As filed with the Securities and Exchange Commission on
October 21, 1996.
Registration No. 333-_____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Tel-Save Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
23-2827736
(I.R.S. Employee Identification Number)
6805 Route 202, New Hope, Pa. 18938 (215) 862-1500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Aloysius T. Lawn, IV
General Counsel and Secretary
Tel-Save Holdings, Inc.
6805 Route 202
New Hope, PA 18938
(215) 862-1500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
<PAGE>
If the only securities being registered on this Form are being 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 (as defined below), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. (x)
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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. ( )
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Shares Amount Aggregate Aggregate Amount of
To Be To Be Price Offering Registration
Registered Registered Per Unit Price Fee
- ---------- ---------- -------- ----- ---
Common 1,000,000 $ 27.00(1) $27,000,000 $8,181.82
Stock
(1) Calculated pursuant to paragraph (c) of Rule 457 under the Securities Act of
1933, as amended, on the basis of the average of the high and low sale prices
for a share of common stock on the Nasdaq National Market on October 18, 1996,
which is within five business days prior to filing.
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
Subject to Completion,
October 21, 1996
Prospectus
1,000,000 Shares
Tel-Save Holdings, Inc.
Common Stock
This Prospectus covers the offering for resale of up to 1,000,000 shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
of Tel-Save Holdings, Inc., a Delaware corporation (the "Company"), which may be
offered from time to time by the Selling Stockholders named herein under
"Selling Stockholders." The Company will receive no part of the proceeds of
sales made hereunder. All expenses of registration incurred in connection with
this public offering are being borne by the Company, except for the fees,
expenses and disbursements of the Selling Stockholders' counsel. None of the
Shares have been registered prior to the filing of the Registration Statement of
which this Prospectus is part.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"TALK." On October 18, 1996, the last reported sale price of the Common Stock
was $27.25.
The Shares may be offered for sale from time to time on the Nasdaq
National Market, or otherwise, at prices then obtainable. The Company has agreed
to indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
See "Plan of Distribution."
The Selling Stockholders and any broker executing selling orders on
behalf of the Selling Stockholders may be deemed to be underwriters within the
meaning of the Securities Act. Commissions received by any such broker may
deemed to be underwriting commissions under the Securities Acts.
Prospective investors should carefully consider the matters discussed
under "Risk Factors" beginning on page 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than those contained in or
incorporated by reference in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any of its agents. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date as of which
information is given in this Prospectus. This Prospectus does not constitute an
offer or solicitation by anyone in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so or to any person to whom,
it is unlawful to make such solicitation.
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AVAILABLE INFORMATION
The Company is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street (Suite 1400), Chicago, Illinois 60661. Copies of all or part of such
materials may also be obtained at prescribedrates from the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, the Commission maintains a
Web site at http://www.sec.gov that contains reports, proxy statements and other
information. Such material also can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a registration statement (which
term shall encompass any amendments thereto) on Form S-3 under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the securities
offered hereby (the "Registration Statement"). This Prospectus, which
constitutes part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which are
contained in exhibits to the Registration Statement as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the securities offered by this Prospectus, reference is made to the
Registration Statement, including the exhibits thereto, and the financial
statements and notes thereto filed or incorporated by reference as a part
thereof, which are on file at the offices of the Commission and may be obtained
upon payment of the fee prescribed by the Commission, or may be examined without
charge at the offices of the Commission. Statements made in this Prospectus
concerning the contents of any document referred to herein are not necessarily
complete, and, in each such instance, are qualified in all respects by reference
to the applicable documents filed with the Commission. The Registration
Statement and the exhibits thereto filed by the Company with the Commission may
be inspected and copied at the locations described above.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act (Commission File No. 0-26728) are incorporated herein by
reference:
(a) the Company's annual report on Form 10-K for the year ended
December 31, 1995;
(b) the Company's quarterly report on Form 10-Q for the quarter
ended March 31, 1996;
(c) the Company's quarterly report on Form 10-Q for the quarter
ended June 30, 1996;
(d) the description of the Company's Common Stock contained in
the Company's registration statement pursuant to Section 12(g) of the
Exchange Act on Form 8-A, filed on September 8, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the filing of a post-effective amendment that indicates the termination of
this offering shall be deemed to be incorporated in this Prospectus by reference
and to be a part hereof from the date of filing of such documents.
Any statements contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to whom this
Prospectus has been delivered, a copy of any or all of the documents referred to
above that have been or may be incorporated by reference herein other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference therein). Requests for such copies should be directed to Tel-Save
Holdings, Inc., 6805 Route 202, New Hope, Pennsylvania 18938 Attention: Aloysius
T. Lawn, IV, General Counsel and Secretary. Telephone requests may be directed
to (215) 862-1500.
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 WITH RESPECT TO
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THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING, WITHOUT LIMITATION, STATEMENTS HEREIN UNDER "RECENT DEVELOPMENTS" AND
STATEMENTS UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" IN THE COMPANY'S ANNUAL AND QUARTERLY
REPORTS. THESE FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH MATTERS WILL BE
REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE
FACTORS DISCUSSED IN THE SECTION HEREIN ENTITLED "RISK FACTORS."
RISK FACTORS
Dependence on AT&T
The design for the Company's long distance network, which is known as
"OBN" or "One Better Network," relies upon AT&T transmission facilities,
international long distance services, and operator services. If AT&T were to
terminate the Company's use of AT&T transmission facilities, international long
distance services, or operator services, the Company would seek to enter into
similar arrangements with other long distance providers. There can be no
assurance that the terms of such agreements would be favorable to the Company.
The Company's current operations and strategy with OBN emphasize the quality and
functionality of the AT&T (now Lucent Technologies, Inc., hereinafter "Lucent")
manufactured equipment, AT&T-provided transmission facilities and billing
services, and AT&T operator services. Loss of the ability to market OBN
emphasizing the quality of these AT&T-based services could have a material
adverse effect on the Company's results of operations and financial conditions.
The Company also will continue to depend on AT&T to provide the AT&T
telecommunication services that the Company resells directly to end users and to
isndependent marketing companies known as "partitions," which in turn resell the
services on the AT&T network to end users. The Company's ability to resell such
services on the AT&T network depends upon whether it can continue to maintain a
favorable relationship with AT&T. AT&T may terminate the provision of services
under its tariffs for limited reasons, including for nonpayment by the Company,
for national defense purposes or if the provision of services to the Company
were to have a substantial adverse impact on AT&T's network. While AT&T policy
historically has been to provide 30-day notice prior to termination of services,
there are no specific notice requirements with respect to such termination.
Although the Company has no specific contingency arrangements in place to
provide service to end users if AT&T were to discontinue its service to the
Company, based upon discussions that the Company has had with other long
distance providers and based upon
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such providers' published tariffs, the Company believes that it could negotiate
and obtain contracts with other long distance providers to resell long distance
services at rates comparable to its current contract tariffs with AT&T. If the
Company were to enter into contracts with another provider, however, the Company
believes it would take approximately 14 to 28 days to switch end users to that
provider. Although the Company believes it may have the right to switch end
users without their consent to such other providers, end users have the right to
discontinue such service at any time. Accordingly, the termination or
non-renewal of the Company's contract tariffs with AT&T or the loss of
telecommunication services from AT&T likely would have a material adverse effect
on the Company's result of operations and financial condition.
Risks Related to Development of OBN
Prior to the deployment of OBN, the Company marketed services by
emphasizing its use of AT&T's transmission facilities and switches ("AT&T
network") and billing services. Although such marketing can continue for
services on the AT&T network that the Company resells under the new AT&T
contract tariff described herein under the heading "Recent Developments," the
Company has had to reduce its emphasis on AT&T in marketing OBN, which makes
less use of the AT&T network. There can be no assurance that the Company will be
able to market OBN successfully, even though OBN uses Company-owned, AT&T (now
Lucent) manufactured switching equipment and AT&T transmission facilities, and
employs the billing services of AT&T and ACUS. Failure to market OBN
successfully would have a material adverse effect on the Company's financial
condition and results of operations.
Additionally, there can be no assurance that the Company will be able to
maintain or secure AT&T contract tariffs for transmission at cost-effective
rates. To the extent that the Company, rather than AT&T, is responsible for
providing the Company's telecommunications services, the Company's potential
liability increases if such services are not provided.
OBN utilizes AT&T (now Lucent) manufactured 5ESS-2000 switching
equipment, which employs the new Digital Networking Unit-SONET (Synchronous
Optical Network) technology and the 5E10 software. While the 5ESS-2000 switches
have operated successfully in the local environment, the Digital Networking
Unit-SONET and 5E10 software offer new technologies that have not been used
extensively, and there can be no assurance that the switches will function
effectively.
Additional management personnel and information systems are required to
support OBN, the costs of which are increasing the Company's overhead. In order
for the Company to provide service over OBN, the Company must operate and be
responsible
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for the maintenance of its own switching equipment. While the Company has hired
additional personnel with experience in operating a switch-based provider, there
can be no assurance that the Company will be successful in operating as a
switch-based provider.
Moreover, operation as a switch-based provider subjects the Company to
risk of significant interruption in the provision of services on OBN in the
event of damage to the Company's facilities (switching equipment or connections
to AT&T transmission facilities) such as could be caused by fire or natural
disaster. Such interruptions could have a material adverse effect on the
Company's financial condition and results of operations.
