U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 20,1996
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13478 13-3698386
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
5697 Rising Sun Avenue, Philadelphia, Pennsylvania 19120
(Address of principal executive offices) (Zip code)
40 Elmont Road, New York, New York 11003
(Former name or former address, if changed since
last report)
Registrant's telephone number, including area code: (215) 342-7700
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Item 5. Other Events
On December 20, 1996, Global Telecommunication Solutions, Inc.
("Company") completed a private placement ("December 1996 Private Placement")
from which the Company derived gross proceeds of $3,000,000 through the sale of
$3,000,000 of promissory notes ("Notes") and 3,000,000 Common Stock Purchase
Warrants ("Warrants"). Each Warrant is exercisable at any time during the period
commencing March 1, 1997 and ending of November 27, 2001, at an initial exercise
price equal to $2.50 per share. The Notes are payable on the earlier of (i)
November 27, 1998 and (ii) the date on which the Company undergoes a "change in
control" in which any person other than an officer, director or 5% stockholder
acquires securities of the Company having 50% or more of the total voting power
of all of the Company's securities then outstanding ("Maturity Date"). No
interest will accrue on the Notes unless the Notes are not paid on or prior to
the Maturity Date, at which time the outstanding principal will immediately
begin to accrue interest at the rate of 12% per annum and the principal amount
outstanding and interest accrued thereon will become convertible, at the option
of the holders, into that number of shares of Common Stock ("Note Shares") equal
to the principal amount and interest being converted divided by the lesser of
(i) $2.00 and (ii) 80% of the average of closing bid prices of the Common Stock
on the five trading days ending on the date immediately following the date a
holder elects to convert. The Notes are not convertible unless the Notes are not
paid in full on the Maturity Date.
Whale Securities Co., L.P. ("Whale") was paid a finder's fee in
connection with the December 1996 Private Placement equal to 5% of the gross
proceeds received by the Company ($150,000) and 150,000 Warrants. Additionally,
Graubard Mollen & Miller, general counsel for the Company, received $50,000 of
Notes and 50,000 Warrants in payment of certain legal fees and expenses.
The Company has agreed to register the shares of Common Stock
underlying the Warrants ("Warrant Shares") for resale under a registration
statement ("Warrant Share Registration Statement") filed pursuant to the
Securities Act of 1933, as amended ("Securities Act") on or before December 31,
1996. The Company has agreed to use its best efforts to have the Warrant Share
Registration Statement declared effective by February 14, 1997 and has
undertaken to have the Warrant Share Registration Statement declared effective
by April 30, 1997.
Additionally, the Company has agreed to register the Note Shares, if
any, for resale under a registration statement ("Note Share Registration
Statement") filed pursuant to the Securities Act within 30 days from the date
that all or any portion of any of the Notes are converted into Common Stock
("Conversion Date"). The Company has agreed to use its best efforts to have the
Note Share Registration Statement declared effective by the 75th day following
the Conversion Date and has undertaken to have the Note Share Registration
Statement declared effective by the 150th day following the Conversion Date.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Unaudited Financial Statements of Business Acquired
Not applicable.
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(b) Unaudited Pro Forma Financial Information
Not applicable.
(c) Exhibits
4.13 Form of Subscription Agreement for December 1996 Private
Placement.
4.14 Form of Warrant issued in the December 1996 Private Placement.
4.15 Form of Promissory Note issued in the December 1996 Private
Placement.
10.31 Finder's fee agreement between the Company and Whale Securities,
Co., L.P. relating to the December 1996 Private Placement.
99.1 Press Release.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 26, 1996 GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
By: /s/ Maria Bruzzese
Maria Bruzzese, Chief Financial Officer
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EXHIBIT 4.13
SUBSCRIPTION AGREEMENT
Global Telecommunication Solutions, Inc.
5697 Rising Sun Avenue
Philadelphia, Pennsylvania 19120
Ladies and Gentlemen:
A. Subscription. I (sometimes referred to herein as the "Investor") hereby
subscribe for and agree to purchase a $_____ principal amount promissory note
("Note") of Global Telecommunication Solutions, Inc., a Delaware corporation
("Company"), in the form included as Exhibit A in the Disclosure Package given
to me simultaneously with this Agreement ("Disclosure Package") and on the terms
and conditions set forth herein. The Company agrees that it shall issue to me a
warrant ("Warrant"), in the form included as Exhibit B in the Disclosure
Package, to purchase one share of the Company's Common Stock for each dollar
principal amount represented by the Note purchased hereby.
1. Purchase.
(a) I hereby tender (i) the purchase price by wire transfer to
the following account ("Account") maintained by the Company's attorneys,
Graubard Mollen & Miller ("GM&M"):
Bankers Trust Company
280 Park Avenue
New York, New York 10017
ABA No.: 021001033
Attention: Florence Blanchard
For further credit to: Graubard Mollen & Miller
Attorney Trust Account No. 42834468
and (ii) two executed copies of this Subscription Agreement and my confidential
Purchaser Questionnaire to GM&M, 600 Third Avenue, New York, New York 10016,
Attention: David Alan Miller, Esq.
(b) The Company is offering up to $3,000,000 of Notes
("Offering"). The Offering will continue until the earlier of December 15, 1996
and the date on which the Company receives and accepts subscriptions for
$3,000,000 of Notes. I understand that the Company can have a closing
("Closing") with respect to subscriptions at any time, without the need to meet
any minimum subscription level. Prior to the Closing, with respect to my
subscription, my payment for the Notes will be held by GM&M in the Account.
2. Acceptance or Rejection of Subscription.
(a) The Company has the right to reject this Subscription
represented by this Agreement, in whole or in part for any reason and at any
time prior to a Closing, notwithstanding prior receipt by me of notice of
acceptance of my subscription.
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(b) In the event of the rejection of Subscription represented
by this Agreement my subscription payment will be promptly returned to me
without interest or deduction and this Agreement shall have no force or effect.
In the event my subscription is accepted and the Offering is completed, the
funds specified above shall be released to the Company and the Notes and
Warrants (together, the "Securities") will be promptly delivered to me.
