Document:

Exhibit 10.3

 

Execution Copy

 

NEITHER
THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS AND NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY BE SOLD OR TRANSFERRED UNLESS THE REGISTRATION PROVISIONS
OF THE SAID ACT AND APPLICABLE STATE SECURITIES LAWS HAVE BEEN COMPLIED WITH OR
UNLESS COMPLIANCE WITH SUCH PROVISIONS IS NOT REQUIRED.  IN CONNECTION WITH SUCH SALE OR TRANSFER.

 

September 24, 2004

 

iBASIS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

Void after September 24, 2009,
and subject to earlier termination

 

This Warrant
(the “Warrant”) entitles
[                 ]
(including any successors or assigns, the “Holder”),
for value received, to purchase from iBASIS, INC., a Delaware corporation (the
“Company”), at any time and from time to
time, subject to the terms and conditions set forth herein, during the period
starting from 5:00 a.m. on the Initial Exercise Date (as defined in Section 1
below) to 5:00 p.m., Eastern time, on the Expiration Date (as defined in
Section 1 below), at which time this Warrant shall expire and become void, all
or any portion of the vested Warrant Shares at the Exercise Price (as defined in
Section 1 below).  This Warrant shall not
be exercisable (and this Warrant shall terminate) if the Initial Exercise Date
(as defined below) never occurs or if the Warrant does not “vest” with respect
to any of the Warrant Shares under Section 2.2 hereof.  This Warrant is issued subject to the
following terms and conditions:

 

1.             Definitions  As used in
this Warrant, the following terms shall have the respective meanings set forth
below or elsewhere in this Warrant as referred to below:

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes
of this Agreement, “control,” when used with respect to any specified Person
means the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

 

“business day” (whether such term is
capitalized or not) means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental
action to close.

 

“Common Stock” means the common stock, $0.001
par value per share, of the Company (including any securities into which or for
which such shares may be exchanged for, or converted into, pursuant to any
stock dividend, stock split, stock combination, recapitalization,
reclassification, reorganization or other similar event).

 

“Company” has the meaning set forth in the
preamble hereof.

 

 

“Current
Market Price” shall mean on any date specified herein, the average daily
Fair Market Value during the period of the most recent 10 days, ending two
trading days immediately preceding such date, on which the national securities
exchanges were open for trading, except that if no Common Stock is then listed
or admitted to trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Fair Market
Value on such date.

 

“Demand Date” means the date on which a Demand
Request is first delivered under the Registration Rights Agreement.

 

“Demand Request” has the meaning set forth for
such term in the Registration Rights Agreement.

 

“Exercise Price” means, initially, $2.10 per
share of Common Stock, as such amount may be adjusted from time to time pursuant
to the terms of this Warrant.

 

“Expiration Date” means September 24, 2009.

 

“Fair Market Value” shall mean (i) if the
Common Stock is traded on Nasdaq, then the last reported sale price per share
of Common Stock on the Nasdaq-NMS or any national securities exchange in which
such Common Stock is quoted or listed, as the case may be, on the date
immediately preceding each date the Warrant is exercised or, if no such sale
price is reported on such date, such price on the next preceding business day
in which such price was reported, (ii) if the Common Stock is actively traded
over-the-counter, then the average of the last sales price quoted, if
determinable, or, if not determinable, the closing bid and asked prices quoted
on the OTCBB (or similar system) over the five (5) trading days ended on the
trading day immediately preceding each date the Warrant is exercised or
(iii) if such Common Stock is not traded, quoted or listed on the Nasdaq-NMS or
any national securities exchange or the over-the-counter market, then the fair
market value of a share of Common Stock, as determined in good faith by the
Board of Directors of the Company.

 

“Holder” has the meaning set forth in the
preamble of hereof.

 

“Initial Exercise Date” means the date on which
this Warrant first vests in accordance with Section 2.2 hereof.

 

“Ownership Limit” has the meaning set forth in
Section 2.2 hereof.

 

“Person” (whether or not capitalized) means an
individual, entity, partnership, limited liability company, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.

 

“Registration
Rights Agreement” means that certain Registration Rights Agreement, dated
as of the date hereof, as it may be amended from time to time, by and among the
Company and the Investors (as such term is defined therein).

 

“SEC” means the United States Securities and
Exchange Commission.

 

“Shares” means the aggregate of 15,000,000
shares of Common Stock issued pursuant to the Securities Purchase Agreement.

 

“Securities Purchase Agreement” means that
certain Securities Purchase Agreement dated September 24, 2004, by and between
the Company and the Purchasers (as such term is defined therein).

 

2

 

“Warrant Shares” means an aggregate of
[                 ]  shares of Common Stock, subject to
adjustment in accordance with Section 3 below.

 

2.             Exercise
of Warrant.  

 

2.1           Method
of Exercise; Payment.

 

(a)           Cash
Exercise.  Subject to all of the
terms and conditions hereof (including the vesting provisions set forth below),
this Warrant may be exercised, in whole or in part, with respect to any then
vested Warrant Shares, at any time and from time to time during the period
commencing on the Initial Exercise Date and ending on the Expiration Date, by
surrender of this Warrant to the Company at its principal office, accompanied
by a subscription substantially in the form attached hereto, executed by the
Holder and accompanied by (a) wire transfer of immediately available funds or
(b) certified or official bank check payable to the order of the Company, in
each case in the amount obtained by multiplying (i) the number of Warrant
Shares (without giving effect to any adjustment thereof pursuant to the
provisions of hereof) for which the Warrant is being exercised, as designated
in such subscription, by (ii) the Exercise Price.  Thereupon, the Holder shall be entitled to
receive the number of duly authorized, validly issued, fully paid and nonassessable
Warrant Shares determined as provided for herein.