The Company's deployment of OBN is intended to increase gross margins,
which have decreased over the past 3 years during which the Company has operated
as a switchless, nonfacilities-based reseller of AT&T services. Gross profit, as
a percentage of sales, has decreased largely as a result of the Company's
offering higher volume discounts to new and larger partitions. Any difficulties
in rendering OBN fully functional could result in a negative impact on margins
and the results of operations, and the more gradual transitioning of existing
end users to OBN that the Company now plans as a result of its new AT&T contract
tariff described herein under the heading "Recent Developments" will delay the
Company's realization of improved gross margins.
Potential Decline in Pricing of Long Distance Services
Although the basic rates of the three largest long distance carriers --
AT&T, MCI and Sprint -- have consistently increased over the past three years
and remained unchanged through the third quarter of 1996, AT&T and other
carriers have announced new price plans aimed at residential customers with
significantly simplified rate structures, which may have the impact of lowering
overall long distance prices. There can be no assurance that AT&T or other
carriers will not make similar offerings available to the small- to medium-sized
businesses that the Company serves. Although OBN makes the Company more price
competitive, a reduction in long distance prices still may have a material
adverse impact on the Company's profitability.
Dependence Upon Key Personnel
The success of the Company's operations during the foreseeable future
will depend largely upon the continued services of Daniel Borislow and Gary W.
McCulla. Mr. Borislow and Mr. McCulla have entered into employment agreements
with the Company that contain non-competition covenants that extend for a period
of up to 18 months following termination of employment.
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The Company's success also depends in part on its ability to manage,
attract and retain qualified personnel. Competition for such personnel is
intense. There can be no assurance that the Company will be successful in
attracting and retaining the personnel that it requires to manage the growth of
its business successfully. The Company's results of operations could be
adversely affected if the Company were unable to attract, manage and retain
these personnel, or if revenue were to fail to increase at a rate sufficient to
absorb the resulting increase in expenses.
Reliance on AT&T Billing Services
The Company uses billing services provided by AT&T and AT&T's College and
University Systems ("ACUS"), a wholly owned strategic business unit of AT&T.
There can be no assurance that either AT&T or ACUS will continue to offer
billing services to the Company on terms acceptable to the Company. AT&T has
begun to remove its name on bills for which it provides billing services and
could further obscure its role in providing billing services or cease providing
billing services altogether. Loss of the AT&T and ACUS billing services or
decreased customer awareness of the AT&T name could have a material adverse
effect on the Company's marketing strategy and retention of existing partitions
and end users. The Company is developing its own information systems in order to
have its own billing capacity, although the Company has not provided such direct
billing services to end users in the past.
Competition
The long distance telecommunications industry is highly competitive and
affected by the introduction of new services by, and the market activities of,
major industry participants. Competition in the long distance business is based
upon pricing, customer service, billing services and perceived quality. The
Company competes against various national and regional long distance carriers
and competes against the numerous companies in the long distance
telecommunications market that offer essentially the same services as the
Company. Several of the Company's competitors are substantially larger and have
greater financial, technical and marketing resources than the Company. The
Company's competitors that resell non-AT&T services do so at prices below that
which the Company can provide as an AT&T switchless reseller, although the
deployment of OBN enables the Company to be price competitive with non-AT&T
resellers at current industry pricing levels. The ability of the Company to
compete effectively in the telecommunications industry will depend upon the
Company's continued ability to provide high quality services at prices generally
competitive with, or lower than, those charged by its competitors. Although the
Company's gross margins are expected to improve following the
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deployment of OBN, revenues could decline if competition for long distance
service forced the Company to offer services at greater discounts.
Recent changes in the regulation of the telecommunications industry may
impact the Company's competitive position. The Telecommunications Act of 1996
(the "1996 Act") effectively opens up the long distance market to competition
from the Bell Operating Companies and Regional Holding Companies (collectively,
"RBOCs"). The entry of these well-capitalized and well-known entities into the
long distance market could significantly alter the competitive environment in
which the Company operates because of the established relationship the RBOCs
have with their local service customers (and the likelihood that the RBOCs will
take advantage of those relationships), as well as the possibility of
interpretations of the 1996 Act favorable to the RBOCs, which may make it more
difficult for other providers, such as the Company, to compete to provide long
distance services.
Maintenance of End User Base
End users are not obligated to purchase any minimum usage amount and can
discontinue service, without penalty, at any time. There can be no assurance
that end users will continue to buy their long distance telephone service
through the Company or through partitions that purchase services from the
Company. In the event that a significant portion of the Company's end users
decides to purchase long distance service from another long distance service
provider, there can be no assurance that the Company will be able to replace its
end user base from other sources. Loss of a significant portion of the Company's
end users would have a material adverse effect on the Company's results of
operations and financial condition.
A high level of customer attrition is inherent in the long distance
industry, and the Company's revenues are affected by such attrition. Attrition
is attributable to a variety of factors, including termination of customers by
the Company for non-payment and the initiatives of existing and new competitors
as they engage in, among other things, national advertising campaigns,
telemarketing programs and the issuance of cash or other forms of incentives.
Reliance on Independent Carrier and Marketing Companies; Lack of Control Over
Marketing Activities
The Company markets services primarily through independent carriers and
marketing companies known as "partitions," which generally have entered into
non-exclusive agreements with the Company. Most partitions to date have made no
minimum use or revenue commitments to the Company under these
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agreements. If the Company were to lose access to services on the AT&T network
or billing services or experiences difficulties with OBN, the Company's
agreements with partitions could be adversely impacted.
One partition, The Furst Group, Inc., is expected to have accounted for
approximately 13 percent of the Company's sales in the third quarter of 1996.
Two other partitions are expected to have accounted for approximately 8 percent
of the Company's sales in the third quarter of 1996. The Company's direct
marketing operations are expected to have accounted for less than one percent of
the Company's sales in the third quarter of 1996. In the event that any of the
partitions, and particularly the three significant partitions noted above, were
to cease doing business with the Company, the financial condition or results of
operations of the Company could be materially adversely affected.
Certain marketing practices, including the methods and means to convert a
customer's long distance telephone service from one carrier to another, have
recently been subject to increased regulatory review at both the federal and
state levels. This increased regulatory review could affect possible future
acquisitions of new business from new partitions or other resellers. Provisions
in the Company's partition agreements mandate compliance by the partitions with
applicable state and federal regulations. Because the Company's partitions are
independent carriers and marketing companies, the Company is unable to control
completely such partitions' activities. The Company is also unable to predict
the extent of its partitions' compliance with applicable regulations or the
effect of such increased regulatory review.
Government Regulation
The Company is subject to regulation by the FCC and by various state
public service and public utility commissions as a nondominant provider of long
distance services. The Company and its partitions are required to file tariffs
for interstate and international service with the FCC, which tariffs are
presumed lawful and become effective on one day's notice. The Company and its
partitions are also required to file tariffs to obtain approval for intrastate
service provided in most of the states in which they market long distance
services. Changes in existing policies or regulations in any state or by the FCC
could materially adversely affect the Company's results of operations,
particularly if those policies make it more difficult to obtain service from
AT&T or other long distance companies at competitive rates, or otherwise
increase the cost and regulatory burdens of providing services. The FCC has
proposed the mandatory detariffing of long distance services. There can be no
assurance that the regulatory authorities in one or more states or the FCC will
not take action having an adverse effect on the business or
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financial condition or results of operations of the Company. Regulatory action
by the FCC or the states also could adversely affect the partitions, or
otherwise increase the partitions' cost and regulatory burdens of providing long
distance services. As it engages in direct marketing to end users, the Company
will be subject to applicable regulatory standards for marketing activities and
the increased FCC and state attention to certain marketing practices may become
more significant to the Company.
Adverse Effect of Rapid Change in Technology and Service
The telecommunications industry has been characterized by rapid
technological change, frequent new service introductions and evolving industry
standards. The Company believes that its future success will depend on its
ability to anticipate such changes and to offer on a timely basis services that
meet these evolving standards. There can be no assurance that the Company will
have sufficient resources to make necessary investments or to introduce new
services that would satisfy an expanded range of partition and end user needs.
Expansion into New Business Activities
In addition to relying on marketing performed by its partitions, the
Company has begun to market its long distance service directly to end users.
Such direct marketing has and is expected to continue to increase the Company's
costs as it hires new employees, provides increased customer support and
collection services, and acquires additional equipment and facilities. The
Company is required to comply with additional regulatory standards for direct
marketing of telecommunications services. Direct marketing by the Company may
also adversely affect its relationship with its partitions as both the Company
and the partitions will be competing to provide similar services.
The Company plans to provide a full range of telecommunications services
to tenants of multi-tenant office and residential buildings and complexes
(competitive telecommunications provider or "CTP" services). To provide such
services, the Company will invest in additional equipment and software and
augment its customer service and direct sales force. The Company may also be
subject to additional regulatory requirements. The Company will need the
approval of the owners, developers or mortgagors of the buildings to provide
these services, and there can be no assurance that the Company will be able to
obtain the requisite approvals. The Company has not functioned previously in
this context and faces competition from other providers that offer similar
services.
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Control by Existing Stockholders; Anti-Takeover Considerations
As of the date of this Prospectus, Mr. Borislow owns beneficially
approximately 47.0% of the outstanding Common Stock, including approximately
13.1% pursuant to a voting trust with Paul Rosenberg. Accordingly, Mr. Borislow,
individually, effectively has the ability to control the election of all of the
members of the Company's Board of Directors and the outcome of corporate actions
requiring majority stockholder approval. Even as to corporate transactions in
which super-majority approval may be required, such as certain fundamental
corporate transactions, Mr. Borislow effectively will control the outcome of
such actions.