3. Issuance of Securities. At the Closing on my subscription, the
Company will deliver the certificates representing the Notes and the Warrants to
me or my agent. The Notes (and the shares of Common Stock they are convertible
into under certain circumstances ("Note Shares")) and the Warrants (and the
shares of Common Stock issuable upon their exercise "Warrant Shares")) shall be
legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT") OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND COMPLIANCE WITHIN ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
4. Registration Rights.
(a) Warrant Shares. The Company agrees to register the Warrant
Shares for resale by the Investor under a registration statement ("Warrant Share
Registration Statement") filed pursuant to the Securities Act of 1933, as
amended ("Securities Act"). The Company agrees to file the Warrant Share
Registration Statement on or before December 31, 1996. The Company agrees to use
its best efforts to have the Warrant Share Registration Statement declared
effective by February 14, 1997 and undertakes to have the Warrant Share
Registration Statement declared effective by April 30, 1997. The Company shall
bear all the expenses and pay all the fees it incurs in connection with the
preparation, filing and modification or amendment of the Warrant Share
Registration Statement and shall pay any and all expenses (up to $5,000) of one
legal counsel selected by the holders of the Warrants, as a group, to represent
them in connection with the sale of the Warrant Shares. The Company shall keep
the Warrant Share Registration Statement effective and current until all the
Warrant Shares are sold or until all such shares may be sold by the holders
thereof under Rule 144 without volume limitations. Notwithstanding the
foregoing, during any consecutive 365-day period, the Company may suspend the
availability of the Warrant Share Registration Statement for no more than two
periods of up to 20 consecutive days and for no more than an aggregate of 40
days during any 365-day period, if the Company's Board of Directors determines,
based upon the opinion of legal counsel, that there is valid purpose for such
suspension.
(b) Note Shares. The Company agrees to register the Note
Shares for resale by the Investor, under a registration statement ("Note Share
Registration Statement") filed pursuant to the Securities Act. The Company
agrees to file the Note Share Registration Statement within 30 days from the
date that all or any portion of any of the Notes issued in the Offering are
converted into Common Stock ("Conversion Date"). The Company agrees to use
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its best efforts to have the Note Share Registration Statement declared
effective by the 75th day following the Conversion Date and undertakes to have
the Note Share Registration Statement declared effective by the 150th day
following the Conversion Date. The Company shall bear all the expenses and pay
all the fees it incurs in connection with the preparation, filing and
modification or amendment of the Note Share Registration Statement and shall pay
any and all expenses (up to $5,000) of one legal counsel selected by the holders
or the Notes, as a group, to represent them in connection with the sale of the
Note Shares. The Company shall keep the Note Share Registration Statement
effective and current until all the Note Shares are sold or until all such
shares may be sold by the holders thereof under Rule 144 without volume
limitations.
Notwithstanding the foregoing, during any consecutive 365-day period, the
Company may suspend the availability of the Note Share Registration Statement
for no more than two periods of up to 20 consecutive days and for no more than
an aggregate of 40 days during any 365-day period, if the Company's Board of
Directors determines, based upon the opinion of legal counsel, that there is
valid purpose for such suspension.
(c) To the extent permitted by law, the Company will indemnify
and hold harmless each holder ("Holder") of the Warrant Shares and Note Shares
(together the "Registrable Securities"), the officers and directors of each
Holder and each person, if any, who controls such Holder within the meaning of
the Securities Act or Securities Exchange Act of 1934, as amended ("Exchange
Act") against any losses, claims, damages, or liabilities to which they may
become subject under the Securities Act, the Exchange Act or any state
securities law or regulation (including all reasonable attorneys' fees and other
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever incurred by the indemnified party in any action or
proceeding between the indemnitor and indemnified party or between the
indemnified party and any third party or otherwise) to which any of them may
become subject under the Securities Act, the Exchange Act or any other statute
or common law or otherwise under the laws of foreign countries, arising from
such registration statement or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) any preliminary prospectus, the
registration statement or prospectus (as from time to time each may be amended
and supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which it included the Registrable
Securities; or (iii) any application or other document or written communication
(collectively called "application") executed by the Company or based upon
written information furnished by the Company in any jurisdiction in order to
qualify the Registrable Securities under the securities laws thereof or filed
with the Securities and Exchange Commission, any state securities commission or
agency, Nasdaq or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, unless such statement or omission is made in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to such Holder expressly for use in any preliminary
prospectus, such registration statement or prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. The Company
agrees promptly to notify the Holder of the Registrable Securities of the
commencement of any litigation or proceedings against the Company or any of its
officers, directors or controlling persons in connection with the issue and sale
or resale of the Registrable Securities or in connection with any such
registration statement or prospectus.
(d) The Company agrees that the above rights shall inure to
the benefit of any person to whom the undersigned transfers all or any portion
of his Notes and/or Warrants.
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5. Investor Representations and Warranties. I acknowledge, represent and
warrant to, and agree with, the Company as follows:
(a) I am aware that my investment in the Company involves a
high degree of risk, and I carefully have read and fully understand the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995, the Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1996, the Company's Proxy Statement dated July 11, 1996 and the
Company's Prospectus dated September 30, 1996, which are included as Exhibits C,
D, E and F, in the Disclosure Package.
(b) I acknowledge and am aware that there is no assurance as to the future
performance of the Company.
(c) I acknowledge that notwithstanding the Company's
commitment herein, there can be no assurance that the Company will file any
Registration Statement for the securities I am purchasing, that such
Registration Statement, if filed, will be declared effective or, if declared
effective, that the Company will be able to keep it effective until I sell the
Common Stock registered thereon.
(d) I am purchasing the Securities for my own account for
investment and not with view to or for sale in connection with the distribution
of the Securities, nor with any present intention of selling or otherwise
disposing of all or any part of the Securities. I understand that there may not
be any market for the Securities. I agree that (1) the purchase of the
Securities is a long-term investment, (2) I may have to bear the economic risk
of investment for an indefinite period of time because neither the Securities
nor the Common Stock underlying the Securities have been registered under the
Securities Act and, notwithstanding the Company's commitment herein to register
such Common Stock for resale by me, may not be registered and, cannot be resold,
pledged, assigned, or otherwise disposed of unless they are subsequently
registered under said Securities Act and under applicable securities laws of
certain states or an exemption from such registration is available. I understand
that the Company is under no obligation to register the Securities and, except
as set forth herein, the Company is under no obligation to register the Common
Stock underlying the Securities on my behalf or to assist me in complying with
any exemption from such registration under the Securities Act or any state
securities laws. I hereby authorize the Company to place legends denoting the
restrictions on the Securities and the Common Stock to be issued upon conversion
or exercise of the Securities, as the case may be.
(e) I recognize that the Securities, as an investment,
involves a high degree of risk including, but not limited to, the risk of
economic losses from operations of the Company and the total loss of my
investment. I believe that the investment in the Securities is suitable for me
based upon my investment objectives and financial needs, and I have adequate
means for providing for my current financial needs and contingencies and have no
need for liquidity with respect to my investment in the Company.
(f) I have been given access to full and complete information
regarding the Company and have utilized such access to my satisfaction for the
purpose of obtaining information in addition to, or verifying information
included in, the Disclosure Package, and I have either met with or been given
reasonable opportunity to meet with officers of the Company for the purpose of
asking questions of, and receiving answers from, such officers concerning the
terms and conditions of the Offering of the Securities and the business and
operations of the
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Company and to obtain any additional information, to the extent reasonably
available. I have received all information and material regarding the Company
that I have requested.
