PURCHASE AGREEMENT





     THIS PURCHASE AGREEMENT is entered into as of the 5th day of February 2001

(this "Agreement"), by and between Gotel Investments Ltd., a British Virgin

Islands corporation (the "Buyer"), and STAR Telecommunications, Inc., a Delaware

corporation (the "Company").



     WHEREAS, the parties desire that, upon the terms and subject to the

conditions contained herein, the Company may issue and sell to the Buyer and the

Buyer may purchase from the Company warrants (the "Warrants") to purchase up to

$35,000,000 of the Common Stock (as defined below) from time to time as provided

herein; and



     WHEREAS, such investments will be made in reliance upon the provisions of

Section 4(2) ("Section 4(2)") and Regulation D ("Regulation D") as promulgated

by the United States Securities and Exchange Commission under the Securities Act

of 1933, as amended (the "Securities Act"), and/or upon such other exemption

from the registration requirements of the Securities Act as may be available

with respect to any or all of the investments to be made hereunder.



     NOW, THEREFORE, the parties hereto agree as follows:



                                   ARTICLE I.

                               CERTAIN DEFINITIONS



     Section I.1 "Accredited Buyer" shall have the meaning set forth in Section

3.2.



     Section I.2 "Agreement" shall have the meaning set forth in the preamble of

this Agreement.



     Section I.3 "Buyer" shall have the meaning set forth in the preamble of

this Agreement.



     Section I.4 "Capital Shares" shall mean (i) the Common Stock and (ii) any

shares of any other class of common stock, whether now or hereafter authorized,

having the right to participate in the distribution of earnings and assets of

the Company and which shall, together with the Common Stock, be treated as one

class of equity securities for purposes of determining beneficial ownership

under Section 13 and Section 16 of the Exchange Act (including the rules and

regulations promulgated thereunder).



     Section I.5 "Closing" shall mean the date of this Agreement.



     Section I.6 "Closing Date" shall mean the date on which the Closing occurs.





<PAGE>





     Section I.7 "Committed Investment" shall be $25,000,000, subject to

increase pursuant to Section 2.3 to $35,000,000.



     Section I.8 "Common Stock" shall mean the Company's common stock, $.001 par

value per share.



     Section I.9 "Common Stock Equivalents" shall mean any securities that are

convertible into or exchangeable for Common Stock or any warrants, options or

other rights to subscribe for or purchase Common Stock or any such convertible

or exchangeable securities.



     Section I.10 "Company" shall have the meaning set forth in the preamble of

this Agreement.



     Section I.11 "Effective Date" shall mean the date on which the SEC first

declares effective a Registration Statement registering the resale of the

Registrable Securities as set forth in Section 6.1(f).



     Section I.12 "Event of Default" shall have the meaning set forth in Section

7.2.



     Section I.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,

as amended, and the regulations promulgated thereunder.



     Section I.14 "Material Adverse Effect" shall mean any material adverse

effect on (i) the assets, liabilities, business, properties, operations,

financial condition or results of operations of the Company and its subsidiaries

taken as a whole, (ii) the transactions contemplated hereby or by the agreements

or instruments to be entered into in connection herewith or (iii) the authority

or the ability of the Company to perform its obligations under this Agreement,

the Registration Rights Agreement or the Warrants.



     Section I.15 "Maximum Share Amount" shall have the meaning set forth in

Section 2.4.



     Section I.16 "NASD" shall mean the National Association of Securities

Dealers, Inc.



     Section I.17 "Outstanding" when used with reference to Common Stock or

Capital Shares shall mean, at any date as of which the number of such shares is

to be determined, all issued and outstanding shares, and shall include all such

shares issuable in respect of outstanding scrip or any certificates representing

fractional interests in such shares; provided, however, that "Outstanding" shall

not mean any such shares then directly or indirectly owned or held by or for the

account of the Company.



     Section I.18 "Person" shall mean an individual, a corporation, a

partnership, an association, a trust or other entity or organization, including

a government or political subdivision or an agency or instrumentality thereof.





                                       2

<PAGE>



     Section I.19 "Principal Market" shall mean the Nasdaq National Market

("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the American Stock

Exchange (the "AMEX") or the New York Stock Exchange (the "NYSE"), whichever is

at the time the principal trading exchange or market for the Common Stock.



     Section I.20 "Prospectus Supplement" shall have the meaning set forth in

Section 6.1(n).