The Company also has an authorized class of 5,000,000 shares of preferred
stock that may be issued by the Board of Directors on such terms and with such
rights, preferences and designations as the Board may determine. Issuance of
such preferred stock, depending upon the rights, preferences and designations
thereof, may have the effect of delaying, deterring or preventing a change in
control of the Company. In addition, the Delaware General Corporation Law and
other provisions of the Company's Amended and Restated Certificate of
Incorporation, including the provision of the Amended and Restated Certificate
that provides that the Board of Directors be divided into three classes each of
which is elected for three years, and the Bylaws contain provisions that may
have the effect of delaying or preventing a change in control of the Company.
Such anti-takeover effects may deter a third party who would propose to
acquire the Company or to engage in a similar transaction affecting control of
the Company in which the Company's stockholders might receive a premium for
their shares over the then-current market value.
Shares Eligible for Future Sale
Future sales of substantial amounts of the Company's Common Stock could
adversely affect the market price of the Common Stock. As of the date of this
Prospectus, Mr. Borislow owns beneficially 47.0% of the outstanding Common
Stock, and a decision by Mr. Borislow to sell his shares could adversely affect
the market price of the Common Stock. Of the Company's 29,049,000 shares of
Common Stock, 15,474,000 shares are freely tradeable by persons other than
"affiliates" of the Company. Of the remaining 13,575,000 shares of Common Stock,
none are, under current interpretations, eligible for resale until after the
expiration of the lock-up period pursuant to Rule 144 under the Securities Act
in September 1997.
There are outstanding options to purchase 3,796,900 shares of Common
Stock.
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In addition to the Warrants underlying the shares being offered by this
Prospectus, there are warrants to purchase up to 3,256,000 shares of Common
Stock ("Other Warrants").
Paul Rosenberg, the holder of 3,795,000 shares of Common Stock, has the
right, under certain conditions, to participate in future registrations of
Common Stock and to cause the Company to register certain shares of Common Stock
owned by him. Holders of the Other Warrants also have registration rights under
certain conditions.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, may adversely affect the market price of
the Common Stock.
THE COMPANY
The Company, originally incorporated in 1989 as Tel-Save, Inc., provides
long distance telephone service throughout the United States primarily to small
and medium-sized businesses. For further information about the business and
operations of the Company, reference is made to the Company's reports
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
The principal executive offices of the Company are located at 6805 Route
202, New Hope, Pennsylvania 18938, and its telephone number is (215) 862-1500.
RECENT DEVELOPMENTS
The Company has subscribed to a new AT&T contract tariff, which permits
the Company to continue to resell AT&T long distance services, including
software defined network ("SDN") services, through mid-1998. The new AT&T
contract tariff also includes other AT&T services (such as international long
distance, inbound and outbound services) that will be used in the Company's new
nationwide long distance network, OBN. The rates that the Company will pay under
the new AT&T contract tariff are more favorable to the Company than under
previous tariffs. During its term, the new AT&T contract tariff will enable the
Company to minimize possible attrition that might result from moving existing
end users from the AT&T network to OBN. The new AT&T contract tariff also
permits a more gradual introduction of OBN, which should reduce the expense of
providing the capacity required in a more rapid phase-in of OBN and lessen the
impact of any technical difficulties during the phase-in of OBN. The more
gradual introduction of OBN, however, will postpone the Company's
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realization of the more favorable margins for OBN service, and the new AT&T
contract tariff requires the Company to commit to purchase $240 million of
service from AT&T over the next 4 years. This commitment is larger than any
previous commitment that the Company has made, but the Company believes that it
can be met based on its current purchases of long distance service from AT&T of
approximately $12 million per month. Further, the Company can terminate the new
contract tariff without liability to AT&T within the first 18 months if the
Company has purchased $90 million in services from AT&T under the new contract
tariff. The Company can also terminate the new contract tariff without liability
to AT&T at any time if the Company and AT&T enter into a new contact tariff or
another contract with at least a $90 million commitment for not more than four
years, provided that the Company must purchase or pay for AT&T services under
the contract tariff of at least $5 million per month for the months prior to
such termination.
The Company is continuing the deployment of OBN, which features five
Company-owned, AT&T (now Lucent) manufactured 5ESS-2000 switches connected by
AT&T digital transmission facilities. Installation of the transmission
facilities and the five switches -- in Jacksonville, New York City, Chicago,
Dallas and San Francisco -- is substantially complete, and testing of the
network is being performed by the Company and the local exchange carriers
("LECs") whose local networks interconnect with the Company's long distance
network. The Company is now in the process of activating access to the local
areas that will be served by each switch, and has begun placing end users on OBN
through the Jacksonville switch. OBN includes echo cancellation equipment
purchased from Lucent. The Company expects OBN to become fully functional in the
fourth quarter of 1996.
The Company believes that gross operating margins for OBN long distance
service will be higher than for AT&T long distance service. AT&T long distance
service is "bundled," which means that the Company pays a single, all-inclusive
price to AT&T for switching, transmission, and LEC access. OBN long distance
service is "unbundled," which means that the Company provides its own switching,
pays AT&T for transmission, and pays access fees directly to LECs. The
"unbundled" charges per call on OBN are expected to be less than the "bundled"
charge paid to AT&T. In addition, OBN should result in a faster and more
reliable "provisioning" process, in which end users who have requested the
Company's services actually begin to receive those services.
OBN is the focus of the Company's current direct marketing efforts to end
users. The Company is also encouraging OBN sales through independent
telecommunications carriers known as "partitions" that purchase the Company's
services for resale to end users. The Company expects that by the end of the
fourth quarter of 1996 most of its new end users will be receiving OBN service.
OBN also will provide the local service capabilities needed to support
the Company's planned provision of CTP Services. The Company intends to begin
activities in planning and marketing CTP Services, and purchasing, installing
and testing the switching modules necessary to provide such services, after OBN
becomes fully functional.
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<PAGE>
The Company has used a portion of the proceeds from its 1996 stock
offering for: (i) advances to new and existing partitions to support their
marketing efforts, (ii) procurement of additional hardware and software for OBN,
(iii) direct marketing efforts, including the purchase of a direct marketing
center in Clearwater, Florida, and (iv) the purchase of a new headquarters
building in New Hope, Pennsylvania. The Company intends to use the remaining
proceeds: (i) to further fund new and existing partitions, (ii) to expand direct
marketing efforts, including the build out of the direct marketing center, and
(iii) to take advantage of growth opportunities, including but not limited to,
possible acquisitions and development of CTP Services. The Company expects to
spend less of the proceeds of the 1996 stock offering to start up OBN than
originally planned because of the new AT&T contract tariff, which will permit a
more efficient phase-in of OBN and avoid some of the costs associated with
moving existing end users to OBN. There can be no assurance that the Company's
financial performance will meet analyst expectations in the future.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 shares of
Common Stock, $.01 par value per share, and 5,000,000 shares of undesignated
Preferred Stock, $.01 par value per share. As of October 18, 1996, 29,049,000
shares of Common Stock were issued and outstanding. There were no shares of
Preferred Stock designated or issued. For further information about the
Company's authorized capital stock, reference is made to the Company's reports
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares of Common Stock offered by this Prospectus.
SELLING STOCKHOLDERS
The Company and The Furst Group, Inc., a New Jersey corporation ("TFG"),
entered into a telecommunications services agreement, dated as of March 14, 1996
(the "Agreement"), pursuant to which TFG agreed to purchase certain
telecommunications services and other associated services from the Company.
Simultaneous with the execution of the Agreement, the Company issued TFG
warrants (the "Warrants") to purchase, subject to certain adjustments and
conditions, 1,500,000 shares of Common Stock (the "Warrant Shares") at an
exercise price of $11.33 per share (the "Exercise Price"), which was the market
price of the
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Common Stock on the date of the Agreement. The Warrants have a net exercise
provision, which provides for a cashless exercise in which Warrants are
exchanged for shares of Common Stock. As a result of the net exercise provision,
the number of shares that the Company will issue upon exercise of the Warrants
will depend on the market price of the Common Stock on the date of exercise of
the Warrants. The Warrants may be exercised, subject to certain conditions, at
the election of their holders between September 14, 1996 and March 13, 1998. The
grant of the Warrants was made pursuant to the exemption from registration under
the Securities Act provided by Section 4(2) thereof.
The Warrants are transferable only to TFG's stockholders, and TFG has
made such a transfer to its stockholders, who are offering the shares of Common
Stock underlying the Warrants in this Prospectus (the "Selling Stockholders").
The names of the Selling Stockholders and the number of Warrant Shares that they
hold are as follows:
Selling Stockholder Warrant Shares
------------------- --------------
James D. Kaylor 697,500
John S. Streep 682,500
Kristen M. Streep 7,500
J. Ryan Streep 7,500
Jeffrey L. Bockol 52,500
Leslie J. Bockol 7,500
Matthew A. Bockol 7,500
Marcia L. Bockol 7,500
Wayne C. Phipps 15,000
Hubert A. Streep 15,000
Because of the net exercise provision described in the previous paragraph, the
number of shares that the Company will issue upon exercise of the Warrants will
depend on the market price of the Common Stock on the date of exercise of the
Warrants. As of the date hereof, the Selling Stockholders own no shares of the
Company's Common Stock. The Selling Stockholders are offering all of the shares
of the Company's Common Stock they will own upon exercise of the Warrants in
this Prospectus. TFG holds warrants to purchase an additional 100,000 shares of
the Company's Common Stock.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised the Company that, depending on
market conditions and other factors, they may sell the Shares offered hereby
from time to time, in one or more transactions, which may involve block
transactions, on the Nasdaq National Market, or otherwise, at market prices
prevailing at the
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<PAGE>
time of sale, at negotiated prices, or at fixed prices, which may be changed.