 

(b)           Conversion.  Subject to all of the terms and conditions
hereof (including the vesting provisions set forth below), the Holder shall
have the right to convert this Warrant, in whole or in part, with respect to
any then vested Warrant Shares, at any time and from time to time during the
period commencing on the Initial Exercise Date and ending on the Expiration
Date, by surrender of this Warrant to the Company at its principal office,
accompanied by a conversion notice substantially in the form attached hereto,
executed by the Holder. Thereupon, the Holder shall be entitled to receive a
number of duly authorized, validly issued, fully paid and nonassessable Warrant
Shares equal to:

 

(i)            the excess of

 

(A) (x) the number of Warrant Shares determined as provided in Section
3 hereof which such holder would be entitled to receive upon exercise of such
Warrant for the number of Warrant Shares designated in such conversion notice
(without giving effect to any adjustment thereof pursuant to the provisions of
this Section 2.1(b)) for which the Warrant is then being exercised, as
designated in such conversion notice, multiplied by
(y) the Current Market Price of each such Warrant Share so receivable upon such
exercise

 

over

 

(B) (x) the number of Warrant Shares (determined as provided in Section
3) which such holder would be entitled to receive upon exercise of such Warrant
for the number of Warrant Shares designated in such conversion notice (without
giving effect to any adjustment thereof pursuant to the provisions of this
Section 2.1(b)), multiplied by (y) the Exercise
Price

 

divided by

 

3

 

(ii)           such Current Market Price of each
such Warrant Share.

 

2.2           Vesting.
This Warrant shall become exercisable with respect to Warrant Shares (“vest”) as follows: (i)
with respect to [     ](1) Warrant Shares, on the 31st
day following the Demand Date if a Demand Registration Statement shall not have
filed with the SEC by such date, (ii) with respect to an additional
[     ] Warrant Shares, on the 121st day
following the Demand Date, if a Demand Registration Statement shall not have
been declared effective by the SEC by such date, (iii) with respect to an
additional [     ] Warrant Shares, on the 151st
day following the Demand Date, if a Demand Registration Statement covering the
resale of the Shares shall not have been declared effective by the SEC by such
date, and (iv) with respect to the remaining [     ]
Warrant Shares, on the 181st day following the Demand Date, if a
Demand Registration Statement covering the resale of the Shares shall not have
been declared effective by the SEC by such date; provided, however,
that notwithstanding the foregoing, the Warrant Shares shall vest in accordance
with clauses (i)-(iv) above only to the extent that, after giving effect to
such vesting, such vesting will not result in the Holder (together with its
Affiliates) owning, holding or beneficially owning more than 9.9% of the Common
Stock (the “Ownership Limit”), and at any time, and from time to time, if the
Holder (together with its Affiliates) owns, holds or beneficially owns a
percentage less than the Ownership Limit, then this Warrant shall thereafter
continue to vest, first with respect to any Warrant Shares that would have
vested in accordance with clauses (i)-(iii) above but for the Ownership Limit
and second, otherwise in accordance with clauses (i)-(iii) above, but in each
case, again, only to the extent that, after giving effect to such vesting, such
vesting will not result in the Holder (together with its Affiliates) owning,
holding or beneficially owning more than the Ownership Limit; provided further that no
Warrant Shares shall “vest” and this Warrant shall immediately terminate if in
connection with the first Demand Request, (a) a Demand Registration Statement
is filed on or prior to the 31st day following the Demand Date and
(b) such Demand Registration Statement has been declared effective by the SEC
prior to the 121st day following the Demand Date.

 

2.3           Delivery
of Stock Certificates on Exercise.  As soon as practicable after the exercise of
this Warrant, and in any event within three (3) business days thereafter, the
Company, at its expense, and in accordance with applicable securities laws,
will cause to be issued in the name of and delivered to the Holder, or as the
Holder may direct (subject in all cases, to the provisions of Section 8
hereof), a certificate or certificates for the number of Warrant Shares
purchased by the Holder on such exercise, plus,  in lieu of any fractional share to which the Holder would otherwise
be entitled, cash equal to such fraction multiplied by the Fair Market Value.

 

2.4           Shares
To Be Fully Paid and Nonassessable. 
All Warrant Shares issued upon the exercise of this Warrant shall be
validly issued, fully paid and nonassessable, free of all Liens (as defined in
the Securities Purchase Agreement, taxes, charges and other encumbrances or
restrictions on sale (other than those set forth herein).

 

2.5           Issuance
of New Warrants; Company Acknowledgment. 
Upon any partial exercise of this Warrant, the Company, at its expense,
will forthwith and, in any event within three (3) business days, issue and
deliver to the Holder a new warrant or warrants of like tenor, registered in
the name of the Holder, exercisable, in the aggregate, for the balance of the
Warrant Shares.  Moreover, the Company
shall, at the time of any exercise of this Warrant, upon the request of the
Holder, acknowledge in writing its continuing obligation to afford to the
Holder any rights to which the Holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant; provided, however,
that if the Holder shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford to the Holder any
such rights.