(g) I have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities and have obtained, in my judgment, sufficient
information from the Company to evaluate the merits and risks of an investment
in the Company. I have not utilized any person as my purchaser representative as
defined in Regulation D promulgated by the Securities and Exchange Commission
pursuant to the Securities Act in connection with evaluating such merits and
risks.
(h) I have relied solely upon my own investigation in making a decision to
invest in the Company.
(i) I have received no representation or warranty from the
Company or any of its officers, directors, employees or agents in respect of my
investment in the Company and I have received no information (written or
otherwise) from them relating to the Company or its business other than as set
forth herein and in the Disclosure. I am not participating in the offer as a
result of or subsequent to: (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising.
(j) I have had full opportunity to ask questions and to
receive satisfactory answers concerning the Offering and other matters
pertaining to my investment and all such questions have been answered to my full
satisfaction.
(k) I have been provided an opportunity to obtain any
additional information concerning the Offering and the Company and all other
information to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense.
(l) I am an "accredited investor" as defined in Section 2(15) of the Act
and in Rule 501 promulgated thereunder.
(m) I understand that (i) the Securities and the underlying
Common Stock have not been registered under the Securities Act, or the
securities laws of certain states in reliance on specific exemptions from
registration, (ii) no securities administrator of any state or the federal
government has recommended or endorsed this Offering or made any finding or
determination relating to the fairness of an investment in the Company and (iii)
the Company is relying on my representations and agreements for the purpose of
determining whether this transaction meets the requirements of the exemptions
afforded by the Securities Act and certain state securities laws.
(n) I have been urged to seek independent advice from my
professional advisors relating to the suitability of an investment in the
Company in view of my overall financial needs and with respect to the legal and
tax implications of such investment.
(o) If the Investor is a corporation, company, trust, employee
benefit plan, individual retirement account, Keogh Plan, or other tax-exempt
entity, it is authorized and qualified to become an Investor in the Company and
the person signing this Subscription Agreement on behalf of such entity has been
duly authorized by such entity to do so.
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(p) I hereby acknowledge and am aware that except for any
rescission rights that may be provided under applicable laws, I am not entitled
to cancel, terminate or revoke this subscription, and any agreements made in
connection herewith shall survive my death or disability.
(q) I hereby acknowledge and am aware that on November 6,
1996, the Board of Directors of The Nasdaq Stock Market approved certain changes
to the maintenance requirements that companies listed on the Nasdaq SmallCap
Market (such as the Company) must meet in order to continue to have their
securities quoted on the Nasdaq SmallCap Market and that such new requirements,
if implemented, could cause the Common Stock and Warrants of the Company to no
longer be quoted on the Nasdaq SmallCap Market.
(r) I acknowledge and am aware that the Company has a history
of net losses (including a net loss of $4,423,792 for the nine months ended
September 30, 1996), and that as of September 30, 1996, the Company had an
accumulated deficit of $9,910,074 and a working capital deficit of $6,510,540.
(s) I acknowledge that Whale Securities Co., L.P., is entitled
to receive from the Company a finder's fee in connection with this Offering
equal to 5% of the gross proceeds received by the Company, as well as Warrants
in a number equal to 5% of the aggregate Warrants issued to Investors in this
Offering.
6. Company Representations and Warranties. The Company represents and
warrants to the Investor as follows:
(a) Due Incorporation and Qualification. The Company has been duly
incorporated, is validly existing and is in good standing under the laws of its
state of incorporation.
(b) Authorized Capital. The Company is authorized to issue
35,000,000 shares of Common Stock and 1,000,000 shares of preferred stock, of
which 5,512,801 shares of Common Stock and no shares of Preferred Stock are
currently issued and outstanding.
(c)' Financial Statements; No Material Adverse Changes. The
financial statements of the Company contained in the reports included in the
Disclosure Package ("Financials") fairly present the consolidated financial
position and results of operations of the Company in all material respects at
the dates thereof and for the periods covered thereby, subject to year-end
adjustments and normal recurring accruals.
(d) Due Authorization; Consents. The Company has full right,
power and authority to enter into this Agreement and to perform all of its
obligations hereunder and thereunder. This Agreement has been, and the Notes and
Warrants will be, duly authorized, executed and delivered by the Company. The
execution and delivery of this Agreement has been, and the Notes and Warrants,
when executed and delivered will have been, duly authorized by all necessary
corporate action and no further corporate action or approval is or will be
required for their respective execution, delivery and performance. This
Agreement constitutes, and the Notes and Warrants, upon execution and delivery
will constitute, valid and binding obligations of the Company, enforceable in
accordance with their respective terms (except (i) as the enforceability thereof
may be limited by bankruptcy or other laws now or hereafter in effect relating
to or affecting creditors' rights generally, (ii) that the remedy of specific
performance and
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injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought, and (iii) that the enforceability of the
indemnification and contribution provisions of the respective agreements and
securities may be limited by the federal and state securities laws and public
policy), and no consent, approval, authorization, order of, or filing with, any
court or governmental authority or any other third party is required to
consummate the transactions contemplated by this Agreement, the Notes or
Warrants, except that the offer and sale of the securities in certain
jurisdictions may be subject to the provisions of the securities or Blue Sky
laws of such jurisdictions. Additionally, other than such consents as may have
already been obtained, no consent, approval, authorization, order of, filing
with, any court or governmental authority or any other third party is required
to consummate the transactions contemplated by this Agreement, the Notes and
Warrants.
(e) Valid Issuances. The Notes and Warrants, when issued and
delivered in accordance with the terms of the Subscription Agreement, will be
duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon conversion of the Notes and exercise of the Warrants when issued
and delivered in accordance with their terms, will be duly and validly issued,
fully paid and non-assessable. The Company has reserved for issuance a
sufficient number of shares of Common Stock to be issued upon conversion of the
Notes and exercise of the Warrants.
(f) Exchange Act Reports. The Company is subject to the
reporting requirements of the Securities Act of 1933, as amended ("Securities
Act") and Securities Exchange Act of 1934, as amended ("Exchange Act") and has
filed all reports and statements required under the Securities Act and Exchange
Act on a timely basis, and each report and statement was true and complete in
all material respects when filed.
7. Indemnification. I hereby agree to indemnify and hold harmless the
Company and its officers, directors, shareholders, employees, agents, and
attorneys against any and all losses, claims, demands, liabilities, and expenses
(including reasonable legal or other expenses, including reasonable attorneys'
fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever incurred by the indemnified party in any
action or proceeding between the indemnitor and indemnitor and indemnified party
or between the indemnified party and any third party or otherwise) incurred by
each such person in connection with defending or investigating any such claims
or liabilities, whether or not resulting in any liability to such person, to
which any such indemnified party may become subject under the Securities Act,
under any other statute, at common law or otherwise, insofar as such losses,
claims, demands, liabilities and expenses (a) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact made by me and
contained in this Subscription Agreement, or (b) arise out of or are based upon
any breach by me of any representation, warranty, or agreement made by me
contained herein.
