SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report April 19, 2000
(Date of earliest event reported) (March 29, 2000)
CTC COMMUNICATIONS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27505 04-3469590
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
220 Bear Hill Rd., Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
(781) 466-8080
(Registrant's telephone number including area code)
(Former name or former address if changed since last report)
<PAGE>
Item 5.
The summary information contained herein is qualified in its entirety by
reference to the texts of the relevant documents referred to herein and
attached as exhibits hereto.
A. 8.25% Series B Convertible Preferred Stock
As of March 22, 2000, the Registrant entered into an Agreement, as amended,
(the "Agreement") with Credit Suisse First Boston Equity Partners LP, and its
affiliates, Bain Capital Fund VI, L.P. and its affiliates and Thomas Lee
Equity Fund IV, L.P. and its affiliates (the "Investors"), under the terms of
which the Investors agreed to purchase for investment for $1,000 per share,
an aggregate of 200,000 shares of the 8.25% Series B Convertible Preferred
Stock of the Registrant (the "Preferred Shares) for $200 million as follows
(Credit Suisse - $50 million; Bain Capital - %$75 million and Thomas Lee -
$75 million). The closing will take place upon obtaining certain regulatory
approvals.
The Registrant intends to use the proceeds of the private placement to
finance the buildout of the Registrant's telecommunications network and for
working capital.
The Registrant entered into a registration rights agreement with the
Investors with respect to the shares of Common Stock issuable upon conversion
of the Preferred Shares ("Registrable Securities") providing for "piggyback"
registration rights and demand registration rights as follows. At any time
commencing one year after the closing, upon demand of not less than 20% or
$30 million of holders of the Registrable Securities on a fully diluted basis
after giving effect to the conversion of all of the Preferred Shares, the
Registrant has agreed to file a Registration Statement covering the
Registrable Securities on no more than three occasions. In addition, in the
event of a mandatory conversion of the Preferred Shares (see "Certificate of
Designation" discussed below), the Registrant has agreed to file a
Registration Statement covering the Registrable Securities. The Registrant
has agreed to pay all expenses of filing the registration statement, except
that the holders of the Registrable Securities shall bear the costs of their
own legal counsel and any underwriting commissions applicable to the
securities sold by them.
B. Certificate of Designation for Preferred Shares
The Registrant has agreed to file a Certificate of Designation with the
Secretary of State of Delaware setting forth the designations, preferences
and relative and other special rights, qualifications, limitations and
restrictions of the 200,000 Preferred Shares issued in connection with the
private placement. Dividends are accrued for three years following the
closing, and thereafter, are payable quarterly at the rate of 8.25% per annum
of the $1,000 purchase price for each Preferred Share payable in cash or if
not paid by the Dividend Date, the Accreted Value for each Preferred Share is
increased by an amount equal to 2.0625%. Upon liquidation, dissolution or
winding up of the Registrant, the Preferred Shares rank senior to any other
junior class of the Registrant's capital stock. The Preferred Shares are
convertible at any time at the holder's election at$50 per share subject to
adjustment, into shares of the Registrant's Common Stock. In addition, the
Registrant, at its option, may require conversion of the Preferred Shares
into shares of its Common Stock if the market price of the Common Stock
reaches certain levels and, at the option of the Registrant commencing on the
fifth anniversary of the closing, may redeem the Preferred Shares. All
outstanding Preferred Shares must be redeemed ten years from the date of
closing. The Preferred Shareholders are entitled to vote such number of
Preferred Shares which they hold or, upon written consent, vote the number of
shares of Common Stock of the Registrant issualbe upon conversion of the
Preferred Shares. Except as otherwise provided by law, the Preferred
Shareholders vote with the holders of the Common Stock as a single class.
Each of the three Investor groups has the right to elect one nominee to the
Company's Board of Directors immediately following the Closing, which number
will be reduced if the number of shares of Preferred Stock and/or Common
Stock issuable upon conversion of the Preferred Stock held by the Investor
group is less than 50% of the total number of shares of Preferred Stock and
Common Stock issuable under the terms of the Agreement.
The Agreement further provides that unless specifically permitted by the
Agreement, the Investor groups will not acquire any additional shares of
capital stock of the Company and have agreed, that except for Permitted
Transfers under the Agreement, will not dispose of any of the securities
issued pursuant to the Agreement.
Item 7c. Exhibits.
Exhibit 3.1 Form of Certificate of Designation for Series B
Convertible Preferred Stock of the Registrant
Exhibit 10.1 Series B Preferred Stock Purchase Agreement dated as
of March 22, 2000.
Exhibit 10.2 Series B Preferred Stock Registration Rights
Agreement dated as of March 22, 2000.
Exhibit 99.1 March 29, 2000 Press Release
- - ------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CTC COMMUNICATIONS GROUP, INC.
By: /s/ John D. Pittenger
John D. Pittenger,
Executive Vice President, Finance and Administration
Dated: April 19, 2000
EXHIBIT INDEX
Exhibit 3.1 Form of Certificate of Designation for Series B
Convertible Preferred Stock of the Registrant
Exhibit 10.1 Series B Preferred Stock Purchase Agreement dated as
of March 22, 2000.
Exhibit 10.2 Series B Preferred Stock Registration Rights
Agreement dated as of March 22, 2000.
Exhibit 99.1 March 29, 2000 Press Release
Exhibit 3.1
CTC COMMUNICATIONS GROUP, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 8.25% SERIES B
CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
8.25% Series B Convertible Preferred Stock
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
CTC Communications Group, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of
directors of the Corporation (the "Board of Directors") by the Corporation's
Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors is
authorized to issue Preferred Stock of the Corporation in one or more series
and the Board of Directors has duly approved and adopted the following
resolution on March 21, 2000 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors hereby
creates, authorizes and provides for the issuance of a series of the
preferred stock of the Corporation, par value $1.00 per share (such preferred
stock designated as the "Series B Convertible Preferred Stock"), consisting
of 200,000 shares and having the powers, designations, preferences, relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions thereof that are set forth in the Certificate of
Incorporation and in this Resolution as follows:
1. Number and Designation. Two hundred thousand (200,000) shares of
the Preferred Stock of the Corporation shall constitute a series designated
as "Series B Convertible Preferred Stock" (the "Series B Preferred Stock").
2. Definitions. Unless the context otherwise requires or unless
otherwise defined herein, when used herein the following terms shall have the
meanings indicated.
"Accreted Value" means, with respect to one share of Series B Preferred
Stock, the amount equal to $1,000.00 plus the amount of any dividends added
to the Accreted Value in accordance with Section 4.2 (which aggregate amount
shall be subject to adjustment whenever there shall occur a stock split,
combination, reclassification, or other similar event involving the Series B
Preferred Stock).
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than holders of the Series B Preferred
Stock becomes the "beneficial owner" (as defined in Rule 13d-3 and 13d-5
under the Exchange Act) of more than 50% of the total voting stock of the
Corporation or (b) the Corporation consolidates with, or merges with or into,
another person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person, or any
person consolidates with, or merges with or into the Corporation, in any such
event pursuant to a transaction in which the holders of the outstanding
voting stock of the Corporation immediately prior to such transaction hold
less than 50% of the outstanding voting stock of the surviving or transferee
company or its parent company immediately after such transaction or
immediately after such transaction any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) other than holders of
the Series B Preferred Stock is the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than
50% of the total voting stock of the surviving or transferee company or its
parent company or (c) during any consecutive two-year period, individuals who
at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the stockholders of the Corporation was approved
by a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved or whose nomination was made by the
holders of the Series B Preferred Stock) cease for any reason to constitute a
majority of the Board of Directors then in office other than pursuant to
provisions of the Purchase Agreement relating to nomination, election,
resignation or removal of directors under certain circumstances described
therein; provided, however, that a "Change of Control" shall not include a
transfer of all or substantially all of the assets of the Corporation to one
or more wholly owned subsidiaries or any merger or consolidation of the
Corporation immediately after which holders of the outstanding voting stock
of the Corporation immediately prior to such transaction hold 50% or more of
the outstanding voting stock of the surviving company or its parent company.
"Closing Date" shall have the meaning given such term in the Purchase
Agreement.
"Current Market Value" means the average of the daily Market Prices of
the Common Stock for ten consecutive trading days immediately preceding the
date for which such value is to be determined.
"Liquidation Preference" means, at a given time with respect to one
share of Series B Preferred Stock, the Accreted Value as of such time, plus
all dividends, whether or not earned or declared, accrued since the end of
the previous Dividend Period.
"Market Price" means, with respect to the Common Stock, on any given
day, (i) the price of the last trade, as reported on the Nasdaq Stock Market,
not identified as having been reported late to such system, or (ii) if the
Common Stock is so traded, but not so quoted, the average of the last bid and
ask prices, as those prices are reported on the Nasdaq Stock Market, or (iii)
if the Common Stock is not listed or authorized for trading on the Nasdaq
Stock Market or any comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation for
that purpose. If the Common Stock is not listed and traded in a manner that
the quotations referred to above are available for the period required
hereunder, the Market Price per share of Common Stock shall be deemed to be
the fair value per share of such security as determined in good faith by the
Board of Directors of the Corporation.
"Purchase Agreement" means the Series B Preferred Stock Purchase
Agreement dated as of March 22, 2000 among the Corporation and the purchasers
named therein.
3. Rank.
3.1. The Series B Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution,
rank (i) senior to all classes of Common Stock and to each other class
of capital stock of the Corporation or series of Preferred Stock of the
Corporation established hereafter by the Board of Directors, the terms
of which do not expressly provide that such class or series ranks
senior to, or on a parity with, the Series B Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
of the Corporation (collectively referred to, together with all classes
of Common Stock of the Corporation, as "Junior Stock"); (ii) on a
parity with each class of capital stock of the Corporation or series of
Preferred Stock of the Corporation established hereafter by the Board
of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Series B Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to as "Parity Stock"); and (iii) junior to each
class of capital stock of the Corporation or series of Preferred Stock
of the Corporation established hereafter by the Board of Directors of
the Corporation, the terms of which expressly provide that such class
or series will rank senior to the Series B Preferred Stock as to
dividend rights or rights on liquidation, winding-up and dissolution of
the Corporation (collectively referred to as "Senior Stock").
3.2. The respective definitions of Senior Stock, Junior
Stock and Parity Stock shall also include any rights or options
exercisable or exchangeable for or convertible into any of the Senior
Stock, Junior Stock and Parity Stock, as the case may be.
3.3. The Series B Preferred Stock shall be subject to the
creation of Junior Stock, Parity Stock and Senior Stock, to the extent
not prohibited hereby.
4. Dividends.
4.1. Holders of the outstanding shares of Series B
Preferred Stock will be entitled to receive dividends on each share of
the Series B Preferred Stock, when and if declared by the Board of
Directors, out of funds legally available therefor, at a rate per annum
equal to 8.25% of the Liquidation Preference from the date of issuance,
payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (unless such day is not a business day, in
which event such dividends shall be payable on the next succeeding
business day) (each such date being a "Dividend Payment Date" and each
such quarterly period being a "Dividend Period"), commencing on June
30, 2000. Each such dividend shall be payable to the holders of record
of shares of the Series B Preferred Stock as they appear on the stock
register of the Corporation at the close of business on the
corresponding Record Date. As used herein, the term "Record Date"
means, with respect to the dividend payable on March 31, June 30,
September 30 and December 31, respectively, of each year, the preceding
March 15, June 15, September 15 and December 15, or such other date,
not more than 60 days or less than 10 days preceding the payment dates
thereof, as shall be fixed as the record date by the Board of
Directors. Dividends, whether or not declared, will accumulate until
declared and paid.
4.2. Any dividend on the Series B Preferred Stock shall
be, at the option of the Corporation, payable (a) in cash or (b) if
cash dividends are not declared by the Board of Directors and paid to
the holders of the outstanding shares of Series B Preferred Stock on or
before each Dividend Payment Date, the Accreted Value for each share of
Series B Preferred Stock automatically shall increase by an amount
equal to the Applicable Percentage multiplied by the Accreted Value as
of the immediately preceding Dividend Payment Date; provided, however,
that, with respect to any Dividend Payment Date occurring prior to the
third anniversary of the Closing Date, all such dividends shall be paid
as described in clause (b). As used herein, the "Applicable
Percentage" for each full Dividend Period for the Series B Preferred
Stock shall be 2.0625%. The Applicable Percentage for the initial
Dividend Period, or any other period shorter than a full period, shall
be computed on the basis of a per annum rate of 8.25% and the actual
number of days elapsed over a 360-day year.
4.3. All dividends paid with respect to shares of the
Series B Preferred Stock shall be paid pro rata to the holders thereof
entitled thereto.
4.4. If accrued dividends on the Series B Preferred Stock
for all prior periods have not been paid in full or added to the
Accreted Value pursuant to Section 4.2(b), then any dividend declared
on any Parity Stock will be declared ratably in proportion to accrued
and unpaid dividends on the Series B Preferred Stock and such Parity
Stock and if dividends on any Parity Stock are due and payable and have
not been paid in full, then any dividend declared on the Series B
Preferred Stock will be declared ratably in proportion to accrued and
unpaid dividends on the Series B Preferred Stock and such Parity Stock.
4.5. So long as any shares of Series B Preferred Stock are
outstanding, if the Corporation pays a dividend or distribution on the
Common Stock (other than dividends or distributions payable solely in
Common Stock) then at the same time the Corporation shall declare and
pay a dividend on each share of Series B Preferred Stock of the type
and in the amount equal to the dividends that would be paid with
respect to a share of Series B Preferred Stock if converted by the
holder thereof into Common Stock on the date established as the record
date with respect to such dividend on the Common Stock.
5. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, and subject to the
rights of holders of Senior Stock and Parity Stock, each holder of Series B
Preferred Stock shall be entitled to be paid, before any distribution is made
on any Junior Stock, out of the assets of the Corporation available for
distribution to its stockholders, an amount equal to the greater of (a) the
Liquidation Preference as of the date fixed for liquidation, dissolution or
winding-up for each share of Series B Preferred Stock held by such holder, or
(b) an amount for each share of Series B Preferred Stock held by such holder
equal to the Current Market Value of the number of shares of Common Stock
into which a share of Preferred Stock could be converted by such holder as of
the date fixed for liquidation, provided that in case of (a) or (b) if such
liquidation, dissolution or winding-up occurs prior to the third anniversary
of the Closing Date, the Accreted Value for each such share shall be deemed
to include dividends that would have accrued on such share from the date of
such liquidation, dissolution or winding-up through the third anniversary of
the Closing Date. If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, there are not sufficient assets
to pay the amounts payable with respect to the Series B Preferred Stock and
all Parity Stock in full, the holders of Series B Preferred Stock and the
holders of Parity Stock will share ratably (in proportion to the other
amounts that would be payable on such shares of Series B Preferred Stock and
the Parity Stock, respectively, if all amounts payable thereon had been paid
in full) in any distribution of assets of the Corporation to which each is
entitled. After payment of the full amount contemplated by the first
sentence of this Section 5, the holders of shares of Series B Preferred Stock
will not be entitled to any further participation in any distribution of
assets of the Corporation. For the purposes of this Section 5, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets
of the Corporation nor the consolidation or merger of the Corporation with or
into one or more other entities shall be deemed to be a liquidation,
dissolution or winding-up of the Corporation.
6. Redemption.
6.1. On and after the fifth anniversary of the Closing
Date, subject to the conversion rights set forth in Section 8, to the
extent the Corporation shall have funds legally available for such
payment, the Corporation may redeem at its option shares of Series B
Preferred Stock, at any time in whole or from time to time in part, at
a redemption price per share equal to the greater of (a) the
Liquidation Preference, and (b) the Current Market Value of the number
of shares of Common Stock into which a share of Preferred Stock could
be converted by the holder on the date fixed for redemption.