     Section I.21 "Registrable Securities" shall mean the Warrant Shares and any

other shares of capital stock issued or issuable as a dividend on or in exchange

for or otherwise with respect to such shares until (i) the Registration

Statement has been declared effective by the SEC and all such shares have been

disposed of pursuant to the Registration Statement, (ii) all such shares have

been sold under circumstances under which all of the applicable conditions of

Rule 144 (or any similar provision then in force) are met, (iii) all such shares

have been otherwise transferred to holders who may trade such shares without

restriction under the Securities Act, and the Company has delivered a new

certificate or other evidence of ownership for such securities not bearing a

restrictive legend, (iv) such time as, in the opinion of counsel to the Buyer,

all such shares may be sold without any time, volume or manner limitations

pursuant to Rule 144(k) (or any similar provision then in effect) under the

Securities Act or (v) any combination of the foregoing relating to all such

shares.



     Section I.22 "Registration Rights Agreement" shall mean the agreement

regarding the filing of the Registration Statement for the resale of the

Registrable Securities, entered into between the Company and the Buyer as of the

Closing Date and in the form attached hereto as EXHIBIT C.



     Section I.23 "Registration Statement" shall mean a registration statement

on Form S-1 for the registration of the resale by the Buyer of the Registrable

Securities under the Securities Act.



     Section I.24 "Regulation D" shall have the meaning set forth in the

recitals of this Agreement.



     Section I.25 "Rule 144" shall mean Rule 144 promulgated under the

Securities Act (or a successor rule).



     Section I.26 "SEC" shall mean the United States Securities and Exchange

Commission.



     Section I.27 "SEC Documents" shall have the meaning set forth in Section

4.7.



     Section I.28 "Section 4(2)" shall have the meaning set forth in the

recitals of this Agreement.



     Section I.29 "Securities" shall mean collectively the Warrants and the

Warrant Shares.





                                       3

<PAGE>



     Section I.30 "Securities Act" shall have the definition ascribed to it in

the recitals of this Agreement.





     Section I.31 "Trading Day" shall mean any day during which the Nasdaq shall

be open for trading.



     Section I.32 "Warrants" shall mean three (3) warrants to purchase

10,000,000 shares of Common Stock each at per share exercises prices of

$0.375, $0.625 and $0.875, respectively, a form of which is attached hereto

as EXHIBIT A.



     Section I.33 "Warrant Shares" shall mean the Common Stock issued and/or

issuable upon exercise of, or otherwise pursuant to, the Warrants.



                                   ARTICLE II.

                          PURCHASE AND SALE OF WARRANTS



     Section II.1 PURCHASE AND SALE OF WARRANTS. Subject to the terms and

conditions of this Agreement, the Company shall issue and sell to the Buyer, and

the Buyer shall purchase from the Company, the Warrants for an aggregate

purchase price of $100.00.



     Section II.2 ISSUANCE OF ADDITIONAL WARRANTS. Upon the terms and subject to

the conditions set forth herein, on and after the exercise by Buyer of the

Warrants, Buyer may purchase and the Company may sell additional warrants with

respect to a number of shares and an exercise price that are mutually agreeable

to the parties, so long as the aggregate value of the shares subject to such

additional warrants, when added to the value of the Warrant Shares, does not

exceed the Committed Investment.



     Section II.3 ADDITIONAL WARRANTS. On the receipt by the Company from MCI

WorldCom Network Services, Inc. ("WorldCom") of a waiver for a period of twelve

(12) months of the acceleration by WorldCom of all balances due under various

obligations owed by the Company to WorldCom, Buyer shall have the right to

purchase from the Company warrants to purchase up to an additional $10 million

in shares of Common Stock (the "WorldCom Waiver Increase") at an exercise price

or prices that are mutually agreed to by the parties, provided that Buyer must

notify the Company within thirty (30) days of the Company's receipt of such

waiver from WorldCom of Buyer's intention to exercise its right to purchase

additional warrants contemplated by the WorldCom Waiver Increase.



     Section II.4 MAXIMUM AMOUNT OF PURCHASED SHARES; RESTRICTION ON EXERCISE.

Unless the Company obtains the approval of its stockholders in accordance with

the corporate laws of the State of Delaware and the applicable rules of the

Nasdaq, no more than that number of Warrant Shares that does not at any time

exceed 19.9% of the shares of Common Stock outstanding at any time and from time

to time (the "Maximum Share Amount") may be issued and sold pursuant to any

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC