common stock or
warrants from a selling shareholder as a gift, partnership distribution or other
non-sale related transfer after the date of this prospectus to resell the common
stock when they deem appropriate.
The 615,115 shares of common stock were issued to three investors in
connection with the Private Placement which resulted in Ursus obtaining net
proceeds of approximately $6.6 million. The investors were granted 279,998
warrants at an exercise price of $15.3956 per share which will expire on
February 10, 2005. Additionally, we have granted the following warrants: (1)
warrants to purchase 25,000 shares of our common stock were granted to Dunwoody
Brokerage Services Inc. and their affiliates for their role in connection with
the aforementioned financing at an exercise price equal to 130% of the closing
price of Ursus common stock on the closing date or an effective price of $20.64
per share, such warrants to expire on February 10, 2005; and (2) warrants to
purchase 25,000 shares of our common stock were granted on January 6, 2000 to
Telcom.net, Inc. at an exercise price of $12.9375 per share for assisting us in
obtaining an affiliate agreement with Yupi.com, such warrants are exercisable
for a period of one year from the date of the effectiveness of this Registration
Statement on Form S-3 to which this prospectus relates. These warrants have been
valued at $58,750 using the Black-Scholes option pricing model and has been
recorded as a consulting expense.
Except as discussed above, the selling shareholders are in no way
associated with us. The following table sets forth the name of each of the
selling shareholders, the number of shares of our common stock owned by each of
the selling shareholders as of March 6, 2000, the number of shares that may be
offered under this Prospectus, and the number of shares of our common stock
owned by each of the selling shareholders after this offering is completed. The
number of shares in the column "Number of Shares Offered by this Prospectus"
represent all of the shares that each selling shareholder may offer under this
prospectus. We do not know when or if the selling shareholders will exercise
their warrants to acquire common stock or upon exercise of the warrants how long
the selling shareholders will hold the shares of common stock before selling
them. We currently have no agreements with any of the selling shareholders
regarding the sale of any of the shares. The shares offered by this prospectus
may be offered from time to time by the selling shareholders named below.
<TABLE>
<CAPTION>
Number of Number of Shares
Number of Shares Shares Subject to Offered by this
NAME OF SELLING SHAREHOLDER (1) Currently Owned Warrants (2) Prospectus
<S> <C> <C> <C>
The Tail Wind Fund Ltd. 386,643 248,798 635,441
Resonance Ltd. 175,747 24,000 199,747
Emerge Capital 52,725 7,200 59,925
James D. Mills* None 500 500
Eric S. Schwartz* None 7,500 7,500
Carlton M. Johnson, Jr.* None 1,000 1,000
P. Bradford Hathorn* None 1,000 1,000
Glenn R. Archer* None 750 750
Charles M. Whiteman* None 1,750 1,750
H. Nelson Logan* None 500 500
Marc A. Tepper* None 2,000 2,000
Michael E. Stough* None 500 500
Dwight B. Bronnum* None 1,000 1,000
Robert L. Hopkins* None 1,000 1,000
Kendick Family Partnership, L.P.* None 7,500 7,500
Telecom.net, Inc. None 25,000 25,000
</TABLE>
- -------------------------
(1) To the best of our knowledge, each selling shareholder named in the table
above has sole voting and investment power with respect to all shares shown as
beneficially owned by such selling shareholder.
(2) The number of shares set forth in the table represents the number of shares
of common stock issuable upon the exercise of all the warrants held by the
selling shareholder. The actual number of shares of common stock offered hereby,
and included in the Registration Statement of which this prospectus is a part,
includes such additional shares of common stock as may be issued or issuable
upon a stock split, stock dividend or similar transaction involving the common
stock.
* Shareholders are affiliates of Dunwoody Brokerage Services, Inc.
PLAN OF DISTRIBUTION
The common stock will be offered and sold to the present or any subsequent
shareholder from time to time in the over-the-counter market, in negotiated
transactions, or by a combination of these methods, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. A selling shareholder may elect to
engage a broker or dealer to effect sales in one or more of the following
transactions: (a) block trades in which the broker or dealer so engaged will
attempt to sell the converted shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction, (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this prospectus, (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers, (d) pro rata distributions
as part of the liquidation and winding up of the affairs of the shareholder, (e)
privately negotiated transactions and (f) exchange distributions and/or
secondary distributions in accordance with the rules of the Nasdaq. In effecting
sales, brokers and dealers engaged by the selling shareholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from shareholders in amounts to be negotiated (and, if
such broker-dealer acts as agent for the purchaser of such shares, from such
purchaser). Broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
shareholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to such selling shareholder.
Broker-dealers who acquire shares as principal may thereafter resell such
shares from time to time in transactions (which may involve crosses and block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive from the purchasers of
such shares commissions as described above. The selling shareholders may also
pledge such shares to banks, brokers or other financial institutions as security
for margin loans or other financial accommodations that may be extended to such
selling shareholders, and any such bank, broker or other institution may
similarly offer, sell and effect transactions in such shares.
The selling shareholders may from time to time deliver all or a portion of
the shares to cover a short sale or sales upon the exercise, settlement, or
closing of a call equivalent position or a put equivalent position.
The selling shareholders may sell all or any portion of the shares in
reliance upon Rule 144 under the Securities Act. Shares not sold pursuant to the
Registration Statement of which this prospectus is a part may be subject to
certain restrictions under the Securities Act and could be sold, if at all, only
pursuant to Rule 144 or another exemption from the registration requirements of
the Securities Act. In general, under Rule 144, a person (or persons whose
shares are aggregated) who has satisfied a one-year holding period may, under
certain circumstances, sell within any three-month period a number of shares
which does not exceed the greater of one percent of our outstanding shares of
common stock or the average weekly reported trading volume of our common stock
during the four calendar weeks prior to such sale. Rule 144 also permits, under
certain circumstances, the sale of shares by a person who is not an affiliate of
Ursus and who has satisfied a two-year holding period without any volume
limitation. Therefore, both during and after the effectiveness of the
Registration Statement, sales of the shares may be made by the selling
shareholders pursuant to Rule 144.
The selling shareholders and any broker-dealers or agents that participate
with the selling shareholders in sales of shares of common stock may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
Ursus will pay all expenses incident to the sale of the common stock to the
public other than underwriting discounts and selling commissions.
LEGAL MATTERS
Stroock & Stroock & Lavan LLP, Miami, Florida has passed upon certain legal
matters regarding the common stock for Ursus.
EXPERTS
The consolidated financial statements of Ursus Telecom Corporation
appearing in Ursus Telecom Corporation's Annual Report (Form 10-K) for the year
ended March 31, 1999 have been audited by Ernst & Young LLP, independent
certified public accountants, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS
We plan to furnish our shareholders with annual reports containing audited
financial statements and a report thereon by independent certified public
accountants and with quarterly reports for the first three quarters of each
fiscal year containing unaudited summary financial information.
GLOSSARY OF TERMS
ACCOUNTING OR SETTLEMENT RATE-The per minute rate negotiated between
carriers in different countries for termination of international long distance
traffic in, and return traffic to, the carriers' respective countries.
CALL REORIGINATION (ALSO KNOWN AS "CALLBACK")-A form of dial up access that
allows a user to access a telecommunications company's network by placing a
telephone call, hanging up, and waiting for an automated call reorigination. The
call reorigination then provides the user with a dial tone which enables the
user to initiate and complete a call.
CALL-THROUGH-The provision of international long distance service through
conventional long distance or "transparent" call reorigination.
DIRECT ACCESS-A means of accessing a network through the use of a permanent
point-to-point circuit typically leased from a facilities-based carrier. The
advantages of direct access include simplified premises-to-anywhere calling,
faster call set-up times and potentially lower access and transmission costs
(provided there is sufficient traffic over the circuit to generate economies of
scale).
DIAL UP ACCESS-A form of service whereby access to a network is obtained by
dialing an international toll-free number or a local access number.
FACILITIES-BASED CARRIER-A carrier which transmits a significant portion of
its traffic over owned transmission facilities.
FCPA-Foreign Corrupt Practices Act.
FIBER OPTIC-A transmission medium consisting of high-grade glass fiber
through which light beams are transmitted carrying a high volume of
telecommunications traffic.
IDD-International Direct Dial.
INTERNET PROTOCOL (IP)-A class of product that uses data and/or voice
transmission over the Internet/Intranet.
ISP-International Settlements Policy. The ISP establishes the permissible
arrangements between facilities-based carriers based in the U.S. and their
foreign counterparts for terminating each other's traffic over their respective
networks.
ITO (INCUMBENT TELECOMMUNICATIONS OPERATOR)-The dominant carrier or
carriers in each country, often, but not always, government-owned or protected
(alternatively referred to as the Postal, Telephone and Telegraph Company, or
PTT).
ITU-International Telecommunications Union-International Telecommunications
Association headquartered in Geneva, Switzerland.
LEC (LOCAL EXCHANGE CARRIER)-Companies from which Ursus and other long
distance providers must purchase "access services" to originate and terminate
calls in the U.S.
LOCAL EXCHANGE-A geographic area determined by the appropriate regulatory
authority in which calls generally are transmitted without toll charges to the
calling or called party.
NODE-A specially configured multiplexer which provides the interface
between the local PSTN where the node is located and a switch. A node collects
and concentrates call traffic from its local area and transfers it to a switch
via private line for call processing. Nodes permit a carrier to extend its
network into new geographic locations by accessing the local PSTN without
requiring the deployment of a switch.
OPERATING AGREEMENTS-An agreement that provides for the exchange of
international long distance traffic between correspondent international long
distance providers that own facilities in different countries. These agreements
provide for the termination of traffic in, and return traffic from, the
international long distance providers' respective countries at a negotiated
"accounting rate." Under a traditional operating agreement, the international
long distance provider that originates more traffic compensates the
corresponding long distance provider in the other country by paying an amount
determined by multiplying the net traffic imbalance by the latter's share of the
accounting rate.
PSCS-Public Service Commissions.
PRIVATE LINE-A dedicated telecommunications connection between end user
locations.
PUBLIC SWITCHED TELEPHONE NETWORK-A telephone network which is accessible
by the public through private lines, wireless systems and pay phones.
REFILE-Traffic originating from one country (original country) and destined
to another country (receiving country) is routed through a third country without
the knowledge of the receiving country. The receiving country has only
identified the third country and assumes the traffic originated from the third
country only.
RESALE-Resale by a provider of telecommunications services of services sold
to it by other providers or carriers on a wholesale basis.
SEC-The Securities and Exchange Commission.
SWITCHING-A process which uses interconnecting circuits to form a
transmission path.
TRANSIT-Traffic originating from one country and destined to another
country is routed through a third country with the full knowledge and consent of
all countries and carriers concerned.
TRANSPARENT CALL REORIGINATION-Technical innovations have enabled
telecommunications carriers to offer a "transparent" form of call reorigination
where the call is automatically and swiftly processed by a programmed switch
without the usual "hang up" and "callback."
WEB CENTRIC-The process by which software programs runs in the Internet
browser as opposed to running on the individual's local personal computers.
<PAGE>
945,113 SHARES
URSUS TELECOM CORPORATION
COMMON STOCK
-------
PROSPECTUS
-------
MARCH __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses payable by it in connection with the
offering described in this Registration Statement will be approximately as
follows:
Legal fees and expenses $8,000.00
Accounting fees and expenses 6,000.00
SEC registration fee 4,810.86
Miscellaneous 1,000.00
------------
Total $19,810.86
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation indemnifies, to the fullest
extent permitted by the Law of the State of Florida, the directors of the
Registrant.
Every person (and the heirs, executors and administrators of such person)
who is or was a director, officer, employee or agent of the Corporation or of
any other company, including another corporation, partnership, joint venture,
trust or other enterprise on which such person serves or served at the request
of the Corporation shall be indemnified by the Corporation against all
judgments, payments in settlement (whether or not approved by court), fines,
penalties and other reasonable costs and expenses (including attorneys' fees and
costs) imposed upon or incurred by such person in connection with or resulting
from any action, suit, proceeding, investigation or claim, civil, criminal,
administrative, legislative or other (including any criminal action, suit or
proceeding in which such person enters a plea of guilty or NOLO CONTENDERE or
its equivalent), or any appeal relating thereto which is brought or threatened
either by or in the right of the Corporation or such other company (herein
called a "Derivative Action") or by any other person, governmental authority or
instrumentality (herein called a "Third-Party Action") and in which such person
is made a party or is otherwise involved by reason of his being or having been
such director, officer, employee or agent or by reason of any action or omission
or alleged action or omission by such person in his capacity as such director,
officer, employee or agent if either (i) such person is wholly successful, on
the merits or otherwise, in defending such derivative or third-party action or
(ii) in the judgment of a court of competent jurisdiction or, in the absence of
such a determination, in the judgment of a majority of a quorum of the Board of
Directors (which quorum shall not include any director who is a party to or is
otherwise involved in such action), or, in the absence of such a disinterested
quorum, in the opinion of independent legal counsel (iii) in the case of a
Derivative Action, such person acted without negligence or misconduct in the
performance of his duty to the Corporation or such other company or (iv) in the
case of a Third-Party Action, such person acted in good faith in what he
reasonably believed to be the best interests of the Corporation or such other
company, and in addition, in any criminal action, had no reasonable cause to
believe that his action was unlawful; provided that, in the case of a Derivative
Action, such indemnification shall not be made in respect of any payment to the
Corporation or such other company or any shareholder thereof in satisfaction of
judgment or in settlement unless either (x) a court of competent jurisdiction
has approved such settlement, if any, and the reimbursement of such payment or
(y) if the court in which such action has been instituted lacks jurisdiction to
grant such approval or such action is settled before the institution of judicial
proceedings, in the opinion of independent legal counsel the applicable standard
of conduct specified hereinbefore has been met, such action was without
substantial merit, such settlement was in the best interests of the Corporation
or such other company and the reimbursement of such payment is permissible under
applicable law. In case such person is successful on the merits or otherwise in
defending part of such action, or in the judgment of such a court or such quorum
of the Board of Directors or in the opinion of such counsel has met the
applicable standard of conduct specified in the preceding sentence with respect
to part of such action, he (she) shall be indemnified by the Corporation against
the judgments, settlements, payments, fines, penalties, and other costs and
expenses attributable to such part of such action.