Such sales may be effected directly or through brokers who may receive
compensation in the form of discounts, concessions, or commissions from the
Selling Stockholders and/or the purchasers of the Common Stock for whom such
brokers may act as agents or to whom they sell as principals, or both (which
compensation as to a particular broker might be in excess of the customary
commissions).
In connection with such sales, the Selling Stockholders and any
participating brokers may be deemed to be underwriters of the Common Stock so
sold within the meaning of Section 2(11) of the Securities Act, and any discount
or commission received by them and any profit on the resale of Common Stock as
principals may be deemed to be underwriting discounts or commissions under the
Securities Act, although the Selling Stockholders disclaim any such underwriter
status. The Selling Stockholders will pay any transaction costs associated with
effecting any sales that occur.
To the extent required, the number of shares of Common Stock to be sold,
the purchase price and public offering price, the name or names of any brokers,
and any applicable commissions or discounts with respect to a particular
offering will be set forth in a supplement to this Prospectus to be filed with
the Securities and Exchange Commission pursuant to Rule 424 under the Securities
Act.
The Company will bear all costs and expenses of the registration of the
Common Stock under the Securities Act and certain state securities laws, other
than fees of counsel for the Selling Stockholders and any discounts or
commissions payable with respect to sales of such Common Stock.
The Selling Stockholders are not restricted as to the price or prices at
which they may sell shares of Common Stock acquired upon the exercise of the
Warrants. Such sales may have an adverse effect on the market price of the
Common Stock. Moreover, the Selling Stockholders are not restricted as to the
number of shares of Common Stock that may be sold at any one time, and it is
possible that a significant number of shares could be sold at the same time,
which also may have an adverse effect on the market price of the Common Stock.
The Company has agreed to indemnify the Selling Stockholders against
certain civil liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Aloysius T. Lawn, IV, the Company's General Counsel and Secretary, will
render an opinion to the effect that the Common
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<PAGE>
Stock offered by this Prospectus is duly authorized, validly issued, fully paid
and non-assessable.
EXPERTS
The consolidated financial statements and schedule of the Company
incorporated by reference in this Prospectus have been audited by BDO Seidman
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing.
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<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . 4
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . 15
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 15
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . 16
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration . . . . . . . . . . . $ 8,182
Printing and engraving expenses . . . . 1,000*
Legal fees and expenses . . . . . . . . 40,000*
Accounting fees and expenses . . . . . 15,000*
Transfer agent and trustee fees . . . . 1,000*
Miscellaneous . . . . . . . . . . . . . 1,000*
Total . . . . . . . . . . . . . . . . . $ 66,182*
*Estimates
Item 15. Indemnification or Director and Officers.
The Delaware General Corporation Law provides, in substance, that
Delaware corporations shall have the power, under specified circumstances, to
indemnify their directors, officers, employees and agents in connection with
actions or suits by or in the right of the corporation, by reason of the fact
that they were or are such directors, officers, employees and agents, against
expenses (including attorneys' fees) and, in the case of actions, suits or
proceedings brought by third parties, against judgment, fines and amounts paid
in settlement actually and reasonably incurred in any such action, suit or
proceeding.
The Company's Bylaws also provide for indemnification to the fullest
extent permitted by the Delaware General Corporation Law. Reference is made to
the Company's Bylaws.
As permitted by the Delaware General Corporation Law, the Company's
Bylaws eliminate the personal liability of its directors to the Company and its
stockholders, in certain circumstances, for monetary damages arising from a
breach of the director's duty of care. Additionally, the Company has entered
into indemnification agreements with some of its directors and officers. These
agreements provide for indemnification to the fullest extent permitted by law
and, in certain respects, may provide greater protection than that specifically
provided for by the Delaware General Corporation Law. The agreements do not
provide indemnification for, among other things, conduct which is adjudged to be
fraud, deliberate dishonesty or wilful misconduct.
The Company has purchased an insurance policy that purports to insure the
officers and directors against certain
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<PAGE>
liabilities incurred by them in the discharge of their functions as officers and
directors.
Item 16. Exhibits.
Exhibit No. Description
4.1 Amended and Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 3.1
to the Company's registration statement on Form S-1 (File No.
33-94940)).
4.2 Amendment to the Amended and Restated Certificate of
Incorporation of the Company effective as of April 15, 1996
(incorporated by reference to Exhibit 3.3 to the Company's
registration statement on Form S-1 (File No. 333-2738)).
4.3 Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's registration statement on Form S-1 (File
No. 33-94940)).
4.4 Form of Nontransferable Warrant To Purchase Common Stock of
Tel-Save Holdings, Inc.
5.1 Opinion of Aloysius T. Lawn, IV.*
23.1 Consent of BDO Seidman, LLP.*
23.2 Consent of Aloysius T. Lawn, IV (included as part of Exhibit
5.1).*
24.1 Power of Attorney (included as part of the signature page).
* To be filed by amendment.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers 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;
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<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represents 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 form 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; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference 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 the 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 that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement 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.
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<PAGE>
(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.
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<PAGE>
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
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 Township of Solebury, Commonwealth of Pennsylvania, on
October 21, 1996.
TEL-SAVE HOLDINGS, INC.
By: /s/ Daniel Borislow
_____________________________
Daniel Borislow
Chairman of the Board of
Directors, Chief Executive
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Daniel Borislow and Aloysius T. Lawn, IV,
and each of them, each with full power to act without the other, his true and
lawful attorney-in-fact and agent, each with full power of substitution and
resubstitution, for such person and in his name, place and stead, in any and all
capacities, to sign any or all further amendments or supplements (including
post-effective amendments) to this Form S-3 Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorneys-in-fact
and agents, or his substitutes, may lawfully do or cause to be done by virtue
thereof.
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<PAGE>
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 below:
Signature Title Date
--------- ----- ----
/s/ Daniel Borislow Chairman of the Board October 21, 1996
_____________________ of Directors, Chief
Daniel Borislow Executive Officer and
Director (Principal
Executive Officer)
/s/ Garry W. McCulla President, Director October 21, 1996
____________________ of Sales and Marketing
Gary W. McCulla and Director
/s/ Emanuel J. DeMaio Chief Operations October 21, 1996
_____________________ Officer and Director
Emanuel J. DeMaio
/s/ Joseph A Schenk Chief Financial Officer October 21, 1996
_____________________ and Director (Principal
Joseph A. Schenk Financial Officer)
/s/ Kevin R. Kelly Controller (Principal October 21, 1996
_____________________ Accounting Officer)
Kevin R. Kelly
/s/ Harold First Director October 21, 1996
_____________________
Harold First
/s/ Ronald R. Thoma Director October 21, 1996
_____________________
Ronald R. Thoma
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 3.1
to the Company's registration statement on Form S-1 (File No.
33-94940)).
4.2 Amendment to the Amended and Restated Certificate of
Incorporation of the Company effective as of April 15, 1996
(incorporated by reference to Exhibit 3.3 to the Company's
registration statement on Form S-1 (File No. 333-2738)).
4.3 Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's registration statement on Form S-1 (File
No. 33-94940)).
4.4 Form of Nontransferable Warrant To Purchase Common Stock of
Tel-Save Holdings, Inc.
5.1 Opinion of Aloysius T. Lawn, IV.*
23.1 Consent of BDO Seidman, LLP.*
23.2 Consent of Aloysius T. Lawn, IV (included as part of Exhibit
5.1).*
24.1 Power of Attorney (included as part of the signature page).
* To be filed by amendment.
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Exhibit 4.4
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS TEL-SAVE HOLDINGS, INC. RECEIVES AN OPINION OF
COUNSEL ACCEPTABLE TO IT THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS
EXEMPT FROM ANY REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
NONTRANSFERABLE WARRANT TO PURCHASE
COMMON STOCK OF
TEL-SAVE HOLDINGS, INC.
Date of Grant: As of March 14, 1996.
Void after 5:00 PM. Eastern Standard Time on
March 13, 1998 (subject to extension or earlier
termination, as herein provided)
No. W-TFG-[ ]
FOR VALUE RECEIVED, Tel-Save Holdings, Inc., a Delaware corporation
(together with its successors and assigns, the "Company") hereby certifies and
agrees that [Warrant Holder Name] (the "Holder") is entitled, subject to the
terms, conditions and adjustments hereof, to receive, in one or more exercises
of this Warrant, from time to time, from the Company such number of shares of
Common Stock, par value $.01 per share, of the Company (the "Common Stock") as
is determined under Paragraph 1 hereof, during the period commencing at 9:00
AM., Eastern Standard Time on September 14, 1996 (the "Commencement Date") and
ending at 5:00 PM. Eastern Standard Time on the earlier of March 13, 1998
(subject to extension as provided herein) and the Earlier Termination Date (as
defined in Paragraph 1 hereof) (such time on such earlier date, the "Termination
Date") at an exercise price (the "Exercise Price") of $11.33 per share (such
Exercise Price reflecting an "Exercise Price" of $17.00 per share on March 14,
1996, the date as of which the Original Warrant (as defined below) was issued,
as adjusted pursuant to the terms of this Warrant to reflect the three-for-two
stock split in the form of a 50% stock dividend effective as of March 15, 1996).