8. Severability. In the event any part of this Subscription Agreement are
found to be void, the remaining provisions of this Subscription Agreement shall
nevertheless be binding with the same effect as though the void parts were
deleted.
9. Choice of Law and Jurisdiction. This Subscription Agreement will be
deemed to have been made and delivered in New York City and will be governed as
to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York. The Company and the Investor each
hereby (i) agrees that any legal suit, action or
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proceeding arising out of or relating to this Subscription Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, proceeding, and (iii)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding and the Company
further agrees to accept and acknowledge service or any and all process which
may be served in any such suit, action or proceeding in New York State Supreme
Court, County of New York or in the United States District Court for the
Southern District of New York and agrees that service of process upon it mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon it in any suit, action or proceeding.
10. Counterparts. This Subscription Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Subscription Agreement may be by actual or facsimile signature.
11. Benefit. This Subscription Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.
12. Notices and Addresses. All notices, offers, acceptance and any
other acts under this Subscription Agreement (except payment) shall be in
writing, and shall be sufficiently given if delivered to the addressees in
person, by Federal Express or similar courier delivery by facsimile delivery or,
if mailed, postage prepaid, by certified mail, return receipt requested, as
follows:
Investor: At the address designated on the signature
page of this Subscription Agreement.
The Company: Global Telecommunication Solutions, Inc.
5697 Rising Sun Avenue
Philadelphia, Pennsylvania 19120
Attention: David S. Tobin, General Counsel
Fax: (215) 745-9108
in any case,
with a copy to: Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
Attention: David Alan Miller, Esq.
Fax: (212) 818-8881
or to such other address as any of them, by notice to the others may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile deliver.
Notice shall have been deemed to be given when received.
13. Oral Evidence. This Subscription Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior oral and
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written agreements between the parties hereto with respect to the subject matter
hereof. This Subscription Agreement may not be changed, waived, discharged, or
terminated orally but, rather, only by a statement in writing signed by the
party or parties against which enforcement or the change, waiver, discharge or
termination is sought.
14. Section Headings. Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part, any of the terms or
provisions of this Subscription Agreement.
15. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive the
delivery of, and the payment for, the Securities.
16. Acceptance of Subscription. The Company may accept this Subscription
Agreement at any time for all or any portion of the Securities subscribed for by
executing a copy hereof as provided and notifying me within a reasonable time
thereafter.
RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTION ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR
HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE
OFFERING OR THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL INVESTMENT SUMMARY.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
FOR CONNECTICUT RESIDENTS: THE SECURITIES OFFERED HAVE NOT BEEN
REGISTERED UNDER SECTION 36-485 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND
ARE OFFERED AND SOLD PURSUANT TO AN EXEMPTION RELATING TO TRANSACTIONS NOT
INVOLVING A PUBLIC OFFERING PURSUANT TO SECTION 36- 490(b)(9)(A) THEREOF. THE
SECURITIES CANNOT BE RESOLD OR TRANSFERRED UNLESS THEY ARE REGISTERED UNDER SUCH
ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
FOR MARYLAND RESIDENTS: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE MARYLAND SECURITIES ACT BY REASON OF AN EXEMPTION RELATING TO THE LIMITED
AVAILABILITY OF THE OFFERING. THESE SECURITIES MAY NOT BE TRANSFERRED OR SOLD
EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE MARYLAND SECURITIES ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION.
FOR NEW JERSEY RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE BUREAU OF SECURITIES OF THE STATE OF NEW JERSEY NOR HAS THE
BUREAU PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
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THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE APPROVAL OF THE
ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THESE ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK.
THESE SECURITIES ARE OFFERED ONLY TO BONA FIDE ADULT RESIDENTS OF THE
STATE OF NEW JERSEY.
FOR FLORIDA RESIDENTS: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT ("FLORIDA
SECURITIES ACT") , AND THEY THEREFORE HAVE THE STATUS OF SECURITIES ACQUIRED IN
AN EXEMPT TRANSACTION UNDER SECTION 517.061 OF THE FLORIDA SECURITIES ACT. EACH
OFFEREE WHO IS A FLORIDA RESIDENT SHOULD BE AWARE THAT SECTION 517.061(11)(a)(5)
OF THE FLORIDA SECURITIES ACT PROVIDES THAT WHEN SALES ARE MADE TO FIVE OR MORE
PERSONS IN FLORIDA, ANY SALE MADE IN FLORIDA IS VOIDABLE BY THE PURCHASER WITHIN
THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO
THE COMPANY, AN AGENT OF THE COMPANY OR AN ESCROW AGREEMENT OR WITHIN THREE DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,
WHICH EVER OCCURS LATER.
THE AVAILABILITY OF THE PRIVILEGE TO VOID SALES PURSUANT TO SECTION
517.061(11)(a)(5) IS HEREBY COMMUNICATED TO EACH FLORIDA OFFEREE.
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Manner in Which Title is to be Held. (check one)
____ Individual Ownership
____ Community Property
____ Joint Tenant with Right of Survivorship (both parties
must sign) ____ Partnership ____ Tenants in common ____
Corporation ____ Trust
____ Other (please indicate)
INDIVIDUAL INVESTORS ENTITY INVESTORS
Signature (Individual) Name of Entity, if any
By:
*Signature
Its
Signature (all record holders should sign) Title
Name(s) Typed or Printed Name Typed or Printed
Address to Which Correspondence Address to Which Correspondence
Should be Directed Should be Directed
City, State and Zip Code City, State and Zip Code
Social Security Number Tax Identification
* If Securities are being subscribed for by any entity, the Certificate
of Signatory on the next page must also be completed.
The foregoing subscription is accepted and the Company hereby agrees to be bound
by its terms.
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
Dated: , 1996 By:
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CERTIFICATE OF SIGNATORY
(To be completed if Securities are being subscribed for by an entity)
I, _________________________________, the ___________________________
(name of signatory) (title)
of ("Entity"), a
(name of entity)
.
(type of entity)
hereby certify that the above entity is duly empowered and authorized to
purchase the Securities and that I am duly empowered and authorized by the
entity to execute the Subscription Agreement on its behalf.
IN WITNESS WHEREOF, I have executed this Certificate this ____ day of
_________, 1996.
(Signature)
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<PAGE>
EXHIBIT 4.14
NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
For the Purchase of
No._______________ ________ shares of
Common Stock
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
(A Delaware Corporation)
Global Telecommunication Solutions, Inc., a Delaware corporation
("Company"), hereby certifies that ________________, or his, her or its
registered assigns ("Holder" or "Registered Holder"), is entitled, subject to
the terms set forth below, to purchase from the Company, at any time or from
time to time during the period commencing March 1, 1997 ("Commencement Date")
and ending on November __, 2001 ("Expiration Date"), ______ shares of common
stock, $.01 par value, of the Company ("Common Stock"), at an initial exercise
price equal to $2.50 per share (subject to adjustment as set forth below). The
number of shares of Common Stock purchasable upon exercise of this Warrant, and
the exercise price per share, each as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the "Warrant Stock"
and the "Exercise Price," respectively.