 

(1)  To be equal to 25% of the initial total of
the Warrant Shares.

 

4

 

2.6           Payment
of Taxes and Expenses.  The Company
shall pay any recording, filing, stamp or similar tax which may be payable in
respect of any transfer involved in the issuance of, and the preparation and
delivery of certificates (if applicable) representing, (i) any Warrant Shares purchased
upon exercise of this Warrant and/or (ii) new or replacement warrants in the
Holder’s name or the name of any transferee of all or any portion of this
Warrant.

 

3.             Adjustment of Exercise Price. 
The Exercise Price shall be subject to adjustment from time to time upon
the happening of certain events as follows:

 

3.1           Subdivision or Combination of Stock. 
If at any time or from time to time after the date hereof, the Company
shall subdivide (by way of stock dividend, stock split or otherwise) its outstanding
shares of Common Stock, the Exercise Price in effect immediately prior to such
subdivision shall be reduced proportionately and the number of Warrant Shares
(calculated to the nearest whole share) shall be increased proportionately, and
conversely, in the event the outstanding shares of Common Stock shall be
combined (whether by stock combination, reverse stock split or otherwise) into
a smaller number of shares, the Exercise Price in effect immediately prior to
such combination shall be increased proportionately and the number of Warrant
Shares (calculated to the nearest whole share) shall be decreased
proportionately.  The Exercise Price and
the number of Warrant Shares, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive event or events described in this
Section 3.1.

 

3.2           Adjustment
for Stock Dividends.  If at any time
after the date hereof, the Company shall declare a dividend or make any other
distribution upon any class or series of stock of the Company payable in shares
of Common Stock or securities convertible into shares of Common Stock, the
Exercise Price and the number of Warrant Shares to be obtained upon exercise of
this Warrant shall be adjusted proportionately to reflect the issuance of any
shares of Common Stock or convertible securities, as the case may be, issuable
in payment of such dividend or distribution. 
The Exercise Price and the number of Warrant Shares, as so adjusted,
shall be readjusted in the same manner upon the happening of any successive
event or events described in this Section 3.2.

 

3.3           Adjustments
for Reclassifications.  If the Common
Stock issuable upon the conversion of this Warrant shall be changed into the
same or a different number of shares of any class(es) or series of stock,
whether by reclassification or otherwise (other than an adjustment under
Sections 3.1 and 3.2 or a merger, consolidation, or sale of assets provided for
under Section 3.4), then and in each such event, the Holder hereof shall
have the right thereafter to convert each Warrant Share into the kind and
amount of shares of stock and other securities and property receivable upon
such reclassification, or other change by holders of the number of shares of
Common Stock into which such Warrant Shares would have been convertible
immediately prior to such reclassification or change, all subject to successive
adjustments thereafter from time to time pursuant to and in accordance with,
the provisions of this Section 3.

 

3.4           Adjustments for Merger or Consolidation.  In the event
that, at any time or from time to time after the date hereof, the Company shall
(a) effect a reorganization, (b) consolidate with or merge into any other
Person, or (c) sell or transfer all or substantially all of its properties or
assets or more than 50% of the voting capital stock of the Company (whether
issued and outstanding, newly issued, from treasury, or any combination
thereof) to any other person under any plan or arrangement contemplating the
consolidation or merger, sale or transfer, or dissolution of the Company, then,
in each such case, the Holder, upon the exercise of this Warrant as provided in
Section 2.1 hereof at any time or from time to time after the consummation of
such reorganization, consolidation, merger or sale or the effective date of
such dissolution, as the case may be, shall receive, in lieu of the Warrant
Shares issuable on such exercise immediately prior to such consummation or such
effective date, as the case may be, the stock and

 

5

 

property (including cash) to
which the Holder would have been entitled upon the consummation of such
consolidation or merger, or sale or transfer, or in connection with such
dissolution, as the case may be, if the Holder had so exercised this Warrant
immediately prior thereto (assuming the payment by the Holder of the Exercise
Price therefor as required hereby in a form permitted hereby, which payment
shall be included in the assets of the Company for the purposes of determining
the amount available for distribution), all subject to successive adjustments
thereafter from time to time pursuant to, and in accordance with, the
provisions of this Section 3.

 

3.5           Continuation of
Terms.  Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any such transfer) referred
to in this Section 3, this Warrant shall continue in full force and effect and
the terms hereof shall be applicable to the shares of Common Stock and other
securities and property receivable upon the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such Common Stock or other securities,
including, in the case of any such transfer, the Person acquiring all or
substantially all of the properties or assets or more than 50% of the voting
capital stock of the Company (whether issued and outstanding, newly issued or
from treasury or any combination thereof), whether or not such Person shall
have expressly assumed the terms of this Warrant.

 

3.6           Certificate as to Adjustments.  Upon the occurrence of each adjustment or
readjustment of the Exercise Price and number of Warrant Shares pursuant to
this Section 3, this Warrant shall, without any action on the part of the
Holder, be adjusted in accordance with this Section 3, and the Company, at its
expense, promptly shall compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment, showing in detail the facts upon
which such adjustment or readjustment is based. 
The Company will forthwith send a copy of each such certificate to the
Holder in accordance with Section 10.4 below.

 

4.             Registration
Rights.  The initial holders of the
Warrant Shares and any permitted transferees of such rights in accordance with
the terms thereof shall be entitled to the registration rights and other rights
applicable to such shares provided by the Registration Rights Agreement.

 

5.             Notices of Record Date.  Upon (a) any establishment by the Company
of a record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or right or option to acquire securities of the Company, or
any other right, or (b) any capital reorganization, reclassification,
recapitalization, merger or consolidation of the Company with or into any other
corporation, any transfer of all or substantially all the assets of the
Company, or any voluntary or involuntary dissolution, liquidation or winding up
of the Company, or the sale, in a single transaction, of a majority of the
Company’s voting stock (whether newly issued, or from treasury, or previously
issued and then outstanding, or any combination thereof), the Company shall
mail to the Holder at least ten (10) business days, or such longer period as
may be required by law, prior to the record date specified therein, a notice
specifying (i) the date established as the record date for the purpose of such
dividend, distribution, option or right and a description of such dividend,
distribution, option or right, (ii) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up, or sale is expected to become effective and (iii) the date, if any,
fixed as to when the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.

 

6.             Exchange of Warrant.  Subject
to the provisions of Section 8 hereof (if and to the extent applicable), this
Warrant shall be exchangeable, upon the surrender hereof by the Holder at the
principal

 

6

 

office of
the Company, for new warrants of like tenor, each registered in the name of the
Holder or, subject to compliance with applicable federal and state securities
laws, in the name of such other persons as the Holder may direct (upon payment
by the Holder of any applicable transfer taxes). Each of such new warrants
shall be exercisable for such number of Warrant Shares as the Holder shall
direct, provided that all of such new warrants shall represent, in the
aggregate, the right to purchase the same number of Warrant Shares and cash,
securities or other property, if any, which may be purchased by the Holder upon
exercise of this Warrant at the time of its surrender.

 

7.             No Dilution or Impairment. 
The Company will not, by amendment of its Certificate of Incorporation
or By-Laws or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution, or
other impairment.

 

8.             Transfer Provisions, etc.

 

8.1           Legends.  Subject to the provisions of Section 6.2 of the Securities
Purchase Agreement, each certificate representing any Warrant Shares issued
upon exercise of this Warrant, and of any shares of Common Stock into which
such Warrant Shares may be converted, shall bear the following legend:

 

“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID
ACT.”

 

8.2           Mechanics of Transfer.

 

(a)           Any transfer of all or any portion of this Warrant (and
the Warrant Shares), or of any interest herein or therein, that is otherwise in
compliance with applicable law shall be effected by surrendering this Warrant
to the Company at its principal office, together with a duly executed form of
assignment, in the form attached hereto. 
In the event of any such transfer of this Warrant, subject to compliance
with applicable federal and state securities laws, the Company shall issue a
new warrant or warrants of like tenor to the transferee(s), representing, in
the aggregate, the right to purchase the same number of Warrant Shares and
cash, securities or other property, if any, which may be purchased by the
Holder upon exercise of this Warrant at the time of its surrender.

 

(b)           In the event of any transfer of all or any portion of this
Warrant in accordance with Section 8.2(a) above, the Company shall issue (i) a
new warrant of like tenor to the transferee, representing the right to purchase
the number of Warrant Shares, and cash, securities or other property, if any,
which were purchasable by the Holder of the transferred portion of this
Warrant, and (ii) a new warrant of like tenor to the Holder, representing the
right to purchase the number of Warrant Shares, and cash, securities or other
property, if any, purchasable by the Holder of the un-transferred portion of
this Warrant.  Until this Warrant or any
portion thereof is transferred on the books of the Company, the Company may
treat the Holder as the absolute holder of this Warrant and all right, title
and interest therein for all purposes, notwithstanding any notice to the
contrary.

 

8.3           No Restrictions on Transfer.  Subject to compliance with applicable federal
and state securities laws, this Warrant and any portion hereof, the Warrant
Shares and the rights hereunder

 

7

 

may be
transferred by the Holder in its sole discretion at any time and to any Person
or Persons, including without limitation Affiliates and affiliated groups of
such Holder, without the consent of the Company.

 

8.4           Warrant
Register.  The Company shall keep at
its principal office a register for the registration, and registration of
transfers, of the Warrants.  The name and
address of each Holder of one or more of the Warrants, each transfer thereof
and the name and address of each transferee of one or more of the Warrants
shall be registered in such register. 
The Company shall give to any Holder of a Warrant promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered Holders of the Warrants.

 

9.             Lost,
Stolen or Destroyed Warrant.  Upon
receipt by the Company of evidence satisfactory to it of loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of a customary affidavit of the Holder and indemnity
agreement, or, in the case of mutilation, upon surrender of this Warrant, the
Company at its expense will execute and deliver, or will instruct its transfer
agent to execute and deliver, a new Warrant of like tenor and date, and any
such lost, stolen or destroyed Warrant thereupon shall become void.

 

10.           General.

 

10.1         Authorized
Shares, Reservation of Shares for Issuance.  At all times while this
Warrant is outstanding, the Company shall maintain its corporate authority to
issue, and shall have authorized and reserved for issuance upon exercise of
this Warrant, such number of shares of Common Stock, any other capital stock or
other securities as shall be sufficient to perform its obligations under this
Warrant (after giving effect to any and all adjustments to the number and kind
of Warrant Shares purchasable upon exercise of this Warrant).