The number of shares of Common Stock issuable upon exercise of this Warrant
("this Warrant") and the exercise price per share shall be
<PAGE>
subject to further adjustment from time to time upon the occurrence of certain
events as set forth below. This Warrant is one of several Warrants issued in
exchange for the Warrant (the "Original Warrant") issued to The Furst Group,
Inc., a New Jersey corporation ("TFG"), in conjunction with, and referenced as
the "Warrant" in, the Telecommunication Services Agreement, dated as of March
14, 1996 (the "Services Agreement"), between Tel-Save, Inc., a wholly owned
subsidiary of the Company, and TFG. The aggregate number of "Warrant Shares" (as
defined below) under this Warrant and all such other Warrants issued in exchange
for the Original Warrant (and any Warrants issued in exchange for any thereof)
and at any time outstanding shall not exceed 1,500,000, as such number shall
have been adjusted and reduced after March 18, 1996 as herein provided.
The shares of Common Stock or any other shares or other units of stock or
other securities or property or any combination thereof receivable upon exercise
of this Warrant, as adjusted from time to time, are sometimes referred to herein
as the "Exercise Shares."
1. Exercise of Warrant; Issuance of Exercise Shares.
(a) Exercise of Warrant. This Warrant may be exercised as to the then
remaining Warrant Shares (as hereinafter defined) by the Holder in whole at any
time or in part from time to time on or after the Commencement Date and until
and including the Termination Date. For purposes of this Warrant, "Warrant
Shares" shall mean [Number of Shares] shares of Common Stock, subject to further
adjustment as provided in Paragraph 8 hereof and to successive reduction upon
any exercise of this Warrant as provided below in this clause (a). Following the
Termination Date, in the absence of the exercise hereof, the Holder shall have
no rights herein to acquire any Exercise Shares and this Warrant shall lapse as
to such rights. This Warrant may be exercised on any business day by delivering
to the Company at its principal office, presently located at the address of the
Company set forth in Paragraph 11 hereof (or such other office of the Company as
shall theretofore have been designated by the Company by written notice to the
Holder), a completed and executed irrevocable Notice of Warrant Exercise in the
form set forth in Appendix A hereto and made a part hereof (or facsimile copy
thereof, provided that the original executed Notice of Warrant Exercise is so
delivered to the Company within two days thereafter), specifying therein the
number of Warrant Shares (which shall not exceed the number thereof then
remaining as to which no Notice of Warrant Exercise has previously been given)
with respect to which the Holder is then exercising its rights hereunder,
provided that this Warrant is so delivered to the Company not later than the
original executed copy of such Notice
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<PAGE>
of Warrant Exercise. The Company, pursuant to such Notice of Warrant Exercise
from Holder, duly completed, and in accordance with Subparagraph 1(c) hereof,
shall, upon receipt of this Warrant and the original executed copy of such
Notice of Warrant Exercise, issue, and deliver a certificate evidencing, such
number of Exercise Shares as shall equal the result of (x) the product of (i)
the difference between the Current Market Price (as defined in Subparagraph 8(d)
hereof) on the date of delivery of such Notice Of Warrant Exercise and the then
Exercise Price, multiplied by (ii) the number of Warrant Shares specified in
such Notice of Warrant Exercise, divided by (y) the Current Market Price on the
date of delivery of such Notice Of Warrant Exercise. Upon such exercise pursuant
to a Notice of Warrant Exercise, the number of Warrant Shares automatically
shall be reduced by the number thereof specified in such Notice of Warrant
Exercise.
In the event that this Warrant shall be duly exercised in part prior to the
Termination Date, the Company shall issue a new Warrant of like tenor evidencing
the rights of the Holder thereof with respect to the balance of the Warrant
Shares under the Warrant so surrendered.
No adjustments shall be made for any cash dividends on Exercise Shares
issuable upon exercise of this Warrant.
(b) Earlier Termination Date. Holder's right to purchase any Exercise
Shares under this Warrant shall terminate and be of no further force and effect
on the date (the "Earlier Termination Date") that (i) Continuing Customers shall
be transferred or disconnected from the Services after a "Change of Control" (as
defined in the Services Agreement) in breach of the terms of Section 6.4 of the
Services Agreement (less than 105 days after a "Change of Control" (as defined
in the Services Agreement)), and (ii) such transferred or disconnected
Continuing Customers shall not have been replaced within 30 days after notice of
such breach by TS with customers of equivalent value that remain on the Services
for at least 105 days.
(c) Issuance of Exercise Shares; Delivery of Warrant Certificates. The
Company shall, within three (3) business days after the exercise of this Warrant
or as soon thereafter as is practicable, issue in the name of the Holder (or
such other person or persons, if any, as specifically permitted under the terms
hereof and as the Holder shall have designated in the Notice of Warrant
Exercise) one or more certificates representing the Exercise Shares to which the
Holder (or such other persons or persons) shall be entitled upon such exercise
under the terms hereof. Such certificate or certificates shall be deemed to have
been issued and the Holder (or such other person or persons so permitted and
designated) shall be deemed to have become the
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record holder of the Exercise Shares as of the date of the due exercise of this
Warrant.
(d) Exercise Shares Fully Paid and Non-assessable. The Company agrees and
covenants that all Exercise Shares issued or delivered upon the due exercise of
this Warrant will, upon issuance in accordance with the terms hereof, be duly
authorized, validly issued, fully paid and non-assessable and free and clear of
all taxes (other than those taxes which, pursuant to Paragraph 2 hereof, the
Company shall not be obligated to pay), liens, charges and security interests
created by or in favor of the Company with respect to the issuance thereof
(other than the limitations on such Exercise Shares imposed by applicable
securities laws and limitations expressly included in this Warrant).
(e) Fractional Shares. The Company shall not be required to issue
fractional shares of capital stock upon the exercise of this Warrant or to
deliver certificates that evidence fractional shares of capital stock. In the
event that any fraction of an Exercise Share would, except for the provisions of
this Subparagraph (e), be issuable upon the exercise of this Warrant, the
Company shall pay to the Holder exercising the Warrant an amount in cash equal
to such fraction multiplied by the "Current Market Price" of the Exercise Share.
2. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Exercise Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax or taxes that may be payable in respect of any transfer of this Warrant or
any transfer involved in the issue of any Warrant Certificates or any
certificates for Exercise Shares in a name other than that of the Holder of this
Warrant, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
3. Mutilated or Missing Warrant. In case this Warrant shall be mutilated,
lost, stolen or destroyed, the Company may in its discretion issue, in exchange
and substitution for and upon cancellation of, this Warrant, if mutilated, or in
lieu of and in substitution for this Warrant if lost, stolen or destroyed, a new
Warrant of like tenor and in the same aggregate denomination (but reflecting the
number of Warrant Shares as to which this Warrant was then exercisable), but
only (i) in the case of loss, theft or destruction, upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction of
this Warrant
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and, in the case of TFG as the Holder, TFG's indemnity, and, in the case of any
other Person as the holder, indemnity or bond, if requested, in each case also
reasonably satisfactory to the Company, and (ii) in the case of mutilation, upon
surrender of this Warrant. The Applicant for such substitute Warrant shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company or its counsel may prescribe.
4. Rights of Holder. The Holder shall not, by virtue of anything contained
in this Warrant or otherwise, be entitled to any right whatsoever, either in law
or equity, of a stockholder of the Company, including, without limitation, the
right to receive dividends or to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election of
directors of the Company or any other matter.
5. Notices of Corporate Action. In the event of a proposal by the Company
(or of which the Company shall have knowledge) for:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a regular periodic dividend
payable in cash) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any consolidation or
merger involving the Company and any other Person or any transfer of all or
substantially all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will deliver to the Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange
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their shares of Common Stock for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall with
respect to Subparagraphs (a) and (b) hereof, be furnished at least 20 days prior
to the date therein specified and, with respect to subparagraph (c) hereof, be
furnished promptly upon the commencement of any event described therein.
6. Right of First Refusal. Until March 14, 2000, except for bona fide
gifts, or sales by any Holder of up to an aggregate of 100,000 Exercise Shares
in any single transaction to the same Person (provided that sales to any
affiliate of such Person shall be, for these purpose, considered a sale to such
Person), the Exercise Shares issued pursuant to this Warrant may not be sold or
transferred by the Holder (and any such sale or transfer will be invalid),
unless such Holder shall have first notified the Company in writing of the
number of Exercise Shares it proposes to sell and shall have offered to sell
such Exercise Shares to the Company at the Market Price (as defined below in
this Paragraph) on the trading day next preceding the date of such notice and
the Company shall not have elected irrevocably in writing to the Holder, within
three (3) business days after such notice, to purchase all, but not less than
all, of such Exercise Shares so offered at such price by the close of business
on the third business day after such Holder notice; if the Company shall have
waived or been deemed to have waived such right to purchase such Exercise
Shares, the Holder may proceed to sell the Exercise Shares that were the subject
of such Holder notice, provided that such sales must be completed within the
three calendar month period after the Holder notice to the Company of intention
to sell such Exercise Shares. If the Company elects to purchase such Exercise
Shares so offered by a Holder notice, Holder shall sell such Exercise Shares to
the Company and payment therefor in immediately available funds shall be made
not later than the close of business on the third business day after such
Holder's notice, subject to receipt by the Company of certificates, in proper
form for transfer, for such Exercise Shares and the Holder's delivery to the
Company of such Exercise Shares free and clear of any liens, charges, claims or
encumbrances. For the purposes of this Paragraph and Paragraph 7 hereof, "Market
Price" as of any date shall be the average of the high and low sales prices,
regular way, of the Common Stock on such day, as reported by NASDAQ.