1. Exercise.
(a) This Warrant may be exercised by the Registered Holder, in
whole or in part, by surrendering this Warrant, with the purchase form appended
hereto as Exhibit A duly executed by such Registered Holder, at the principal
office of the Company, or at such other office or agency as the Company may
designate, accompanied by payment in full, in lawful money of the United States,
of the Exercise Price payable in respect of the number of shares of Warrant
Stock being purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Stock shall be issuable upon such exercise as provided
in subsection 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within five business days after clearance
of the funds constituting the Exercise Price, the Company at its expense will
cause to be issued in the name of, and delivered to, the Registered Holder, or,
subject to the terms and conditions hereof, as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of shares of Warrant Stock
to which such Registered Holder shall be entitled upon such exercise, and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face or
faces thereof for the
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number of shares of Warrant Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant,
minus the number of such shares purchased by the Registered Holder upon such
exercise as provided in subsection 1(a) above.
2. Adjustments to Exercise Price and Number of Securities.
(a) If the outstanding shares of the Company's Common Stock
shall be subdivided or split into a greater number of shares, or a dividend in
Common Stock shall be paid in respect of Common Stock, the Exercise Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
split or immediately after the record date of such dividend be proportionately
reduced. If the outstanding shares of Common Stock shall be combined or
reverse-split into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination or reverse-split shall, simultaneously
with the effectiveness of such combination or reverse-split, be proportionately
increased. When any adjustment is required to be made in the Exercise Price, the
number of shares of Warrant Stock purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Exercise Price in effect immediately prior to
such adjustment, by (ii) the Exercise Price in effect immediately after such
adjustment.
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, or the
payment of a liquidating distribution, then, as part of any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution,
lawful provision shall be made so that the Registered Holder of this Warrant
shall have the right thereafter to receive upon the exercise hereof (to the
extent, if any, still exercisable) the kind and amount of shares of stock or
other securities or property which such Registered Holder would have been
entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution, as
the case may be, such Registered Holder had held the number of shares of Common
Stock which were then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined by the Board of Directors
of the Company) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder of this Warrant such that the provisions set forth in this Section 2
(including provisions with respect to adjustment of the Exercise Price) shall
thereafter be applicable, as nearly as practicable, in relation to any shares of
stock or other securities or property thereafter deliverable upon the exercise
of this Warrant.
(c) No adjustment in the per share Exercise Price shall be
required unless such adjustment would require an increase or decrease in the
Exercise Price of at least $0.01; provided, however, that any adjustments which
by reason of this paragraph are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 2 shall be made to the nearest cent or to the nearest 1/100th of a
share, as the case may be.
(d) Upon the happening of any event requiring an adjustment of
the Exercise Price hereunder, the Company shall forthwith give written notice
thereto to the Registered Holder of this Warrant stating the adjusted Exercise
Price and the adjusted number of shares purchasable upon the exercise hereof
resulting from such event and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3. Fractional Shares. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock or Warrants upon
the exercise or transfer of the Purchase Option, nor shall it be required to
issue scrip or pay cash in lieu of any fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of Warrants, shares of Common Stock or
other securities, properties or rights.
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<PAGE>
4. Limitation on Sales, etc. Each holder of this Warrant acknowledges
that, notwithstanding the provisions of Section 5 hereof, this Warrant and the
Warrant Stock have not been registered under the Act as now in force or
hereafter amended, or any successor legislation, and agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of this Warrant or any
Warrant Stock issued upon its exercise in the absence of (a) an effective
registration statement under the Act as to this Warrant and the Warrant Stock
issued upon its exercise and registration or qualification of this Warrant or
such Warrant Stock under any applicable Blue Sky or state securities law then in
effect, or (b) an opinion of counsel, satisfactory to the Company, that such
registration and qualification are not required.
Without limiting the generality of the foregoing, unless the
offering and sale of the Warrant Stock to be issued upon the exercise of the
Warrant shall have been effectively registered under the Act, the Company shall
be under no obligation to issue the shares covered by such exercise unless and
until the Registered Holder shall have executed an investment letter in form and
substance reasonably satisfactory to the Company, including a warranty at the
time of such exercise that it is acquiring such shares for its own account, for
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, in which event the Registered Holder shall be
bound by the provisions of a legend or legends to such effect which shall be
endorsed upon the certificate(s) representing the Warrant Stock issued pursuant
to such exercise.
5. Registration Rights of Warrant Holder.
(a) The Company agrees to register the Warrant Stock for
resale by the Investor under a registration statement ("Warrant Stock
Registration Statement") filed pursuant to the Securities Act of 1933, as
amended ("Securities Act"). The Company agrees to file the Warrant Stock
Registration Statement on or before December 31, 1996. The Company agrees to use
its best efforts to have the Warrant Stock Registration Statement declared
effective by February 14, 1997 and undertakes to have the Warrant Stock
Registration Statement declared effective by April 30, 1997. The Company shall
bear all the expenses and pay all the fees it incurs in connection with the
preparation, filing and modification or amendment of the Warrant Stock
Registration Statement and shall pay any and all expenses (up to $5,000) of one
legal counsel selected by the holders or the Warrants, as a group, to represent
them in connection with the sale of the Warrant Stock. The Company shall keep
the Warrant Stock Registration Statement effective and current until all the
Warrant Stock are sold or until all such shares may be sold by the holders
thereof under Rule 144 without volume limitations. Notwithstanding the
foregoing, during any consecutive 365-day period, the Company may suspend the
availability of the Warrant Stock Registration Statement for no more than two
periods of up to 20 consecutive days and for no more than an aggregate of 40
days during any 365-day period, if the Company's Board of Directors determines,
based upon the opinion of legal counsel, that there is valid purpose for such
suspension.
(b) To the extent permitted by law, the Company will indemnify
and hold harmless each holder ("Holder") of the Warrant Stock ("Registrable
Securities"), the officers and directors of each Holder and each person, if any,
who controls such Holder within the meaning of the Securities Act or Securities
Exchange Act of 1934, as amended ("Exchange Act") against any losses, claims,
damages, or liabilities to which they may become subject under the Securities
Act, the Exchange Act or any state securities law or regulation (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever incurred by
the indemnified party in any action or proceeding between the indemnitor and
indemnified party or between the indemnified party and any third party or
otherwise) to which any of them may become subject under the Securities Act, the
Exchange Act or any other statute or common law or otherwise under the laws of
foreign countries, arising from such registration statement or based upon any
untrue statement or alleged untrue statement of a material fact contained in (i)
any preliminary prospectus, the registration statement or prospectus (as from
time to time each may be amended and supplemented); (ii) in any post-effective
amendment or amendments or any new registration statement and prospectus in
which it included the Registrable Securities; or (iii) any application or other
document or written communication (collectively called "application") executed
by the
3
<PAGE>
Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Registrable Securities under the securities
laws thereof or filed with the Securities and Exchange Commission, any state
securities commission or agency, Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such statement
or omission is made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to such Holder expressly for
use in any preliminary prospectus, such registration statement or prospectus, or
any amendment or supplement thereof, or in any application, as the case may be.