 

10.2         No Impairment.  The
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities, sale or other transfer of any of its assets or
properties, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder hereunder against impairment. Without limiting
the generality of the foregoing, the Company (a) will not increase the par
value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor on such exercise, and (b) will take
all action that may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.

 

10.3         No Rights as Stockholder.   The Holder shall not be entitled to vote or to
receive dividends or to be deemed the holder of Common Stock that may at any
time be issuable upon exercise of this Warrant for any purpose whatsoever, nor
shall anything contained herein be construed to confer upon the Holder any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance or reclassification of stock,
change of par value or change of stock to no par value, consolidation, merger
or conveyance or otherwise), or to receive notice of meetings (except to the
extent otherwise provided in this Warrant), or to receive dividends or
subscription rights, until the Holder shall have exercised this Warrant and
been issued Warrant Shares in accordance with the provisions hereof.

 

8

 

10.4         Notices.  All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been given if personally delivered or
delivered by overnight courier or mailed by first-class registered or certified
mail, postage prepaid, return receipt requested, or sent by fax machine,
addressed as follows:

 

(a)           if to the Company at:

 

iBasis, Inc.

20 Second
Avenue

Burlington,
MA  01803

Attention:  Chief Financial Officer

 

with a copy
to:

Johan V.
Brigham

Bingham
McCutchen LLP

150 Federal
Street

Boston, MA
02110

 

(b)           if
to the Holder, at the Holder’s address appearing in the books maintained by the
Company.

 

11.           Amendment
and Waiver.  No failure or delay of the Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  The rights and remedies of the Holder are
cumulative and not exclusive of any rights or remedies which it would otherwise
have. The terms of this Warrant may be amended, modified or waived only
with the written consent of the Company and the Holder.

 

12.           Governing Law.  This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York, as such laws are applied to contracts entered into and
wholly to be performed within the  State
of New York and without giving effect to any principles of conflicts or choice
of law that would result in the application of the laws of any other
jurisdiction.

 

13.           Covenants To Bind Successor and
Assigns.  All covenants, stipulations,
promises and agreements in this Warrant contained by or on behalf of the
Company shall bind its successors and assigns, whether so expressed or not.

 

14.           Severability. 
In case any one or more of the provisions contained in this Warrant
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. 
The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

 

15.           Construction.  The definitions of this Warrant shall apply equally
to both the singular and the plural forms of the terms defined. Wherever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The section and paragraph headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.

 

9

 

16.           Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate. In any action
or proceeding brought to enforce any provision of this Warrant or where any
provision hereof is validly asserted as a defense, the successful party to such
action or proceeding shall be entitled to recover reasonable attorneys’ fees in
addition to any other available remedy.

 

[SIGNATURE PAGE TO FOLLOW]

 

10

 

IN WITNESS WHEREOF,
the Company has executed this Common Stock Purchase Warrant as of the date
first written above.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  iBASIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ofer Gneezy

  
	
   

  	
  Title:

  	
  President
  and Chief Executive

  Officer

  
					

 

 

NOTICE AND

SUBSCRIPTION

 

To:          iBasis, Inc.

20 Second
Avenue

Burlington,
MA  01803

 

The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the attached Warrant for, and to exercise thereunder,
               
shares of Common Stock, of iBASIS, INC., a Delaware corporation (the “Company”), and tenders herewith payment of
$             ,
representing the aggregate purchase price for such shares based on the price
per share provided for in such Warrant. Such payment is being made in
accordance with Section 2.1(a) of the attached Warrant.

 

The
undersigned hereby represents and warrants as follows:

 

(a)           the undersigned is acquiring such
shares of Common Stock for its own account for investment and not for resale or
with a view to distribution thereof in violation of the Securities Act; and

 

(b)           the undersigned is an “accredited
investor” as defined in Rule 501 of Regulation D promulgated under the
Securities Act and was not organized for the purpose of acquiring the Warrant
or such shares of Common Stock.  The
undersigned’s financial condition is such that it is able to bear the risk of
holding such securities for an indefinite period of time and the risk of loss
of its entire investment.  The
undersigned has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of its
investment in the Company.

 

Please issue a
certificate or certificates for such shares of Common Stock in the following
name or names and denominations and deliver such certificate or certificates to
the person or persons listed below at their respective addresses set forth
below:

 

 

 

 

If said number
of shares of Common Stock shall not be all the shares of Common Stock issuable
upon exercise of the attached Warrant, a new Warrant is to be issued in the
name of the undersigned for the balance remaining of such shares of Common
Stock less any fraction of a share of Common Stock paid in cash.

 

	
  Dated:
                 ,    

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

The
undersigned iBasis, Inc. hereby acknowledges receipt of this Notice and
Subscription and authorizes issuance of the shares of Common Stock described
above.

 

	
  iBasis, Inc.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
				

 

 

FORM OF ASSIGNMENT

 

(To be executed upon assignment of Warrant)

 

For value received,
                                                                    
hereby sells, assigns and transfers unto                            
the attached Warrant [     % of the attached Warrant],
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint
                                         
attorney to transfer said Warrant [said percentage of said Warrant] on the
books of iBASIS, INC., a Delaware corporation, with full power of substitution
in the premises.