The foregoing rights of indemnification shall be in addition to any rights
which any such director, officer, employee or agent may otherwise be entitled
any agreement or vote of shareholders or at law or in equity or otherwise.
In any case in which, in the judgment of a majority of such a disinterested
quorum of the Board of Directors, any such director, officer or employee will be
entitled to indemnification under the foregoing provisions of this Article, such
amounts as they deem necessary to cover the reasonable costs and expenses
incurred by such person in connection with the action, suit, proceeding,
investigation or claim prior to final disposition thereof may be advanced to
such person upon receipt of an undertaking by or on behalf of such person to
repay such amounts if it is ultimately determined that he (she) is not so
entitled to indemnification.
The amendment or repeal of, or adoption of any provision inconsistent with,
this Article SIXTH will require the affirmative vote of the holders of at least
66 2/3% of the common stock and all series of voting Preferred Stock, voting
together as a single class. Any amendment or repeal of, or adoption of any
provision inconsistent with, this Article SIXTH will not adversely affect any
right or protection existing hereunder prior to such amendment, repeal, or
adoption.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT INDEX
Exhibit Sequential
Number Page No.
- ------ --------
3.1+ - Articles of Incorporation of the Company
3.2+ - Form of Amended and Restated Articles of
Incorporation of the Company
3.3+ - Bylaws of the Company
3.4+ - Form of Amended and Restated Bylaws of Company
4.1+ - Specimen of Certificate for Common Stock
5.1* - Opinion of Stroock & Stroock & Lavan LLP II-7
10.1+ - Employment Agreement between the Company and Luca M.
Giussani
10.2+ - Amendment to Employment Agreement with Luca M. Giussani
10.3+ - Employment Agreement between the Company and Jeffrey R.
Chaskin
10.4+ - Amendment to Employment Agreement with Jeffrey R. Chaskin
10.5+ - Employment Agreement between the Company and Johannes S.
Seefried
10.6+ - Amendment to Employment Agreement with Johannes S.
Seefried
10.7+ - Employment Agreement between the Company and Richard C.
McEwan
10.8^ - Employment Agreement between the Company and Paul Biava
10.9+ - Lease Agreement
10.10+ - Form of 1998 Stock Incentive Plan
10.11+ - Form of Financial Consulting Agreement
10.12+ - Form of Agency Agreement
10.13+ - Agreement regarding formation of Ursus Telecom France
10.14+ - Agreement regarding purchase of interest in
South African Agency
10.15+ - Agreement dated January 20, 1998 among Messrs.
Giussani, Rispoli and the Company
10.16+ - Form of Representative's Warrant
10.17+ - Form of Lock Up Letter
10.18< - Purchase Agreement dated February 10, 2000 by and
between Ursus Telecom Corporation and The
Tail Wind Fund Ltd., Emerge Capital and Resonance
Limited
10.19< - Registration Rights Agreement dated February 10,
2000 by and between Ursus Telecom Corporation and
The Tail Wind Fund Ltd., Emerge Capital and
Resonance Limited
10.20< - Form of Stock Purchase Warrant issued to The Tail Wind
Fund Ltd., Emerge Capital and Resonance Limited on
February 10, 2000
10.21* - Form of Stock Purchase Warrant originally issued to
Dunwoody Brokerage Services, Inc. on
February 10, 2000 II-8
10.22* - Form of Stock Purchase Warrant issued to
Telecom.net, Inc. on January 6, 2000 II-14
10.23>** - Network Service Agreement with Global
Crossing USA, Inc.
10.24* - Power of Attroney, Reference is amde to page II-6
21.1^ - List of Subsidiaries
23.1* - Consent of Ernst & Young LLP II-25
27^ - Financial Data Schedule
- -----------
+ Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (File No. 333-46197) and incorporated herein by reference.
^ Previously filed as an exhibit to the Company's Form 10-K for the year
ended March 31, 1999 and incorporated herein by reference.
> Previously filed as an exhibit to the Company's Current Report on Form 8-K
on August 19, 1999 and incorporated herein by reference.
< Previously filed as an exhibit to the Company's Current Report on Form 8-K
on February 18, 2000
* Filed herewith.
** Confidential treatment has been granted with respect to certain information
contained in this exhibit.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offer or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreement, certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunrise, State of Florida, on this 13th day of March,
2000. Ursus Telecom Corporation
By: /s/ LUCA M. GIUSSANI
----------------------
Luca M. Giussani
CHIEF EXECUTIVE OFFICER
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW HEREBY CONSTITUTES AND APPOINTS LUCA M. GIUSSANI, AS HIS ATTORNEY-IN-FACT,
WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM IN ANY AND ALL
CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT
(INCLUDING POST-EFFECTIVE AMENDMENTS), AND TO FILE THE SAME, WITH EXHIBITS
THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND
EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEY-IN-FACT FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY
TO BE DONE IN CONNECTION THEREWITH AS FULLY TO ALL INTENTS AND PURPOSES AS HE
MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEY-IN-FACT, OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:
Signature Title Date
/s/ Luca M. Giussani Chief Executive Officer and Director March 13, 2000
- ------------------------
Luca M. Giussani
/s/ Jeffrey R. Chaskin
- ------------------------- President, Chief Operating March 13, 2000
Jeffrey R. Chaskin Officer and Director
/s/ Johannes S. Seefried Chief Financial Officer and Director March 13, 2000
- -------------------------
Johannes S. Seefried
/s/ Steven L. Relis Chief Accounting Officer March 13, 2000
- -------------------------
Steven L. Relis
<PAGE>
EXHIBIT 5.1
OPINION OF STROOCK, STROOCK & LAVAN
STROOCK & STROOCK & LAVAN LLP
First Union Financial Center
200 South Biscayne Boulevard
Suite 3300
Miami, Florida 33131-2385
March 13, 2000
Ursus Telecom Corporation
440 Sawgrass Corporate Parkway
Suite 112
Sunrise, Florida 33325
Re: URSUS TELECOM CORPORATION REGISTRATION STATEMENT ON FORM S-3
------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Ursus Telecom Corporation, a Florida corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), of a Registration Statement on Form
S-3 (the "Registration Statement"), relating to 945,113 shares of Common Stock
of the Company, $.01 par value per share, and Common Stock underlying warrants
granted by the Company (the "Shares"). The Shares may be issued by the Company
to the selling shareholders set forth in the Registration Statement (the
"Selling Shareholders") upon exercise by the Selling Shareholders of the
warrants described in the Registration Statement (the "Warrants"). The Shares,
once issued, are to be sold from time to time as set forth in the Registration
Statement, the prospectus contained therein and any amendments or supplements
thereto.
As such counsel, we have examined copies of the Articles of Incorporation and
By-Laws of the Company, each as in effect as of the date hereof, and the
Registration Statement. We also have examined the original or reproduced or
certified copies of all such records of the Company, all such agreements,
certificates of officers and representatives of the Company and others, and such
other documents, papers, statutes and authorities as we deemed necessary to form
the basis of the opinions hereinafter expressed. In such examinations, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of copies
of documents supplied to us by the Company and others. As to certain matters of
fact relevant to the opinions expressed herein, we have relied upon statements
and certificates of officers of the Company and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of Florida and we do not purport to be experts on, or to
express any opinion herein concerning, any law other than the laws of the State
of Florida and the federal laws of the United States of America.
Based upon and subject to the foregoing, we are of the opinion that the Shares
to be issued upon exercise of the Warrants (assuming payment of the exercise
price of the Warrants) when issued will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus forming a
part of the Registration Statement. In giving such consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN LLP
By: /s/ Michael Basile
-----------------------------
Michael Basile
Partner
Exhibit 10.21
FORM OF WARRANT ORIGINALLY ISSUED TO DUNWOODY BROKERAGE SERVICES, INC.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.
VOID AFTER 5:00 P.M. EASTERN TIME ON FEBRUARY 10, 2005 ("EXPIRATION
DATE").
URSUS TELECOM CORPORATION
WARRANT TO PURCHASE ______ SHARES OF
COMMON STOCK, PAR VALUE $0.01 PER SHARE ("COMMON STOCK")
For VALUE RECEIVED, ____________________________________ ("Warrantholder"),
is entitled to purchase, subject to the provisions of this Warrant, from Ursus
Telecom Corporation, a Florida corporation ("Company"), at any time not later
than 5:00 P.M., Eastern time, on the Expiration Date, at an exercise price per
share equal to $_____ (the exercise price in effect being herein called the
"Warrant Price"), _____ shares ("Warrant Shares") of Common Stock. The number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as described herein.
Section 1. REGISTRATION. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. TRANSFERS. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act") or an exemption from such
registration; provided, however, this Warrant may only be transferred to an
affiliate of the Warrantholder. Subject to such restrictions, the Company shall
transfer this Warrant from time to time upon the books to be maintained by the
Company for that purpose, upon surrender thereof for transfer properly endorsed
or accompanied by appropriate instructions for transfer and such other documents
as may be reasonably required by the Company to establish that such transfer is
being made in accordance with the terms hereof, and a new Warrant shall be
issued to the transferee and the surrendered Warrant shall be canceled by the
Company.
Section 3. EXERCISE OF WARRANT. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time upon
surrender of the Warrant, together with delivery of the duly executed Warrant
exercise form attached hereto (the "Exercise Agreement") and payment by cash,
certified check or wire transfer of funds for the Warrant Price for that number
of Warrant Shares then being purchased, to the Company during normal business
hours on any business day at the Company's principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
holder hereof). The Warrant Shares so purchased shall be deemed to be issued to
the holder hereof or such holder's designee, as the record owner of such shares,
as of the close of business on the date on which this Warrant shall have been
surrendered (or evidence of loss, theft or destruction thereof and security or
indemnity satisfactory to the Company), the Warrant Price shall have been paid
and the completed Exercise Agreement shall have been delivered. Certificates for
the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding seven (7) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. Neither this
Warrant nor the Common Stock issued upon exercise hereof nor any other security
issued or issuable upon exercise of this Warrant may be offered, sold or
transferred except as provided in this agreement and in conformity with the
Securities Act, and then only against receipt of an agreement of such person to
whom such offer of sale is made to comply with the provisions of this Section 4
with respect to any resale or other disposition of such security. The Company
may cause the legend set forth on the first page of this Warrant to be set forth
on each Warrant or similar legend on any security issued or issuable upon
exercise of this Warrant, unless counsel for the Company is of the opinion as to
any such security that such legend is unnecessary.
Section 5. PAYMENT OF TAXES. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid. The holder shall be responsible for income taxes due under federal, state
or other law, if any such tax is due.
Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall
be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange
and substitution of and upon cancellation of the mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. RESERVATION OF COMMON STOCK. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued Common Stock, sufficient
shares to provide for the exercise of the rights of purchase represented by the
Warrant. The Company agrees that all Warrant Shares issued upon exercise of the
Warrant shall be, at the time of delivery of the certificates for such Warrant
Shares, duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock of the Company.
Section 8. ADJUSTMENTS. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while
the Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event upon payment of a Warrant
Price that has been adjusted to reflect a fair allocation of the economics of
such event to the Warrantholder. Such adjustments shall be made successively
whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitations, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or properties thereafter deliverable upon the exercise
thereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume the obligation to deliver to the holder of the Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase and the other obligations under this
Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
(c) In case the Company shall fix a payment date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
8(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such payment date shall be determined by multiplying the Warrant Price in
effect immediately prior to such payment date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price per share of Common Stock (as defined below), less the fair
market value (as determined by the Company's Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Market Price per
share of Common Stock. "Market Price" shall mean the average of the twenty-five
(25) consecutive closing bid prices of the Common Stock immediately preceding
the date in question. Such adjustment shall be made successively whenever such a
payment date is fixed.
(d) If, at any time within one year of the date of issuance of
this Warrant, the Company issues to an investor shares of common stock at a
price (the "Issue Price") lower than $17.2, then the exercise price of the
Warrant shall be adjusted to equal a price equal to 120% of the Issue Price.
This subsection (d) shall no longer apply the day after the effective date of
any public offering of common stock by the Company.
The adjustments in this subsection (d) shall not apply to any of
the following:
(i) issuances of options to acquire shares of Common Stock
by the Company pursuant to the provisions of any existing shareholder-approved
option or similar employee benefit plan heretofore adopted by the Company or
issuances of up to 1,000,000 shares of Common Stock to directors or employees of
the Company pursuant to the provisions of any subsequently adopted
shareholder-approved option or similar employee benefit plan; or
(ii) sales of shares of Common Stock by the Company upon
conversion or exercise of any convertible securities, options or warrants
outstanding prior to the date hereof; or
(iii) issuances by the Company of up to 2,000,000 shares of
Common Stock in the aggregate during such one (1) year period so long as within
the following categories: (A) the issuance by the Company of up to 750,000
shares of Common Stock during the one (1) year period as consideration for the
acquisition by the Company of one or more privately held entities; (B) the
issuance by the Company of up to 750,000 shares of Common Stock during the one
(1) year period as consideration for the acquisition by the Company of one or
more publicly traded companies; (C) the issuance by the Company of up to 400,000
shares of Common Stock to corporate strategic partners of the Company in
connection with the formation of joint ventures or marketing agreements; and (D)
the issuance by the Company of up to 100,000 shares of Common Stock to
consultants of the Company in consideration for services to be rendered to the
Company.
(e) An adjustment shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made pursuant
to Section 8(a), the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
Section 9. FRACTIONAL INTEREST. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of the Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
fractional share shall be disregarded and the number of shares to be issued upon
exercise shall be the number of whole shares only.
Section 10. BENEFITS. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
Section 11. NOTICES TO WARRANTHOLDER. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment.
Section 12. IDENTITY OF TRANSFER AGENT. The Transfer Agent for the
Common Stock is Continental Stock Transfer & Trust Company. Upon the appointment
of any subsequent transfer agent for the Common Stock or other shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant, the Company will mail to the Warrantholder a
statement setting forth the name and address of such transfer agent.
Section 13. NOTICES. Any notice pursuant hereto to be given or made by
the Warrantholder to or on the Company shall be sufficiently given or made if
sent by certified mail, return receipt requested, postage prepaid, addressed as
follows:
Ursus Telecom Corporation
440 Sawgrass Corporate Parkway
Sunrise, FL 33325
Attn: Johannes Seefried
Chief Financial Officer
Fax: (954) 846-7884
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 13.
Any notice pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if personally delivered or
if sent by an internationally recognized courier services by overnight or
two-day service, to the address set forth on the books of the Company or, as to
each of the Company and the Warrantholder, at such other address as shall be
designated by such party by written notice to the other party complying as to
delivery with the terms of this Section 13. All such notices, requests, demands,
directions and other communications shall, when sent by courier be effective two
(2) days after delivery to such courier as provided and addressed as aforesaid.
Section 14. REGISTRATION RIGHTS. The initial holder of this Warrant is
entitled to the benefit of certain registration rights set forth in the
Placement Agent Agreement dated February 16, 2000, between the Company and
Dunwoody Brokerage Services, Inc.
Section 15. SUCCESSORS. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 16. GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of New York, without giving effect to
its conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
duly executed, as of the day and year first above written.
URSUS TELECOM CORPORATION
By: /s/
----------------------
Name:
Title:
<PAGE>
Ursus Telecom Corporation
WARRANT EXERCISE FORM
To: Ursus Telecom Corporation
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
-------------------------------
Name
--------------------------------
Address
--------------------------------
--------------------------------
Federal Tax ID or Social Security No.
and delivered by / / certified mail to the above address, or
/ / electronically (provide DWAC Instructions:_______), or
/ / other (specify: _________________________________).
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.
By exercising the rights represented by this Warrant, the undersigned
hereby certifies that, as of the date of exercise of this Warrant, the
representations and warranties contained in Section 5 of the Purchase Agreement
are true and correct in all material respects with respect to the undersigned.
Dated:___________________, ____
Note: The signature must correspond with Signature:______________________
the name of the registered holder as written
on the first page of the Warrant in every ______________________________
particular, without alteration or enlargement Name (please print)
or any change whatever, unless the Warrant
has been assigned. ______________________________
______________________________
Address
______________________________
Federal Identification or
Social Security No.
Assignee:
______________________________
______________________________
______________________________
Exhibit 10.22
FORM OF WARRANT ISSUED TO TELECOM.NET, INC.
URSUS TELECOM CORPORATION
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAW OR EXCEPT UPON DELIVERY TO URSUS TELECOM CORPORATION (THE
"COMPANY") OF AN OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT THE PROPOSED TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION UNDER SUCH ACT OR REGISTRATION OR QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS.
Warrant
No. _____ _______________ Shares of Common Stock
THIS CERTIFIES that, for value received, _____________________________
_______________________(the "Holder"), is entitled to subscribe for and purchase
from Ursus Telecom Corporation, a Florida corporation (the "Company"), upon the
terms and conditions set forth herein, at any time or from time to time from and
after July 1, 1999 and before 5:00 p.m. Eastern Standard Time on the date which
is twelve (12) months following the date a registration statement filed by the
Company with the Securities and Exchange Commission with respect to Common
Shares has been declared or is deemed to be effective (the "Exercise Period"),
an aggregate of ______ shares of common stock, $.01 par value per share (the
"Common Shares"), of the Company (as adjusted, the "Underlying Shares") at an
exercise price of ______ per Common Share. The Underlying Shares are sometimes
collectively referred to herein as the "Underlying Securities."
This Warrant is the warrant (collectively, including any warrants issued
upon the exercise or transfer of any such warrants in whole or in part, the
"Warrants") issued pursuant to an agreement dated October 22, 1999 (the
"Agreement"), between the Company and __________. As used herein the term "this
Warrant" shall mean and include this Warrant and any Warrant or Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant in
whole or in part.
1. (a) This Warrant may be exercised during the Exercise Period, as to the
whole or any lesser number of whole Underlying Shares, by the surrender of this
Warrant (with the election at the end hereof duly executed) to the Company at
its office at Ursus Telecom Corporation, 440 Sawgrass Corporate Parkway, Suite
112, Sunrise, Florida 33325, or at such other place as is designated in writing
by the Company, together with payment of the Exercise Price (as defined)
multiplied by the number of Underlying Shares for which this Warrant is being
exercised. This Warrant may only be exercised for a proportionate amount of
Underlying Shares in amounts of not less than 100 Common Shares (unless less
than an aggregate of 100 Common Shares are then purchasable under this Warrant
by the Holder).
(b) Payment of the Exercise Price may be made (i) in cash, by check
made payable to the Company, or cash equivalent, (ii) tender to the Company of
Common Shares owned by the Holder having a value, as determined by the Board
(but without regard to any restrictions on transferability applicable to such
stock by reason of federal or state securities laws or agreements with an
underwriter for the Company), not less than the Exercise Price, (iii) by the
assignment to a broker-dealer registered under the Securities Exchange Act of
1934 ("Exchange Act") of the proceeds of a sale of some or all of the shares
being acquired upon the exercise of the Warrant, provided such assignment
complies with Regulation T as promulgated under the Exchange Act by the Board of
Governors of the Federal Reserve System, (iv) by tender to the Company of a
portion of this Warrant, which portion shall be deemed to have a value equal to
the difference between the Exercise Price and the fair market value per share of
the Common Shares purchasable upon exercise of the portion of the Warrant
tendered (as determined by reference to the closing sale price or in the absence
thereof, the closing bid price, on the trading date preceding the date that such
tender is made), or (v) by any combination thereof.
2. Upon each exercise of the Holder's rights to purchase Common Shares, the
Holder shall be deemed to be the holder of record of the Underlying Shares
issuable upon such exercise, notwithstanding that the transfer books of the
Company shall then be closed or certificates representing such Underlying Shares
shall not then have been actually delivered to the Holder. Promptly after each
such exercise of this Warrant, the Company shall issue and deliver, or shall
cause the transfer agent for the Common Shares to issue and deliver, to the
Holder a certificate or certificates for the Underlying Shares issuable upon
such exercise, registered in the name of the Holder or its designee. The Company
has reserved, deposited and will at all times maintain with the transfer agent
for the Common Shares a number of Underlying Shares sufficient for issuance and
delivery upon exercise of the Warrants. In the event that the Company fails
promptly to issue and deliver or cause the issuance and delivery of certificates
for Common Shares in accordance with the second sentence of this Section, the
Representative is hereby irrevocably designated the Company's agent to so
instruct the transfer agent for the Common Shares to issue and deliver such
certificates and to take any other actions either of them deem necessary or
appropriate in connection with such issuance and delivery. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the right
of the Holder to purchase the balance of the Underlying Shares (or portions
thereof) subject to purchase hereunder.
3. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a Warrant Register as they
are issued. The Company shall be entitled to treat the registered holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or the nominee is committing a breach of trust
in requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. This Warrant shall be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Warrant or Warrants to the person entitled thereto. This
Warrant may be exchanged, at the option of the Holder thereof, for another
Warrant, or other Warrant of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Underlying
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act").
4. The Company shall at all times reserve and keep available for issuance
upon the exercise of the Warrants and on deposit with the transfer agent for the
Common Shares a number of its authorized and unissued Common Shares that will be
sufficient to permit the exercise in full of the Warrants. The Company covenants
that all Common Shares issuable upon exercise of this Warrant, upon receipt by
the Company of the full payment therefor, shall be validly issued, fully paid,
nonassessable, and free of preemptive rights.
5. (a) In case the Company shall at any time after the date hereof (i)
declare a dividend on the outstanding Common Shares payable in shares of its
capital stock, (ii) subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Shares (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Exercise
Price, and the number of Underlying Shares issuable upon exercise of the
Warrants in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination, or reclassification, shall be
proportionately adjusted so that the holders of the Warrants after such time
shall be entitled to receive the aggregate number and kind of shares which, if
such Warrants had been exercised immediately prior to such time, such holders
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(c) In any case in which this Section 5 shall require that an
adjustment in the number of Underlying Shares be made effective as of a record
date for a specified event the Company may elect to defer, until the occurrence
of such event, issuing to the Holder, if the Holder exercised this Warrant after
such record date, the Common Shares, if any, issuable upon such exercise over
and above the number of Underlying Shares, if any, issuable upon such exercise
on the basis of the number of Underlying Shares in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to the Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(d) Whenever there shall be an adjustment as provided in this Section
5, the Company shall promptly cause written notice thereof to be sent by
registered mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Underlying Shares issuable
pursuant to such Warrants and the Exercise Price, after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
(e) The Company shall not be required to issue fractions of Common
Shares or other capital stock of the Company upon the exercise of this Warrant.
If any fraction of a share would be issuable on the exercise of this Warrant (or
specified portions thereof), the Company shall purchase such fraction for an
amount in cash equal to the same fraction of the Current Market Price (as
hereinafter defined) of such Common Share on the date of exercise of this
Warrant.
(f) The "Current Market Price" per Common Share on any date shall be
defined as the average of the daily closing prices for the 30 consecutive
trading days immediately preceding the date in question. The closing price for
each day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the closing bid price regular way, in
either case on the principal national securities exchange (including, for
purposes hereof, the Nasdaq National Market System) on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the highest reported
bid price for the Common Shares as furnished by the National Association of
Securities Dealers, Inc. through The Nasdaq Stock Market, Inc. or a similar
organization if The Nasdaq Stock Market, Inc. is no longer reporting such
information. If on any such date the Common Shares are not listed or admitted to
trading on any national securities exchange and are not quoted by The Nasdaq
Stock Market, Inc. or any similar organization, the fair value of the Common
Shares on such date, as determined in good faith by the Board of Directors of
the Company, whose determination shall be conclusive absent manifest error,
shall be used.
6. (a) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant solely the kind and
amount of Common Shares and other securities, property, cash, or any combination
thereof receivable upon such consolidation, merger, sale, lease, or conveyance
by a holder of the number of Common Shares for which this Warrant might have
been exercised immediately prior to such consolidation, merger, sale, lease, or
conveyance and (ii) make effective provision in its certificate or articles of
incorporation or otherwise, if necessary, to effect such agreement. Such
agreement shall provide for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5 hereof.
(b) In case of any reclassification or change of the Common Shares
issuable upon exercise of this Warrant (other than a change in par value or from
no par value to a specified par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more classes or
series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the Common Shares (other than a
change in par value, or from no par value to a specified par value, or as a
result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and amount
of shares of stock and other securities, property, cash, or any combination
thereof receivable upon such reclassification, change, consolidation, or merger
by a holder of the number of Common Shares for which this Warrant might have
been exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in Section 5 hereof.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of Common Shares and to successive
consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on Common Shares in
Common Shares or make any other distribution (other than regularly scheduled
cash dividends which are not in a greater amount per share than the most recent
such cash dividend) to all holders of Common Shares; or
(b) to issue any rights, warrants, or other securities to all holders
of Common Shares entitling them to purchase any additional Common Shares or any
other rights, warrants, or other securities; or
(c) to effect any reclassification or change of outstanding Common
Shares, or any consolidation, merger, sale, lease, or conveyance of property,
described in Section 6(b); or
(d) to effect any liquidation, dissolution, or winding up of the
Company;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of Common Shares to
be entitled to receive any such dividend, distribution, rights, warrants, or
other securities are to be determined, or (ii) the date on which any such
reclassification, change of outstanding Common Shares, consolidation, merger,
sale, lease, conveyance of property, liquidation, dissolution, or winding up is
expected to become effective, and the date as of which it is expected that
holders of record of Common Shares shall be entitled to exchange their shares
for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution, or winding up. Any such
notice shall be deemed delivered on the date of actual delivery as shown by the
certification receipt or at the expiration of the tenth (10th) business day
after the date of mailing, whichever is earlier in time.
8. The issuance of any shares or other securities upon the exercise of this
Warrant, and the delivery of certificates or other instruments representing such
shares or other securities, shall be made without charge to the Holder for any
tax or other charge in respect of such issuance. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of any certificate in a name other than that
of the Holder and the Company shall not be required to issue or deliver any such
certificate unless and until the person or persons requesting the issue 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.
9. (a) If, at any time during the Exercise Period, the Company shall file a
registration statement (other than on Form S-4, Form S-8, or any successor form)
with the Securities and Exchange Commission (the "Commission") while this
Warrant or any of the Holder's Securities (as hereinafter defined) are
outstanding, the Company shall give all the then holders of the Warrants or any
Holder's Securities (collectively, the "Eligible Holders") at least 45 days'
prior written notice of the filing of such registration statement. If requested
by any Eligible Holder in writing within 30 days after receipt of any such
notice, the Company shall, at the Company's sole expense (other than the fees
and disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Holder's Securities sold by any
Eligible Holder), register or qualify all or, at each Eligible Holder's option,
any portion of the Holder's Securities of any Eligible Holder who shall have
made such request, concurrently with the registration of such other securities,
all to the extent requisite to permit the public offering and sale of the
Holder's Securities through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts through
its officers, directors, auditors, and counsel to cause such registration
statement to become effective as promptly as practicable. Notwithstanding the
foregoing, if the managing underwriter of any such offering shall advise the
Company in writing that, in its opinion, the distribution of all or a portion of
the Holder's Securities requested to be included in the registration
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then any Eligible Holder who shall have requested
registration of his or its Holder's Securities shall delay the offering and sale
of such Holder's Securities (or the portions thereof so designated by such
managing underwriter) for such period, not to exceed 90 days (the "Delay
Period"), as the managing underwriter shall request, provided that no such delay
shall be required as to any Holder's Securities if any securities of the Company
are included in such registration statement and eligible for sale during the
Delay Period for the account of any person other than the Company and any
Eligible Holder unless the securities included in such registration statement
and eligible for sale during the Delay Period for such other person shall have
been reduced pro rata to the reduction of the Representative's Securities which
were requested to be included and eligible for sale during the Delay Period in
such registration. As used herein, "Holder's Securities" shall mean the
Underlying Securities which have not been previously sold pursuant to a
registration statement or Rule 144 promulgated under the Act.
(b) In the event of a registration pursuant to the provisions of this
Section 9, the Company shall use its best efforts to cause the Holder's
Securities so registered to be registered or qualified for sale under the
securities or Blue Sky Laws of such jurisdictions as the Holder or such holders
may reasonably request; PROVIDED, HOWEVER, that the Company shall not be
required to qualify to do business in any state by reason of this Section 9(b)
in which it is not otherwise required to qualify to do business.
(c) The Company shall keep effective any registration or qualification
contemplated by this Section 9 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document, and communication until the earlier of the
conclusion of the period required to permit the Eligible Holders to complete the
offer and sale of the Holder's Securities covered thereby and 90 days from the
effective date of the Registration Statement; PROVIDED, HOWEVER, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Holder's Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Holder's Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(d) In the event of a registration pursuant to the provisions of this
Section 9, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other documents, as any Eligible Holder may reasonably request to
facilitate the disposition of the Holder's Securities included in such
registration.
(e) In the event of a registration pursuant to the provisions of this
Section 9, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses, and customary closing
conditions, including, but not limited to, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Holder's Securities.
(f) The Company agrees that until all the Holder's Securities have
been sold under a registration statement or pursuant to Rule 144 under the Act,
it shall keep current in filing all reports, statements and other materials
required to be filed with the Commission to permit holders of the Holder's
Securities to sell such securities under Rule 144.
(g) So long as any Holder's Securities are outstanding, the Company
will not enter into any agreement requiring the registration of any securities
of the Company which is in conflict with the terms of this Section 9.
10. (a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 10, but not be limited to, attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
relating to the sale of any of the Holder's Securities, or (B) in any
application or other document or communication (in this Section 10 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Holder's Securities
under the securities or Blue Sky laws thereof or filed with the Commission or
any securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
such Eligible Holder by or on behalf of such Person expressly for inclusion in
any registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Warrant. The foregoing agreement to indemnify shall be
in addition to any liability the Company may otherwise have, including
liabilities arising under this Warrant.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "Indemnified Party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
Indemnified Party or Parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 10) and the
Company shall promptly assume the defense of such action, including the
employment of counsel and payment of expenses. Such Indemnified Party or Parties
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel reasonably
satisfactory to such Indemnified Party or Parties to have charge of the defense
of such action or such Indemnified Party or Parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other Indemnified Parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company and the Company shall not have the right to direct the
defense of such action on behalf of the Indemnified Party or Parties. Anything
in this Section 10 to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld. The Company shall
not, without the prior written consent of each Indemnified Party that is not
released as described in this sentence, settle or compromise any action, or
permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respect of which indemnity may be
sought hereunder (whether or not any Indemnified Party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each Indemnified Party from all liability in respect of
such action. The Company agrees promptly to notify the Eligible Holders of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of any Holder's Securities or
any of its officers or directors in connection with the sale of any Holder's
Securities or any preliminary prospectus, prospectus, registration statement, or
amendment or supplement thereto, or any application relating to any sale of any
Holder's Securities.