The Company agrees promptly to notify the Holder of the Registrable Securities
of the commencement of any litigation or proceedings against the Company or any
of its officers, directors or controlling persons in connection with the issue
and sale or resale of the Registrable Securities or in connection with any such
registration statement or prospectus.
(c) The Company agrees that the above rights shall inure to
the benefit of any person to whom the undersigned transfers all or any portion
of his Warrants.
(d) Nothing contained in this Warrant shall be construed as
requiring the Holder(s) to exercise their Warrants prior to or after the initial
filing of the Registration Statement or the effectiveness thereof.
(e) Each of the Holder(s) participating in any of the
foregoing offerings shall furnish to the Company a completed and executed
questionnaire provided by the Company requesting information customarily sought
of selling securityholders.
6. Notices of Record Date, etc. In case:
(a) the Company shall take a record of the holders of its
Common Stock (or other securities at the time issuable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution (other than a dividend or distribution payable solely in
capital stock of the Company or out of funds legally available therefor), or to
receive any right to subscribe for or purchase any shares of stock of any class
or any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities as are
at the time issuable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least ten (10) days prior to the
record date or effective date, for the event specified in such notice, provided
that the failure to mail such notice shall not affect the legality or validity
of any such action.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such shares of Warrant Stock
4
<PAGE>
and other stock, securities and property, as from time to time shall be issuable
upon the exercise of this Warrant.
8. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. Transfers, etc. The Company will maintain a register containing the
names and addresses of the Registered Holders of this Warrant and of the holders
of other warrants of like tenor issued simultaneously hereunder. Any Registered
Holder may change its, his or her address as shown on the warrant register by
written notice to the Company requesting such change.
Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
10. Mailing of Notices, etc. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, sent by reputable
overnight delivery or by facsimile to the address furnished to the Company in
writing by the last Registered Holder of this Warrant who shall have furnished
an address to the Company in writing. All notices and other communications from
the Registered Holder of this Warrant or in connection herewith to the Company
shall be mailed by first-class certified or registered mail, postage prepaid,
sent by reputable overnight delivery or by facsimile to the Company at its
offices at Global Telecommunication Solutions, Inc., 40 Elmont Road, Elmont, New
York 11003, Attention: Secretary, or such other address as the Company shall so
notify the Registered Holder. Notices shall be deemed to be given when received.
11. No Rights as Stockholders. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
12. Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against whom enforcement of
the change or waiver is sought.
13. Headings. The headings of this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
14. Governing Law. This Warrant will be governed by and construed in
accordance with the law of the State of New York without regard to the
principles of conflict of law.
15. Venue. The Company (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Warrant shall be instituted
exclusively in New York State Supreme Court, County of New York or in the United
States District Court for the Southern District of New York, (b) waives any
objection to the venue of any such suit, action or proceeding and the right to
assert that such forum is not a convenient forum, and (c) irrevocably consents
to the jurisdiction of the New York State Supreme Court, County of New York, and
the United States District Court for the Southern District of New York in any
such suit, action or proceeding. The Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon it mailed by certified mail to its address
shall be deemed in every respect effective service of process upon it in any
such suit, action or proceeding.
5
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the 23rd day of December, 1996.
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
By:
Shelly Finkel, Chairman of the Board
6
<PAGE>
EXHIBIT A
PURCHASE FORM
To: Global Telecommunication Solutions, Inc.
5697 Rising Sun Avenue
Philadelphia, Pennsylvania 19120
Dated:
In accordance with the provisions set forth in the attached Warrant
(No. __), the undersigned hereby irrevocably elects to purchase __________
shares of the Common Stock covered by such Warrant and herewith makes payment of
$__________, representing the full Exercise Price for such shares at the price
per share provided for in such Warrant.
The undersigned has had the opportunity to ask questions of and receive
answers from the officers of the Company regarding the affairs of the Company
and related matters, and has had the opportunity to obtain additional
information necessary to verify the accuracy of all information so obtained.
The undersigned understands that the issuance to the undersigned of the
shares has not been registered under the Securities Act of 1933, as amended, or
the securities laws of any other jurisdiction, and agrees with the Company that
the undersigned will not sell or transfer such shares without registration of
same under the Securities Act of 1933, as amended, or under an appropriate
exception therefrom.
Signature
Address
7
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EXHIBIT 4.15
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD,
ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
$_________________ November __, 1996
FOR VALUE RECEIVED, GLOBAL TELECOMMUNICATION SOLUTIONS, INC., a
Delaware corporation ("Company"), with its principal office at 5697 Rising Sun
Avenue, Philadelphia, Pennsylvania 19120, promises to pay to the order of
_________________________, at _____________________________________ ("Holder"),
or registered assigns, on the earlier of (i) the 24-month anniversary of the
date hereof and (ii) that date on which the Company undergoes a "change in
control" (which shall be deemed to have occurred at such time that any person
other than any officers or directors of the Company as of the date hereof, or
any stockholders or group of stockholders who beneficially own more than 5% of
the outstanding capital stock of the Company as of the date hereof, acquire
securities of the Company (in one or more transactions) having 50% or more of
the total voting power of all of the Company's securities then outstanding, the
principal amount of ________________ Dollars ($____________), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public or private debts, without interest.
Notwithstanding the foregoing, this Note may be prepaid by the Company at any
time in whole or in part without penalty or premium. This Note shall be paid
(and prepaid, if applicable) pro rata with certain additional notes of like
tenor being issued simultaneously herewith. Payments of principal and interest
(if any) are to be made at the address of the Holder designated above or at such
other place as the Holder shall have notified the Company in writing at least
five days before such payment is due. The dates described in (i) and (ii) above
are sometimes referred to herein as the "Maturity Date."
No interest shall accrue or be paid on this Note unless this Note is
not paid on or prior to the Maturity Date, in which event the outstanding
principal shall immediately begin to accrue interest at the rate of 12% per
annum and the principal amount outstanding and interest accrued thereon shall be
convertible, at any time after the Maturity Date at the option of the Holder,
into shares of the common stock of the Company, par value $.01 per share
("Common Stock"), in accordance with the terms and provisions of Section 3,
below.
This Note is issued pursuant to a subscription agreement between the
Company and the Holder ("Subscription Agreement"), which is available for
inspection at the Company's principal office. Reference herein to the
Subscription Agreement shall in no way impair the absolute and unconditional
obligation of the Company to pay both principal and interest hereon as provided
herein.