7. Forfeiture of Exercise Shares. By accepting any Exercise Shares upon
exercise of this Warrant, the Holder agrees that, subject to the next succeeding
sentence, if Continuing Customers shall be transferred or disconnected from the
Services after a Change of Control in breach of the terms of Section 6.4
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of the Services Agreement (less than 105 days after a Change of Control) and
there is an Early Termination Date of the Warrant pursuant to Paragraph 1(b)
hereof, all Exercise Shares issued hereunder upon delivery of a Notice of
Warrant Exercise during the period beginning on the 90th day prior to a Control
Change Date and ending on the 105th day after such Control Change Date (the
"Covered Exercise Shares") (or an amount in readily available funds equal to any
proceeds from the sale or other disposition of such Covered Exercise Shares if
such sale or other disposition was a bona fide, arm's-length sales transaction
for cash with a Person not affiliated with the Holder and otherwise equal to the
Market Price of the shares on the date of such sale or other disposition) shall
immediately be forfeited and returned (or paid over) to the Company, for no
consideration, free and clear, in the case of forfeited and returned shares, of
any lien, charge, claim or encumbrance. The foregoing sentence will not apply
and the Covered Exercise Shares referenced therein (or the proceeds thereof, as
the case may be) will not be forfeited to the Company if either (i) TFG
irrevocably waives, before exercise, its rights to give notice and transfer
customers under Section 6.4 of the Services Agreement and shall not transfer any
Continuing Customers (as defined in the Services Agreement) in violation of the
105-day advance written notice requirement of Section 6.4 of the Services
Agreement in a manner that causes an Early Termination Date or (ii) TFG or the
successor, if any, to TFG upon or in connection with a Change of Control giving
rise to the Control Change Date, as the case may be, shall agree in writing not
to, and shall not, transfer the then Continuing Customers under Section 6.4 of
the Services Agreement in violation of the 105-day advance written notice
requirement of such Section in a manner that causes an Early Termination Date.
For purposes of this Paragraph, "Change of Control" shall be defined as in the
Services Agreement and "Control Change Date" shall mean the date as of which a
Change of Control shall occur. This Section shall not limit the rights or
obligations of any party under the Services Agreement.
8. Adjustment of Exercise Price, Warrant Shares and Exercise Shares. The
Exercise Price, the number of Warrant Shares and the kind of Exercise Shares
issuable upon the exercise of this Warrant shall be subject to adjustment from
time to time upon the happening of certain events after March 18, 1996 as
hereinafter provided. The Exercise Price in effect at any time, the number of
Warrant Shares and the kind of securities issuable upon exercise of this Warrant
shall be subject to adjustment as follows:
(a) If the Company shall after March 18, 1996 (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock, (ii)
subdivide or classify its
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outstanding Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or reclas
sification shall be proportionally adjusted so that the Holder of this Warrant
exercised after such date shall be entitled to receive the aggregate number and
kind of shares that, if this Warrant had been exercised by such Holder
immediately prior to such date, such Holder would have owned upon such exercise
and been entitled to receive upon such dividend, subdivision, combination or
reclassification. For example, if the Company declares a 2 for 1 stock dividend
or stock split and the Exercise Price immediately prior to such event was $5.00
per share, the adjusted Exercise Price immediately after such event would be
$2.50 per share. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall after March 18, 1996 issue rights or warrants
to all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into Common Stock) at a price
(or having a conversion price per share) less than the "Current Market Price" of
the Common Stock (as defined in Subparagraph (d) of this Paragraph below) on the
record date mentioned below, the Exercise Price shall be adjusted so that the
same shall equal the price determined by multiplying the Exercise Price in
effect immediately prior to the date of such issuance by a fraction, the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on the record date mentioned below and the number of additional
shares of Common Stock that the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at the "Current Market Price"
per share of the Common Stock, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on such record date and the
number of additional shares of Common Stock offered for subscription or
purchases (or into which the convertible securities so offered are convertible).
Such adjustment shall be made successively whenever such rights or warrants are
issued and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights or warrants; and,
to the extent that shares of Common Stock are not delivered (or securities
convertible into Common Stock are not delivered) after the expiration of such
rights or warrants, the Exercise Price shall be readjusted to the Exercise Price
that would then be in effect had the adjustment made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the
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number of shares of Common Stock (or securities convertible into Common Stock)
actually delivered.
(c) Whenever the Exercise Price payable upon exercise of this Warrant is
adjusted pursuant to Subparagraphs (a) and (b) above, the number of Warrant
Shares as to which a Notice of Warrant Exercise may be given shall
simultaneously be adjusted by multiplying (x) the number of Warrant Shares then
remaining as to which no Notice of Warrant Exercise has theretofore been given
by (y) the Exercise Price in effect just prior to such adjustment, and dividing
the product so obtained by the Exercise Price, as adjusted.
(d) For the purpose of any computation in this Warrant, the "Current Market
Price" per share of Common Stock at any date shall be deemed to be the average
of the daily closing prices for 10 consecutive business days before such date.
The closing price for each day shall be the last sale price regular way or, in
case no such reported sale takes place on such day, the average of the last
reported bid and lowest reported asked prices as reported by NASDAQ, or other
similar organizations if NASDAQ is no longer reporting such information, or if
not so available, the fair market price as determined by the Board of Directors.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least ten cents ($0.10)
in such price; provided, however, that any adjustments that by reason of this
Subparagraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this Paragraph 8 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this Paragraph
8 to the contrary notwithstanding, the Company shall be entitled, but shall not
be required, to make such additional reductions in the Exercise Price, in
addition to those required by this Paragraph 8, as it, in its sole discretion,
shall determine to be advisable in order that any dividend or distribution in
shares of Common Stock, subdivision, reclassification or combination of Common
Stock, issuance of warrants to purchase Common Stock or distribution of
evidences of indebtedness or other assets (excluding cash dividends) referred to
hereinabove in this Paragraph 8 hereafter made by the Company to the Holders of
its Common Stock shall not result in any tax to the Holders of its Common Stock
or securities convertible into Common Stock.
(f) Whenever the Exercise Price is adjusted as herein provided or the
Termination Date extended as herein provided, the Company shall promptly cause a
notice, setting forth the adjusted Exercise Price and adjusted number of Warrant
Shares as to which
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a Notice of Warrant Exercise may be given under this Warrant and/or the extended
Termination Date, to be mailed to the Holders, at their last addresses appearing
in the books of the Company, and shall cause a certified copy thereof to be
mailed to its transfer agent, if any. The Company may retain a firm of
independent certified public accountants selected by the Board of Directors (who
may be the regular accountants employed by the Company) to make any computation
required by this Paragraph 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
(g) In the event that at any time, as a result of an adjustment made
pursuant to Subparagraph 8(a) above, the Holder of this Warrant thereafter shall
become entitled to receive any Exercise Shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
this Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Subparagraphs (a) to (e), inclusive, of Paragraph 8
above.
(h) Irrespective of any adjustments in the Exercise Price, the number of
Warrant Shares or kind of Exercise Shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued in exchange or substitution
for this Warrant or any part thereof may continue to express the same price and
number and kind of shares as are stated in this Warrant.
(i) Whenever the Exercise Price shall be adjusted or the Termination Date
extended, in each case as required by the provisions hereof, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided
and/or the Termination Date extended and, in the case of an Exercise Price
adjustment, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder and
the Company shall, forthwith after each such adjustment, mail a copy by
certified mail or such certificate to the Holder.
9. Restrictions on Transferability; Restrictive Legends; Indemnification.
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(a) Neither this Warrant nor the right to exercise this Warrant or to
receive Exercise Shares upon any such exercise may be sold, assigned or
transferred by the Holder, except that this Warrant and such rights may be
transferred, upon compliance with the other Subparagraphs of this Paragraph 9,
(i) by TFG, as the Holder, to any successor to TFG by reason of a merger or
consolidation of TFG or any successor to all or substantially all of TFG's
assets if such successor assumes in writing this Warrant and all of TFG's
liabilities and obligations under the Services Agreement (subject to the
provisions of Section 6.4 thereof) and (ii) by TFG, as the Holder, to the
shareholders of TFG as of the date of this Warrant if TFG guarantees in writing
the performance by each such transferee of such transferee's obligations under
the Warrant transferred. Any sale, assignment or transfer of this Warrant in
violation of this Paragraph 9 is null and void as of the time of such transfer.
(b) No Exercise Share may be offered for sale or sold, or otherwise
transferred or sold in any transaction that would constitute a sale thereof
within the meaning of the Securities Act (except to the Company pursuant to
Paragraph 6 hereof), unless (i) such security has been registered for sale under
the Securities Act and registered or qualified under applicable state securities
laws relating to the offer and sale of securities, or (ii) an exemption from the
registration requirements of the Securities Act and the registration or
qualifications requirements of all such state securities laws are available and
the Company shall have received an opinion of counsel (which may be an opinion
that covers multiple or all subsequent sales) satisfactory to the Company that
the proposed sale or other disposition of such securities may be effected
without registration under the Securities Act, such counsel and such opinion to
be satisfactory to the Company.
(c) Except as otherwise permitted by this Paragraph 9, this Warrant and any
Warrant issued upon direct or indirect transfer of or in substitution for this
Warrant or any part thereof shall be stamped or otherwise imprinted with a
legend substantially in the form of the legend with respect to transfer
limitation and securities acts at the head of this Warrant.
(d) Except as otherwise permitted by this Paragraph 9, each certificate for
an Exercise Share issued upon exercise of this Warrant or any Warrant issued
upon direct or indirect transfer of or in substitution for this Warrant or any
part thereof shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The shares represented by this certificate (i) have not been
registered under the Securities Act of 1933, as
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amended, and may not be transferred in the absence of such
registration or an exemption therefrom under such Act, except under
circumstances where neither such registration nor such an exemption is
required by law and (ii) are subject to the provisions of a Warrant
agreement, dated as of March 14, 1996, between Tel-Save Holdings, Inc.
and The Furst Group, Inc., a copy of which Warrant agreement is on
file at the principal office of Tel-Save Holdings, Inc.
; and, subject to Subparagraph 9(e) below, each certificate issued upon direct
or indirect transfer of any such Exercise Share shall be stamped or otherwise
imprinted with a legend in substantially the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be transferred in
the absence of such registration or an exemption therefrom under such Act,
except under circumstances where neither such registration nor such an
exemption is required by law.
(e) The Company shall, at the request of any registered holder of an
Exercise Share, exchange the certificate representing such security for a
certificate representing the same security not bearing the restrictive legend
required by Subparagraph 9(d) if the Exercise Shares may be sold or transferred
pursuant to the provisions of Rule 144(k) and, in the opinion of counsel to the
Company, such restrictive legend is no longer necessary. In addition, the legend
shall be appropriately modified to remove clause (ii) thereof if the Exercise
Shares are no longer subject to any restriction under this Warrant.
(f) The Holder agrees to indemnify and hold harmless the Company against
any loss, damage, claim or liability arising from the disposition of this
Warrant or any Exercise Share held by such Holder or any interest therein in
violation of the provisions of this Paragraph 9.
10. Registration Rights.
(a) Certain Definitions. For purpose of this Paragraph 10, the following
terms will be defined as follows:
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Holder" means The Furst Group, Inc., a New Jersey corporation, as the
Holder of the Original Warrant, and any successor or assign thereof that is
permitted pursuant to Subparagraph 9(a) of the Original Warrant.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
the Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registrable Securities" means the Exercise Shares issued upon exercise of
this Warrant and any securities issued or issuable with respect to any of such
Exercise Shares (x) by way of stock split, stock dividend or other distribution,
(y) in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or (z) in any other way. Any Registrable
Security will cease to be a Registrable Security when (i) a Registration
Statement covering such Registrable Security has been declared effective by the
Commission and it has been disposed of or purchased, as the case may be,
pursuant to such effective Registration Statement, (ii) it is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met or it may be
sold pursuant to Rule 144(k) under the Securities Act or (iii) it has been
otherwise transferred, the Company has delivered a new certificate or other
evidence of ownership for it not bearing a legend and it may be resold without
subsequent registration under the Securities Act.
"Registration Statement" means any registration statement of the Company,
including the prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement, which relates
to Registrable Securities.
"Shelf Registration" means the shelf registration statement filed by the
Company in accordance with Subparagraph 10(b) hereof.
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"Underwriter" means a securities dealer that purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
(b) Shelf Registrations
(i) (1) The Company will file a "shelf" registration statement with respect
to the resale of at least 1,000,000 shares of the Registrable Securities
pursuant to Rule 415 (or any similar provision that may be adopted by the
Commission) under the Securities Act (the "Shelf Registration") within 2
business days after the first date that the Company is first permitted to file a
registration statement on Form S-3, but not later than October 1, 1996.
(2) If the Company is not able to file a registration statement on Form S-3
on the date required by clause (1) of this clause (i), it will, by such time,
file a registration statement on such other form as will permit the registration
for resale of the Registrable Securities and such other registration statement
will be the "Shelf Registration" until replaced by another registration
statement so permitting such sales.
(ii) The Company agrees to use its best efforts to have the Shelf
Registration declared effective as soon as practicable after the date of filing
thereof and to keep the Shelf Registration continuously effective until the
first date there shall be no remaining Registrable Securities (including by
reason of the fact that all Registrable Securities may be sold pursuant to Rule
144(k) under the Securities Act).
(iii) The Company may require the Holder to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing as being necessary or
appropriate for completion of the Registration Statement.
(iv) The Holder agrees by acquisition of the Registrable Securities that,
at any time when any Registration Statement is effective, upon receipt of any
written notice from the Company of the happening of any of the following events:
(1) any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (2) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(3) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (4) the existence of any fact
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that results in the Registration Statement, the Prospectus or any document
incorporated therein by reference containing an untrue statement of material
fact or omitting to state 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, in the case of the Prospectus) not misleading, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement until such Holder's receipt of copies of a supplemented
or amended Prospectus that does not contain an untrue statement of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, or
until it is advised in writing by the Company that the use of the Prospectus may
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus, and, if so directed by the
Company, Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. If the Company shall give any such notice, the time period
mentioned in Subparagraph (b) of this Paragraph 10 shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when the Holder either receives the copies
of the supplemented or amended prospectus contemplated above or is advised in
writing by the Company that the use of the Prospectus may be resumed.
(v) The Holder agrees by acquisition of the Registrable Securities to
cooperate with the Company in all reasonable respects in connection with the
preparation and filing of Registra- tion Statements hereunder in which such
Registrable Securities are included or expected to be included.
(vi) In the event that the number of Exercise Shares exceeds 1,000,000
shares, the Company will amend the Registration Statement and/or file another
Registration Statement (which shall be part of the Shelf Registration for all
purposes of this Paragraph 10) covering such additional Exercise Shares.
(c) Company Registrations. If the Company at any time after this Warrant
becomes exercisable proposes to register for sale by the Company in an
underwritten offering any of its Common Stock under the Securities Act on any
form of general application (other than registration statements on Forms S-4 or
S-8 or other similar or substitute forms), it will each such time give written
notice to the Holder of its intention to do so and, upon the written request of
the Holder made within 30 days after the receipt of any such notice (which
request shall specify the number of Registrable Shares intended to be disposed
of by the
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Holder), the Company will include among the securities that it then endeavors to
register under the Securities Act all of the Registrable Shares that the Company
has been so requested to register; provided, however, that if, in the written
opinion of the managing Underwriter or Underwriters, the total number of
Registrable Shares requested to be included by the Holder, together with all
shares of Common Stock to be offered by the Company and other holders of the
Company's securities, will exceed the maximum number of shares that can be
marketed (i) at a price reasonably related to their then current market value,
or (ii) without otherwise materially and adversely affecting the entire
offering, then the number of shares of Common Stock otherwise to be included in
the registration statement by the Holder and other holders of the Company's
securities requesting registration shall be reduced as follows: (1) there shall
first be excluded shares of Common Stock proposed to be included by holders of
the Company's securities not possessing legal rights to include the same; and
(2) any further reduction shall be pro rata among such holders (having such
legal right) requesting such registration in the proportion of the number of
shares of Common Stock then owned by each with respect to which it has
registration rights; provided, however, that there shall be no reduction
pursuant to the provisions hereof in the number of shares to be included therein
(i) by the Company and (ii) by a person or persons with a legal right to demand
such registration if the registration is at the demand of such person or persons
pursuant to such legal right.
(d) Fees and Expenses. The Company will pay all registration expenses in
connection with each registration pursuant to this Paragraph 10 other than
underwriting discounts and commissions and the fees, expenses and disbursements
of counsel, if any, retained by the Holder.
(e) Registration Procedures. If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
as provided in this Paragraph 10, the Company will as expeditiously as possible:
(i) prepare in conformity with the requirements of the Securities Act
and file with the Commission a Registration Statement with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become effective;
(ii) prepare in conformity with the requirements of the Securities Act
and file with the Commission such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and to comply with the
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provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement (1) in the case of the Shelf
Registration, for the time period set forth in Subparagraph (b) of this
Paragraph 10, and (2) in the case of a Registration Statement under Subparagraph
(c) of this Paragraph 10, until (A) such time as all of such securities have
been disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Registration Statement, but (B) in
no event for a period of more than 120 days after such Registration Statement
becomes effective;
(iii) furnish to the Holder of such Registrable Securities such number
of conformed copies of such Registration Statement and of each such amendment
and supplement thereto (in each case including all exhibits and one fully
executed copy of such Registration Statement and of each such amendment and
supplement thereto), such number of copies of the prospectus contained in such
Registration Statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents, as such Seller may reasonably request;
(iv) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall reasonably
request, and take any other action as may be necessary or advisable to enable
such Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder, except that the Company shall not
for any purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not, but for the requirements
of this paragraph, be so qualified or to consent to general service of process
in any such jurisdiction;
(v) notify the Holder of any such Registrable Securities covered by
such Registration Statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
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therein not misleading in light of the circumstances then existing; and
(vi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable but in any event not later than
eighteen months after the effective date of the Registration Statement, an
earnings statement covering the period of at least twelve consecutive months,
beginning with the first month of the first quarter after the effective date of
such Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
The Company may require each seller of any securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time request in writing and as shall be required by law or by the Commission
in connection therewith.