 

If not all of the attached Warrant is to be so
transferred, a new Warrant is to be issued in the name of the undersigned for
the balance of said Warrant.

 

The
undersigned hereby agrees that it will not sell, assign, or transfer the right,
title and interest in and to the Warrant unless applicable federal and state
securities laws have been complied with.

 

	
  Dated:
                 ,    

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

FORM OF CONVERSION NOTICE

 

To iBasis, Inc.:

 

The
undersigned registered holder of the attached Warrant hereby irrevocably
converts such Warrants with respect to
                    
(2) shares of the Common Stock which such holder would be entitled to receive
upon the exercise hereof, and requests that the certificates for such shares be
issued in the name of, and delivered to
                            ,
whose address is as follows:

 

 

 

 

 

Such
conversion is being made in accordance with Section 2.1(b) of the attached
Warrant.  The undersigned hereby
represents and warrants as follows:

 

(a)           the
undersigned is acquiring such shares of Common Stock for its own account for
investment and not for resale or with a view to distribution thereof in
violation of the Securities Act; and

 

(b)           the
undersigned is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act and was not organized for the purpose of
acquiring the Warrant or such shares of Common Stock.  The undersigned’s financial condition is such
that it is able to bear the risk of holding such securities for an indefinite
period of time and the risk of loss of its entire investment.  The undersigned has sufficient knowledge and
experience in investing in companies similar to the Company so as to be able to
evaluate the risks and merits of its investment in the Company.

 

	
  Dated:

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature
  must conform in all respects to name of holder as specified on the face of
  Warrant)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Street
  Address)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (City)

  	
  (State)

  	
  (Zip Code)

  
					

 

(2)  Insert here the number of shares called for
on the face of this Warrant Certificate (or, in the case of a partial
conversion, the portion thereof as to which the Warrants evidenced by this
Warrant Certificate are being converted), in either case without making any
adjustment for additional shares of Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment provisions of
the Warrant evidenced by this Warrant Certificate, may be delivered upon
exercise.  In the case of a partial
conversion, a new Warrant Certificate will be issued and delivered,
representing the unconverted portion of the Warrants, to the holder
surrendering this Warrant Certificate.

 

 

The
undersigned iBasis, Inc. hereby acknowledges receipt of this Conversion Notice
and authorizes issuance of the shares of Common Stock described above.

 

	
  iBasis, Inc.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date:DEBT RESTRUCTURING AGREEMENT
                          ----------------------------

              This  Debt  Restructuring  Agreement  ("Agreement")  is  made  and
entered into this 24th day of September,  2004 (the  "Effective  Date"),  by and
among  Knightsbridge Fine Wines, Inc.  (hereinafter  referred to as "Borrower"),
and Gryphon Master Fund, L.P. (hereinafter referred to as "Lender").

              WHEREAS, Borrower has requested Lender to cancel certain penalties
due to Lender and to freeze  remaining  penalties which may come due pursuant to
the terms of that certain  registration rights agreement,  dated April 21, 2004,
between Borrower and Lender (the "Registration Rights Agreement");

              WHEREAS,  Borrower has requested  Lender cancel  certain  interest
payments  currently  due and which will become due pursuant to the terms of that
certain 7.5% Senior Secured  Convertible Note Due 2006, dated April 21, 2004, in
the original  principal amount of $5,500,000,  issued by Borrower to Lender (the
"Original Note"); and

              WHEREAS,  Lender has agreed to cancel  certain  penalties  due and
freeze future  penalties  pursuant to the  Registration  Rights Agreement and to
cancel certain  interest  payments which are currently due and certain  interest
payments which shall become due in the future  pursuant to the Original Note, as
more  specifically set forth herein,  in consideration for the issuance of a new
promissory note in the amount of seven hundred thousand dollars ($700,000) to be
issued by Borrower to Lender.

              NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:

1.  CANCELLATION OF AMOUNTS DUE AND TERMS OF PAYMENT
    ------------------------------------------------

      1.1   Cancellation  of Amounts  Currently  Due.  Lender  hereby  agrees to
            cancel  (i)  those  penalties  which  are  currently  due  under the
            Registration  Rights  Agreement;  (ii) one certain  interest payment
            which is  currently  due  under  the  Original  Note;  and (iii) one
            certain  future  interest  payment  which  will be due in the future
            pursuant to the terms of the Original Note. The specific  amounts to
            be cancelled  pursuant to items  (i)-(iii) of this paragraph 1.1 are
            set forth in Exhibit A attached  hereto and  incorporated  herein by
            reference.

      1.2   Freeze on Future Penalties.  As of the Effective Date, Lender hereby
            agrees to freeze any future  penalties  due pursuant to the terms of
            the Registration Rights Agreement.

      1.3   Note and Payment.  In consideration  for the above stated actions by
            Lender,  Borrower  will issue and  deliver to Lender the  promissory
            note in the  amount of seven  hundred  thousand  dollars  ($700,000)
            substantially  in the form  attached  hereto as  Exhibit B (the "New
            Note").  Borrower agrees to pay to Lender the principal and interest

                                       1
<PAGE>

            due in respect to the New Note according to the terms thereof, which
            terms are incorporated herein in their entirety.

      1.4   Security and  Reinstatement of Penalties and Interest.  The New Note
            shall be secured by 3,000,000 shares of common stock of the Borrower
            owned by Joel Shapiro (the  "Collateral").  The Collateral  shall be
            held  pursuant to the Stock  Pledge and Escrow  Agreements  attached
            hereto as Exhibit C and Exhibit D, respectively.  Should an Event of
            Default (as defined in the New Note) occur,  which the Borrower does
            not cure  following  notice in accordance  with the terms of the New
            Note,  then the Lender  shall have the right to  immediately  demand
            that the Collateral be released to Lender and shall also be entitled
            to  reinstate  any  interest or  penalties  previously  cancelled or
            frozen  pursuant  to the terms of this  Agreement  less any  amounts
            actually paid by the Borrower under the New Note.

      1.5   Term of Agreement.  This Agreement shall have a term beginning as of
            the Effective  Date and ending on the date that the New Note is paid
            in full and Borrower has complied  with its  obligations  under this
            Agreement and the New Note.

2.  CONDITIONS PRECEDENT TO DEBT RESTRUCTURING
    ------------------------------------------

      2.1   Conditions to the Debt Restructuring.  The restructuring of the debt
            by Lender shall be subject to the following  conditions set forth in
            this Section.

            A.    The New Note shall have been duly  executed  and  delivered by
                  Borrower to Lender.

            B.    The  representations  and warranties of Borrower  contained in
                  this  Agreement  and the New Note shall be true and correct in
                  all material respects.

            C.    Joel  Shapiro  shall have  entered  into the Stock  Pledge and
                  Escrow Agreements  attached hereto as Exhibit C and Exhibit D,
                  respectively.

            D.    Borrower  shall  have  executed  and  delivered  to Lender the
                  Notice of  Conversion  Price  Adjustment  in the form attached
                  hereto as Exhibit E.

            E.    Borrower  shall  have  executed  and  delivered  to Lender the
                  Irrevocable  Escrow Agent  Instructions  in the form  attached
                  hereto as Exhibit F.

3.  REPRESENTATIONS, WARRANTIES AND COVENANTS
    -----------------------------------------

                  Borrower represents and warrants that:

                                       2
<PAGE>

      3.1   Transaction is Legal and Authorized. This Agreement and the New Note
            executed by Borrower,  and  compliance  by Borrower  with all of the
            provisions  of  this  Agreement  are  valid,   legal,   binding  and
            enforceable  in  accordance  with their terms and will not  conflict
            with or result in any breach of any of the  provisions of Borrower's
            articles  of  incorporation,  bylaws  or  the  terms  of  any  other
            agreement to which Borrower is subject.

      3.2   No Consents  Required.  The execution,  delivery and  performance of
            this  Agreement by Borrower does not require the consent or approval
            of any  governmental  body,  agency,  authority  or other  person or
            entity.

4.  COVENANTS

      4.1   Assignment. Borrower shall not assign or transfer any of its rights,
            duties or  obligations  under the New Note without the prior written
            consent of Lender.

      4.2   Further  Assurances.  Borrower  shall from time to time  execute and
            deliver, or cause to be executed and delivered, to Lender such other
            documents and shall take, or cause to be taken, such other action as
            may be  reasonably  requested  by  Lender in order to  implement  or
            effectuate  the  provisions  of, or more  fully  perfect  the rights
            granted or intended to be granted to Lender pursuant to the terms of
            this  Agreement,  the New Note or any other  agreement  executed and
            delivered to Lender by Borrower.

      4.3   Continuing  Covenants.   At  all  times  during  the  term  of  this
            Agreement,  Borrower  shall  adhere  to and  comply  with all of the
            covenants and agreements set forth in this Section 4.

5.  INFORMATION AS TO BORROWER
------------------------------

      5.1   Notice of Default or Event of  Default.  Immediately  upon  becoming
            aware of the existence of any  condition or event which  constitutes
            an Event of Default  (as  defined in the New Note),  Borrower  shall
            submit to Lender a written notice specifying the nature of the Event
            of Default  and what  action  Borrower is taking or proposes to take
            with respect thereto.

      5.2   Requested Information.  With reasonable  promptness,  Borrower shall
            submit to Lender such other  information  as, from time to time, may
            be reasonably requested by Lender.

6.  GENERAL
    -------

      6.1   Parties,  Successors and Assigns.  This  Agreement  shall be binding
            upon  Borrower,  its successors and assigns and inure to the benefit
            of the successors and assigns of Lender.

                                       3
<PAGE>

      6.2   Notices.  All notices  (including other  communications  required or
            permitted)  under  this  Agreement  must be in  writing  and must be
            delivered  (a) in  person,  (b) by  registered  or  certified  mail,
            postage  prepaid,  return  receipt  requested,  (c)  by a  generally
            recognized  courier  or  messenger  service  that  provides  written
            acknowledgement of receipt by the addressee,  or (d) by facsimile or
            other  generally  accepted means of electronic  transmission  with a
            verification of delivery. Notices are deemed delivered when actually
            delivered to the address for notices as follows:

                           To Lender:

                           Gryphon Master Fund, L.P.
                           100 Crescent Court, Suite 490
                           Dallas, Texas  75201
                           Attn:  Ryan R. Wolters
                           Telephone:  (214) 871-6783
                           Facsimile:  (214) 871-6711

                           With a copy to:

                           Warren W. Garden, P.C.
                           100 Crescent Court
                           Suite 490
                           Dallas, Texas  75201
                           Attn:  Warren W. Garden, Esq.
                           Telephone:  (214) 871-6710
                           Facsimile:  (214) 871-6711

                           To Borrower:

                           Knightsbridge Fine Wines, Inc.
                           One Kirkland Ranch Road
                           Napa, California  94558
                           Attn:    Joel Shapiro
                           Telephone:  (707) 254-9100
                           Facsimile:  707-254-7258

                           With a copy to:

                           Law Offices of Louis E. Taubman, PC
                           225 Broadway, Suite 1200
                           New York, New York 10007
                           Attn: Louis E. Taubman, Esq.
                           Telephone:   (212) 732-7184
                           Facsimile:   (212) 202-6380

                                       4
<PAGE>

            Any party may by  written  notice as set  forth  herein  change  the
            address  or   telephone/fax   numbers  to  which  notices  or  other
            communications to it are to be delivered or mailed.

      6.3   Entire   Agreement;   Amendments.   This  Agreement  and  all  other
            agreements  referred to herein or delivered in  connection  herewith
            shall constitute the entire  agreement  between the parties relating
            to the subject matter hereof,  shall supersede all prior agreements,
            commitment  letters,  and understandings  between the parties hereto
            relating to the subject  matter  hereof,  and shall not be modified,
            amended or  terminated,  nor shall any  provision  hereof be waived,
            except in a writing signed by all parties affected.  Notwithstanding
            the foregoing,  the  Registration  Rights Agreement and the Original
            Note shall only be  modified  to the extent  specifically  set forth
            herein  and  shall  otherwise  remain in full  force  and  effect in
            accordance with their existing terms.

      6.4   Governing  Law;  Jurisdiction  and Venue.  This  Agreement  shall be
            governed by, and construed in accordance with, the laws of the State
            of Nevada  without  regard to  principles  of  conflicts of law. The
            parties  hereby  agree  that  all  actions  or  proceedings  arising
            directly or  indirectly  from or in connection  with this  Agreement
            shall be litigated only in the United States  District Court for the
            Northern District of Texas located in Dallas County,  Dallas, Texas.
            The parties consent and submit to the  jurisdiction and venue of the
            foregoing  court and consent that any process or notice of motion or
            other  application  to said court or a judge  thereof  may be served
            inside or outside  the State of Texas or the  Northern  District  of
            Texas (but with respect to any party hereto,  such consent shall not
            be deemed a general  consent to  jurisdiction  and  service  for any
            third  parties)  by  registered  mail,  return  receipt   requested,
            directed  to the party being  served at its  address  provided in or
            pursuant to Section  6.2 above (and  service so made shall be deemed
            complete three (3) days after the same has been posted as aforesaid)
            or by personal service or in such other manner as may be permissible
            under the rules of said court. Borrower hereby waives any right to a
            jury  trial in  connection  with  any  litigation  pursuant  to this
            Agreement.

      6.5   Survival.  All  representations  warranties  and  covenants  made by
            Borrower  under  this  Agreement  shall be  considered  to have been
            relied upon by Lender and shall  survive  the  delivery to Lender of
            the New Note.

      6.6   Counterparts.  This  Agreement  may  be  signed  in  any  number  of
            counterparts,  each of which shall be deemed an  original,  with the
            same  effect as if the  signatures  thereto and hereto were upon the
            same instrument.

      6.7   Counsel.  Each party to this Agreement  represents and warrants that
            it has received the advice and counsel of an attorney in  connection
            with the negotiation, preparation and execution of this Agreement.

                            [SIGNITURE PAGE FOLLOWS]

                                       5
<PAGE>

           IN WITNESS WHEREOF the parties have executed this Agreement effective
as of the day and year first above written.

                                    BORROWER:

                                    KNIGHTSBRIDGE FINE WINES, INC.

                                    ---------------------------------
                                    Name:    Joel Shapiro
                                    Title:   Chief Executive Officer

                                    LENDER:

                                    GRYPHON MASTER FUND L.P.

                                    By:  Gryphon Partners, L.P.,
                                         its General Partner

                                    By:  Gryphon Management Partners, L.P.,
                                         its General Partner

                                    By:  Gryphon Advisors, L.L.C.,
                                         its General Partner

                                    By:
                                       ------------------------------------
                                         Warren W. Garden, Authorized Agent

                                       6
<PAGE>

                                    EXHIBIT A
                                    ---------

1.    All amounts currently  payable,  or that in the future may become payable,
as  liquidated  damages  under  Section  2(c)(i)  of  the  Registration   Rights
Agreement.

2.    The  interest  payment  that was due and  payable on July 1,  2004,  under
Section 2 of the Original Note.

3.    The interest  payment that will become due and payable on January 1, 2005,
under Section 2 of the Original Note.

                                       7
<PAGE>

                                    EXHIBIT B
                                    ---------

                                Form of New Note

                                       8
<PAGE>

                                    EXHIBIT C
                                    ---------

                         Form of Stock Pledge Agreement

                                       9
<PAGE>

                                    EXHIBIT D
                                    ---------

                            Form of Escrow Agreement

                                       10
<PAGE>

                                    EXHIBIT E
                                    ---------

                  Form of Notice of Conversion Price Adjustment

                                       11
<PAGE>

                                    EXHIBIT F
                                    ---------

                  Form of Irrevocable Escrow Agent Instructions

                                       12

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