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Events of Default.
(a) Upon the occurrence of any of the following events (herein called
"Events of Default"):
(i) (A) The Company shall commence any proceeding or
other action relating to it in bankruptcy or seek reorganization,
arrangement, readjustment of its debts, receivership, dissolution,
liquidation, winding-up, composition or any other relief under any
bankruptcy law, or under any other insolvency, reorganization,
liquidation, dissolution, arrangement, composition, readjustment of
debt or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing; or (B)the Company shall admit the
material allegations of any petition or pleading in connection with any
such proceeding; or (C) the Company shall apply for, or consent or
acquiesce to, the appointment of a receiver, conservator, trustee or
similar officer for it or for all or a substantial part of its
property; or (D) the Company shall make a general assignment for the
benefit of creditors;
(ii) (A) The commencement of any proceedings or the
taking of any other action against the Company in bankruptcy or seeking
reorganization, ar rangement, readjustment of its debts, liquidation,
dissolution, arrangement, composition, or any other relief under any
bankruptcy law or any other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing and the continuance of
any of such events for 60 days undismissed, unbonded or undischarged;
or (B) the appointment of a receiver, conservator, trustee or similar
officer for the Company for any of its property and the continuance of
any of such events for 60 days undismissed, unbonded or undischarged;
or (C) the issuance of a warrant of attachment, execution or similar
process against any of the property of the Company and the continuance
of such event for 60 days undismissed, unbonded and undischarged;
(iii) Any breach of any of the Company's material
representations or warranties contained in the Subscription Agreement
and such breach is not remedied within 20 days of the Company's receipt
of written notice of same;
(iv) The Company shall fail to perform any of its
material obligations contained in the Subscription Agreement and such
failure is not remedied within 20 days of the Company's receipt of
written notice of same;
(v) The Company shall fail to comply with any of its
obligations under this Note; provided, however, that with respect to a
failure to comply with any of the provisions of Sections 2(a)(i) and
2(a)(iii) of this Note, such failure is not remedied within 20 days
after the Company's receipt of written notice of same;
(vi) The Company shall default with respect to any
indebtedness for borrowed money (other than under this Note) in excess
of $500,000 if either (A) the effect of such default is to accelerate
the maturity of such indebtedness (giving effect to any applicable
grace periods) or (B) the holder of such indebtedness declares the
Company to be in default (giving effect to any applicable grace
periods) and either Holder does not waive in writing such default
within five days of receipt of notice of same; or
(vii) Any judgment or judgments against the Company
or any attachment, levy or execution against any of its properties for
any amount in excess of $500,000 in the aggregate shall remain unpaid,
or shall not be released, discharged, dismissed, stayed or fully bonded
for a period of 45 days or more after its entry, issue or levy, as the
case may be, and Holder does not
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waive in writing such failure to pay within five days from the date of
receipt of notice of same.
then, and in any such event, the entire principal amount of this Note then
outstanding shall forthwith become immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
expressly waived. The Events of Default listed herein are solely for the purpose
of protecting the interests of the Holder of this Note. If the Note is not paid
in full upon an Event of Default, as required above, interest shall accrue on
the outstanding principal of this Note from the date of the Event of Default up
to and including the date of payment at a rate equal to 12% per annum.
(b) Non-Waiver and Other Remedies. No course of dealing or
delay on the part of the Holder of this Note in exercising any right hereunder
shall operate as a waiver or otherwise prejudice the right of the Holder of this
Note. No remedy conferred hereby shall be exclusive of any other remedy referred
to herein or now or hereafter available at law, in equity, by statute or
otherwise.
(c) Collection Costs; Attorney's Fees. In the event this Note
is turned over to an attorney for collection after the Maturity Date or upon the
occurrence of an Event of Default, the Company agrees to pay all reasonable
costs of collection, including reasonable attorney's fees and expenses and all
out of pocket expenses incurred in connection with such collection efforts,
which amounts may, at the Holder's option, be added to the principal hereof.
2. Obligation to Pay Principal and Interest; Covenants. No provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and interest (if any) on, this Note
at the place, at the respective times, at the rates, and in the currency herein
prescribed.
(a) Affirmative Covenants. The Company covenants and agrees that, while
this Note is outstanding, it shall:
(i) Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income and
profits, or upon any properties belonging to it before the same shall
be in default, except where failure to pay will not have a material
adverse effect on the Company or its operations; provided, however,
that the Company shall not be required to pay any such tax, assessment,
charge or levy which is being contested in good faith by proper
proceedings and adequate reserves for the accrual of same are
maintained if required by generally accepted accounting principles;
(ii) Preserve its corporate existence and continue
to engage in business of the same general type as conducted as of the
date hereof;
(iii) Comply in all material respects with all
statutes, laws, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, permits, licenses, authorizations and requirements
("Requirement(s)") of all governmental bodies, departments,
commissions, boards, companies or associates insuring the premises,
courts, authorities, officials, or officers, which are applicable to
the Company, except wherein the failure to comply would not have a
material adverse effect on the Company; provided that nothing contained
herein shall prevent the Company from contesting the validity or the
application of any Requirements.
(b) Negative Covenants. The Company covenants and agrees that while this
Note is outstanding it will not directly or indirectly:
(i) Guaranty or otherwise in any way become or be
responsible for indebtedness for borrowed money, or for obligations, in
either case of any of its officers, directors or principal stockholders
or any of their
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affiliates, contingently or otherwise, other than such guaranties
existing as of the date hereof;
(ii) Declare or pay cash dividends;
(iii) Sell, transfer or dispose of, any of its assets
other than in the ordinary course of its business or such assets that
have become obsolete or are no longer necessary for the Company's
operations and for fair value; or
Conversion.
(a) In the event that this Note is not paid in full on the
Maturity Date, the Holder may, at its option and its sole discretion, determine
to convert ("Conversion Right") all or any portion of this Note, in whole but
not in part, into Common Stock, as provided below. The Conversion Right shall
not affect in any way the Company's obligation to pay all amounts due (or any of
its other obligations) hereunder, unless and until the Holder exercises such
Conversion Right.
(b) Notice. In order to elect to convert all or any portion of
this Note, the Holder must hand deliver or telecopy to the Company a written
notice of its election to convert, stating the principal amount of this Note to
be converted, the interest accrued on such principal (which also must be
converted) and the applicable number of Converted Shares (as defined herein), as
determined under Section 3(c) hereof. The date such notice is hand delivered or
telecopied to the Company shall be deemed the "Conversion Date." Notwithstanding
anything to the contrary contained in this Note, the Company shall have the
right, at any time after the Maturity Date, to repay the principal amount of
this Note and the interest accrued thereon, provided that it shall first furnish
Holder with written notice ("Repayment Notice") of its intention to do so at
least five days prior to such repayment. The receipt by Holder of such Repayment
Notice shall not extinguish Holder's ability to exercise its Conversion Right in
accordance with this Section 3 until such time as repayment is made.