(b) The Holder agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Holder's Securities held by the Holder, each
other person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, and its or their respective
counsel, to the same extent as the foregoing indemnity from the Company to the
Holder in Section 10(a), but only with respect to statements or omissions, if
any, made in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, or in any application, in reliance upon and in conformity
with written information furnished to the Company with respect to the Holder by
or on behalf of the Holder expressly for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
any such registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against the Holder pursuant to this Section 10(b),
the Holder shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the Indemnified Parties, by the provisions of Section 10(a).
(c) To provide for just and equitable contribution, if (i) an
Indemnified Party makes a claim for indemnification pursuant to Section 10(a) or
10(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this agreement expressly provides for
indemnification in such case, or (ii) any Indemnified Party or indemnifying
party seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Holder's
Securities included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an Indemnified Party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and the
Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Holder and the other
Indemnified Parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 10(c). In no case shall any Eligible Holder be responsible
for a portion of the contribution obligation imposed on all Eligible Holders in
excess of its pro rata share based on the number of Common Shares (or which
would be owned upon exercise of all Holder's Securities) by it and included in
such registration as compared to the number of Common Shares owned (or which
would be owned upon exercise of all Holder's Securities) by all Eligible Holders
and included in such registration. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 10(c), each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee,
agent, and counsel of each such Eligible Holder or control person shall have the
same rights to contribution as such Eligible Holder or control person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such registration statement, each director of the Company, and
its or their respective counsel shall have the same rights to contribution as
the Company, subject in each case to the provisions of this Section 10(c). This
Section 10(c) is intended to supersede any right to contribution under the Act,
the Exchange Act or otherwise.
11. Unless registered pursuant to the provisions of Section 9 hereof, the
certificate or certificates evidencing such securities shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAW OR
EXCEPT UPON DELIVERY TO URSUS TELECOM CORPORATION (THE "COMPANY") OF
AN OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT THE PROPOSED TRANSFER MAY BE
EFFECTED WITHOUT REGISTRATION UNDER SUCH ACT OR REGISTRATION OR
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS."
12. Any transfer permitted hereunder shall be made by surrender of this
Warrant to the Company at its principal office or to any person designated by
the Company as the transfer agent for this Warrant (the "Transfer Agent") at its
offices with a duly executed request to transfer the Warrant, which shall
provide adequate information and evidence of authority (in the case of execution
by a corporation, partnership, trust or other entity that is not a natural
person) to effect such transfer and shall be accompanied by (x) funds sufficient
to pay any transfer taxes applicable to the transfer and (y) a Form of
Assignment in the form attached hereto duly executed by the assignee. In the
case of a partial transfer of this Warrant, upon compliance with the immediately
preceding sentence, this Warrant shall be divided into two or more Warrants of
even date herewith setting forth warrant amounts that in the aggregate are equal
to the warrant amount immediately prior to the transfer. Upon satisfaction of
all transfer conditions, the Company or Transfer Agent shall, as promptly as
practicable and without charge, execute and deliver a new Warrant in the name of
the transferee named in such transfer request dated as of the date of this
Warrant, and this Warrant promptly shall be canceled
13. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses, the Company shall exercise and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.
14. The Holder of any Warrant shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
15. This Warrant shall be construed in accordance with the laws of the
State of Florida.
16. The Company irrevocably consents to the jurisdiction of the courts of
the State of Florida and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this
Warrant, any document or instrument delivered pursuant to, in connection with or
simultaneously with this Warrant, or a breach of this Warrant or any such
document or instrument. In any such action or proceeding, the Company waives
personal service of any summons, complaint or other process. Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the Company shall
appear to answer such summons, complaint or other processes.
Dated:
WITNESS: URSUS TELECOM CORPORATION
- ----------------------------- By: -------------------------------
Secretary Luca M. Giussani,
Chief Executive Officer
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto a Warrant to purchase Common Shares of Ursus Telecom Corporation
(the "Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint attorney to transfer such Warrant on
the books of the Company, with full power of substitution.
Dated:
--------------------------
Signature
<PAGE>
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _____ Common
Shares covered by the within Warrants and tenders payment herewith in the amount
of $ _____ in accordance with the terms thereof, and requests that certificates
for such securities be issued in the name of, and delivered to:
--------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Underlying Shares shall not be all the Underlying Shares
covered by the within Warrant, requests that a new Warrant for the balance of
the Underlying Shares covered by the within Warrant be registered in the name
of, and delivered to, the undersigned at the address stated below.
Dated: ___________________ Name: ________________________
(Print)
Address:
Signature: _____________________
<PAGE>
CERTIFICATE
This certificate (the "Certificate") is being delivered to Ursus Telecom
Corporation, a Florida corporation ("the Company"), in connection with the
issuance by the Company of warrants (the "Warrants") to purchase an aggregate of
25,000 shares of Common Stock, par value $.01 per share of the Company (the
"Common Stock"), pursuant to the Engagement Letter dated June 28, 1999 between
the Company and Telcom.net, Inc. Terms used herein and not otherwise defined
herein are used herein as defined in the Warrants.
(a) In connection with the acquisition by the undersigned of Warrants to
purchase 25,000 shares of Common Stock, the undersigned represents that the
undersigned (i) is acquiring the Warrants (and shares of Common Stock) solely
for investment purposes and not with a view toward, or for sale in connection
with, any distribution thereof, (ii) has received and reviewed such information
as it deems necessary to evaluate the merits and risks of its investment in the
Warrants (and shares of Common Stock), (iii) is an "accredited investor" within
the meaning of Rule 501(a) under the Securities Act, (iv) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Warrants (and shares of Common Stock),
including a complete loss of its investment and (v) understands that there is no
public market for the Warrants and the shares of Common Stock issuable upon
exercise thereof and is prepared to hold such Warrants or such shares for an
indefinite period.
(b) The undersigned understands that if in the future the undersigned
decides to resell, pledge or otherwise transfer any of the Warrants (or shares
of Common Stock), such Warrants (or shares of Common Stock) may be resold,
pledged or transferred only (i) to the Company, (ii) to a person who the
undersigned reasonably believes is a qualified institutional buyer that
purchases for its own account or for the account of a qualified institutional
buyer to whom notice is given that such resale, pledge or transfer is being made
in reliance on Rule 144A under the Securities Act, (iii) if registered under the
Securities Act or (iv) pursuant to an exemption from registration under the
Securities Act.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed in its name as of the day and year first above written.
TELCOM.NET, INC.
------------------------
Name:
Date:
--------------------
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Ursus Telecom
Corporation for the registration of 945,113 shares of its common stock and to
the incorporation by reference therein of our report dated June 23, 1999, with
respect to the consolidated financial statements and schedule of Ursus Telecom
Corporation included in its Annual Report (Form 10-K) for the year ended March
31, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Miami, Florida
March 13, 2000