(f) Underwriting.
(i) If a registration pursuant to this Paragraph 10 involves an
underwritten offering, the Company shall have the right to select the
Underwriters therefor.
(ii) If requested by the Underwriters for any underwritten offering, the
Company will enter into an underwriting agreement with such Underwriters for
such offering, such agreement to contain such representations and warranties by
the Company and such other terms and provisions as are customarily contained in
agreements of this type. The Holder requesting registration for sale in such
underwritten offering under this Paragraph 10 shall be a party to such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
Underwriters shall also be made to and for the benefit of such Holder and the
conditions precedent to the obligations of such Underwriters under such
underwriting agreement shall be conditions precedent to the obligations of such
Holder. Such Holder shall not be required to make any representations or
warranties to or agreements with the Company or its Underwriters other than
representations, warranties or agreements regarding such Holder and such
Holder's intended method of distribution. No Person may participate in any
underwritten registration hereunder unless such Person (a) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires,
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powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
(iii) The Holder, if such Holder is then the beneficial owner (as provided
in Rule 13d-3 under the Exchange Act) of 2% or more of the Common Stock of the
Company and if requested by the managing Underwriters in any underwritten
offering of Common Stock of the Company (whether or not any Registrable
Securities of such Holder are included in such offering), agrees not to effect
any public sale or distribution of the Registrable Securities, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten offering), during the 10-day period prior to, and during a period
of up to 90 days beginning on, the closing date of such underwritten offering,
to the extent timely notified in writing by the Company or the managing
Underwriters, provided that the Company's directors and executive officers and
all other beneficial holders of the same percentage of shares as the Holder
similarly agree.
(g) Indemnification
(i) Indemnification by Company. The Company shall indemnify and hold
harmless the Holder, its officers, directors, employees and Agents and each
Person who controls such Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an "Indemnified Holder") from and against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or
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omission or allegation thereof based upon information furnished in writing to
the Company by such Holder specifically for use therein; provided, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if (i) such Holder failed to send or deliver (if and
to the extent required under the Securities Act) a copy of the Prospectus with
or prior to the delivery of written confirmation of the sale of Registrable
Securities and (ii) the Prospectus would have completely corrected such untrue
statement or omission; and provided, further, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is completely corrected in an amendment or supplement to the Prospectus and if,
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver (if and to the extent required by the Securities Act) such Prospectus as
so amended or supplemented, prior to or concurrently with the sale of a
Registrable Security to the person asserting such loss, claim, damage, liability
or expense who purchased such Registrable Security which is the subject thereof
from such Holder. The Company will also indemnify Underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers and directors and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) to the same extent as provided above with respect to the
indemnification of the Indemnified Holders; provided, however, if such
Underwriters, selling brokers, dealer managers or similar securities industry
professionals require or agree to indemnification provisions different from
those set forth herein, but standard in the industry, the Company agrees to
provide them such indemnification rather than the indemnification provided for
herein.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from the Company, such Indemnified Holder shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel satisfactory to such Indemnified
Holder and the payment of all expenses. Such Indemnified Holder shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expense
of such Indemnified Holder unless (a) the Company has agreed to pay such fees
and expenses or (b) the Company shall have failed to assume the defense of such
action or proceeding and has failed to employ counsel satisfactory to such
Indemnified Holder in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any impleaded parties) include both
such Indemnified Holder and the Company, and such Indemnified Holder shall have
been advised by counsel reasonably satisfactory to the Company that there may be
one or more legal defenses available to such Indemnified Holder which are
different from or additional to those available to the
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Company (in which case, if such Indemnified Holder notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company,
the Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Holder, it being understood, however,
that the Company shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for such Indemnified Holder and any other Indemnified
Holders, which firm shall be designated in writing by such Indemnified Holders).
The Company shall not be liable for any settlement of any such action or
proceeding effected without its written consent (which will not be unreasonably
withheld), but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless such Indemnified Holders from and against any
loss or liability by reason of such settlement or judgment.
(ii) Indemnification by Holder of Registrable Securities. The Holder agrees
to indemnify and hold harmless the Company, its directors and officers and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Holder, but only with respect
to information relating to such Holder furnished in writing by such Holder
specifically for use in any Registration Statement or Prospectus, or any
amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its directors or
officers or any such controlling person, in respect of which indemnity may be
sought against a Holder, such Holder shall have the rights and duties given the
Company and the Company or its directors or officers or such controlling person
shall have the rights and duties given to each Holder by the preceding
paragraph.
The Company shall be entitled to receive indemnities from Underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement or any amendment or
supplement thereto, or any preliminary prospectus.
(iii) Contribution. If the indemnification provided for in this
Subparagraph (g) is unavailable to an indemnified
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party under clause (i) or (ii) of this Subparagraph (g) (other than by reason of
exceptions provided in those clauses) in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the Indemnified
Holder on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnified Holder on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of clause (i) of
this Subparagraph (g), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this clause (iii) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(h) Termination Date Extension. If, by reason of its agreement under
Subparagraph 10(f)(iii) hereof, Holder is not permitted to sell Registrable
Securities for a period that includes the Termination Date (before any
adjustment under this Subparagraph), the Termination Date will be extended by
such number of days as equals the number of days from the beginning of such
period that Holder is so prevented from selling to the Termination Date (before
any adjustment under this Subparagraph). If, by reason of its agreement under
Subparagraph 10(b)(iv) hereof, Holder is not permitted to sell Registrable
Securities for more than 30 days in any twelve-month period, the Termination
Date will be extended by such number of days in such twelve-month
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period as Holder is so prevented from selling as exceeds such 30 days.
11. Notices. All notices or other communications under this Warrant shall
be in writing and shall be deemed to have been given if delivered by hand or
mailed by certified mail, postage prepaid, return receipt requested, or
delivered by facsimile transmission (which shall be followed by delivery of an
original copy), addressed as follows:
If to the Company:
Tel-Save Holdings, Inc.
22 Village Square
New Hope, PA 18939
Facsimile No. 215-862-1083
with a copy to:
Aloysius T. Lawn, IV, Esquire
General Counsel and Secretary
22 Village Square
New Hope, PA 10939
Facsimile No.: 215-862-1085
and to the Holder:
at the address (or facsimile number) of the Holder appearing on the
books of the Company or the Company's transfer agent, if any.
Either of the Company or the Holder may from time to time change the
address or facsimile number to which notices to it are to be mailed hereunder by
notice in accordance with the provisions of this Paragraph 11.
12. Supplements and Amendments. Except as otherwise provided herein, this
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
13. Successors and Assigns. This Warrant shall inure to the benefit of and
be binding on the Company and the Holder and their respective successors and
assigns, subject to the limitations on transfer of this Warrant and the rights
hereunder by the Holder. Any successor to the Company by merger or consolidation
(if other than the Company) will, upon such succession, assume in writing the
Company's obligations hereunder.
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14. Severability. If for any reason any provision, paragraph or terms of
this Warrant is held to be invalid or unenforceable, all other valid provisions
herein shall remain in full force and effect and all terms, provisions and
paragraphs of this Warrant shall be deemed to be severable.
15. Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of said State.
16. Entire Agreement. This Warrant consists of all the terms and conditions
contained herein and all documents incorporated herein specifically by reference
and constitutes the complete and exclusive statement of the understandings
between the parties and supersedes all proposals and prior agreements (oral or
written) between the parties relating to the rights and obligations provided
hereunder.
17. Headings; Etc. Paragraph and Subparagraph headings used herein are
included herein for conveniences of reference only and shall not affect the
construction of this Warrant nor constitute a part of this Warrant for any other
purpose. The words "herein," "hereof," "hereby," "hereto," "hereunder" and words
of similar import refer to this Warrant as a whole and not to any particular
article, section, paragraph, subparagraph or other subdivision of this Warrant.
Defined terms shall include the plural and the singular as the context shall
require.
18. Consent and Acknowledgment of Holder. The terms and conditions of this
Warrant are agreed and consented to by the Holder, as evidenced by Holder's
signature on the line provided below. This Warrant shall bind and be enforceable
by and against the Holder and such Holder's successors, heirs, estates,
representatives and assigns and the Company and its successors and assigns.
IN WITNESS WHEREOF, the Company and the Holder have caused these presents
to be duly executed as of the day and year written above.
TEL-SAVE HOLDINGS, INC.
By:_______________________
Chief Executive Officer
[Name of Holder]
as the Holder
___________________________
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APPENDIX A
NOTICE OF WARRANT EXERCISE
Pursuant to the attached Warrant ("Warrant"), by and between the
undersigned and Tel-Save Holdings, Inc., a Delaware corporation (the "Company"),
dated as of March 14, 1996, the undersigned hereby irrevocably elects to
exercise the Warrant with respect to ________________ Warrant Shares (as defined
in the Warrant) as provided for therein.
The undersigned requests that a certificate for the Exercise Shares be
issued in the name of:
________________________________________
_________________________________________
_______________________________________________________
(Please print name, address and social security number)
Dated: ___________________________________
Address: ___________________________________
___________________________________
___________________________________
Signature: ___________________________________