(c) Conversion Rate. If the Holder properly elects to convert
all or a portion of the principal and interest owed under this Note pursuant to
this Section 3, the Company shall convert such principal and interest into the
number of shares of the Common Stock ("Converted Shares") equal to the principal
amount and interest being converted divided by the lesser of (i) $2.00 ("Set
Price") and (ii) 80% of the average of the closing bid price of one share of
Common Stock on the five trading days ending the day immediately prior to the
Conversion Date ("Market-Based Price"). Notwithstanding the foregoing, in no
event shall the Market-Based Price be less than $.25 ("Floor Price"). The
Company shall issue certificates for such Converted Shares to the Holder within
five business days of the Conversion Date and deliver same to Holder, who shall
simultaneously deliver the Note to the Company. If the entire Note is not
converted, the Company shall issue to Holder a new Note in the applicable,
reduced amount. The number of Converted Shares to be issued to the Holder upon
conversion will be rounded up to the nearest whole number.
(d) Adjustments.
(i) If the outstanding shares of the Company's Common Stock shall be
subdivided or split into a greater number of shares, or a dividend in Common
Stock shall be paid in respect of Common Stock, the Set Price and Floor Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall, simultaneously with the effectiveness of such subdivision or
split or immediately after the record date of such dividend, be proportionately
reduced. If the outstanding shares of Common Stock shall be combined or
reverse-split into a smaller number of shares, the Set Price and Floor Price in
effect immediately prior to such combination or reverse-split shall,
simultaneously with the effectiveness of such combination or reverse-split, be
proportionately increased.
(ii) Upon the happening of any event requiring an adjustment of the Set
Price or Floor Price hereunder, the Company shall forthwith give written notice
thereto to the
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Holder of this Note stating the adjusted Set Price and Floor Price and the
adjusted number of shares purchasable upon the conversion hereof resulting from
such event and setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
Miscellaneous.
(a) Required Consent. The Company may not modify any of
the terms of this Note without the prior written consent of the Holder.
(b) Lost Documents. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note or
any Note exchanged for it, and (in the case of loss, theft or destruction) of
indemnity satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Note, if mutilated, the Company will make and deliver in lieu of such Note
a new Note of like tenor and unpaid principal amount and dated as of the
original date of the Note.
(c) Benefit. This Note shall be binding upon and inure
to the benefit of the parties hereto and their legal representatives,
successors and assigns.
(d) Notices and Addresses. All notices, offers, acceptances
and any other acts under this Note (except payment) shall be in writing, and,
except as otherwise set forth in Section 3 hereof, shall be sufficiently given
if delivered to the addressee in person, by Federal Express or similar receipted
overnight delivery or by facsimile delivery.
To Holder: To Holder's address on page 1 of this Note
To the Company: Global Telecommunication Solutions, Inc.
5697 Rising Sun Avenue
Philadelphia, Pennsylvania 19120
Attn: Corporate Secretary
Fax: (215) 745-9108
In either case with copies to: Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
Attn: David Alan Miller, Esq.
Fax: (212) 818-8881
or to such other address as any of them, by notice to the others may designate
from time to time. Notices shall be deemed given when received.
(d) Governing Law. This Note and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed and interpreted according to the law of the State of New York.
(e) Jurisdiction and Venue. The Company (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Note shall
be instituted exclusively in New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding, and the Company further agrees to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in New York State Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York and
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agrees that service of process upon it mailed by certified mail to its address
shall be deemed in every respect effective service of process upon it in any
such suit, action or proceeding.
(g) Section Headings. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Note.
(h) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein shall survive the
delivery of this Note.
IN WITNESS WHEREOF, this Note has been executed and delivered
on the date specified above by the duly authorized representative of the
Company.
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
By:
Shelly Finkel, Chairman of the Board
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EXHIBIT 10.31
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
November 21, 1996
BY FAX AND REGULAR MAIL
Whale Securities Co., L.P.
650 Fifth Avenue
New York, New York 10019
Attention: William G. Walters, Chairman
Dear Billy:
This is just to confirm in writing what we spoke about earlier
that Global Telecommunication Solutions, Inc. ("GTS") intends to raise between
$2 and $3 million dollars by issuing promissory notes and a number of warrants
equal to the principal amount of the notes purchased.
The notes would be payable in two years, without interest, and
be convertible into GTS Common Stock only in the event of a default. The
warrants would be exercisable for $2.50 a share for a period of five years from
the closing of the offering and would not be redeemable. GTS will commit to
register the resale of the shares underlying the warrants by April 15, 1997.
At the final closing of the offering, GTS will pay Whale a
finder's fee equal to 5% of the cash raised and issue to Whale and/or its
designees a number of warrants equal to 5% of the warrants sold. The warrants
will be in the same form as those purchased by the investors in the offering.
The resale by you and your designees of the shares underlying
the warrants will be registered by means of the same registration statement we
file on behalf of the investors.
We have already finalized the documents and have received
$1,000,000 in our attorney's escrow account. We expect to close later this week
on the first $2,000,000.
Please call me if you have any questions.
Sincerely,
GLOBAL TELECOMMUNICATIONS
SOLUTIONS, INC.
By: /s/Shelly Finkel
Shelly Finkel
Chairman of the Board
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
GTS OBTAINS $3 MILLION FINANCING
DECEMBER 24, 1996, Elmont, New York -- Global Telecommunication
Solutions, Inc. ("GTS") (NASDAQ: GTST, GTSTW) announced today that it has
consummated the sale of $3,000,000 of Notes in a private offering. The Notes are
payable in two years, without interest. In consideration of the loan, GTS has
issued warrants to purchase 3,000,000 shares of GTS's common stock at an
exercise price of $2.50 per share for a period of five years. The approximate
$2.8 million net proceeds will be used for general corporate purposes.
The notes, warrants and shares underlying the warrants have not been
registered under the Securities Act of 1933 or any applicable state securities
laws and may not be offered or sold in the United States absent registration or
an applicable exemption from such registration requirements. The Company has
agreed to register the common stock underlying the warrants for resale by the
investors in the offering.
GTS is a leading provider of prepaid phonecards as a convenient
alternative to conventional credit, coin and collect long distance calls,
including the Global Link(R) phonecard. The Company also develops and markets
prepaid phonecards featuring licensed and promotional graphics and phonecards
offering state-of-the-art interactive applications.
# # #
Except for any historical information contained herein, the matters discussed in
this press release contain forward-looking statements that involve risks and
uncertainties which are described in the company's SEC reports, including the
10-KSB for the period ended December 31, 1995 and the 10-Qs for the periods
ended March 31, 1996, June 30, 1996 and September 30, 1996.
<PAGE>