6.2. To the extent the Corporation shall have funds
legally available for such payment, on the tenth anniversary of the
Closing Date the Corporation shall redeem all outstanding shares of the
Series B Preferred Stock, if any (other than shares of Series B
Preferred Stock with respect to which the holder thereof has waived the
redemption requirement set forth in this Section 6.2) at a redemption
price per share equal to the greater of (a) the Liquidation Preference
as of such date, and (b) the Current Market Value of the number of
shares of Common Stock into which a share of Preferred Stock could be
converted by the holder as of such date, which redemption price shall
be payable, at the Company's option, (1) in cash or (2) in shares of
Common Stock, which shares shall be valued at (x) 95% of the average of
the daily Market Prices of the Common Stock for twenty consecutive
trading days immediately preceding the redemption date in the case of
redemptions pursuant to clause (a) and (y) 100% of the average of the
daily Market Prices of the Common Stock for twenty consecutive trading
days immediately preceding the redemption date in the case of
redemptions pursuant to clause (b).
6.3. Promptly following the occurrence of a Change of
Control, the Corporation shall notify (a "Change of Control Notice")
the holders of the Series B Preferred Stock of such occurrence. Within
thirty days after the Corporation sends a Change of Control Notice,
each holder of shares of Series B Preferred Stock shall have the option
to either (a) to the extent the Corporation shall have funds legally
available therefor, to require the Corporation to redeem such holder's
shares of Series B Preferred Stock, or such portion thereof as may be
determined by such holder, at a redemption price per share in cash
equal to the Liquidation Preference as of the date of the Change of
Control (which date shall be the redemption date for purposes hereof)
or (b) convert such holder's shares of Series B Preferred Stock, or
such portion thereof as may be determined by such holder, as set forth
in Section 8.1 into shares of Common Stock (or into a corresponding
number of the type of security into which shares of Common Stock are
converted in such Change of Control); provided, however, that the
Accreted Value for each share of Series B Preferred Stock tendered for
redemption or conversion shall include, in addition to accrued and
unpaid dividends through the date fixed for redemption or conversion,
dividends which would have accrued from such date to the third
anniversary of the Closing. Any election pursuant to clause (a) or (b)
must be made by written notice delivered to the offices of the
Corporation, accompanied by certificates representing the shares to be
redeemed or converted, within thirty days following the mailing of the
Change of Control Notice. Such notice shall be signed by the holder of
the shares to be redeemed or converted and must specify the number of
shares to be redeemed or converted.
6.4. Shares of Series B Preferred Stock which have been
issued and reacquired in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the
General Corporation Law of the State of Delaware) have the status of
authorized and unissued shares of the class of Preferred Stock
undesignated as to series and may be redesignated and reissued as part
of any series of the Preferred Stock.
6.5. If the Corporation is unable or shall fail to
discharge its obligation to redeem all outstanding shares of Series B
Preferred Stock pursuant to Section 6.2 or shares of Series B Preferred
Stock surrendered for redemption pursuant to Section 6.3 (the
"Mandatory Redemption Obligation"), the Mandatory Redemption Obligation
shall be discharged as soon as the Corporation is able to discharge
such Mandatory Redemption Obligation. If and so long as any Mandatory
Redemption Obligation with respect to the Series B Preferred Stock
shall not be fully discharged, the Corporation shall not (i) declare or
pay any dividend or distribution with respect to, or directly or
indirectly, redeem, purchase, or otherwise acquire any Parity Stock or
discharge any mandatory or optional redemption, sinking fund or other
similar obligation in respect of any Parity Stock (except in connection
with a redemption, sinking fund or other similar obligation to be
satisfied pro rata with the Series B Preferred Stock and except for
dividends on Parity Stock which are payable solely in additional shares
of or by the increase in the liquidation value of Parity Stock, in each
case, pursuant to the terms thereof) or (ii) declare or pay any
dividend or distribution with respect to, or directly or indirectly
redeem, purchase, or otherwise acquire, any Junior Stock, or, directly
or indirectly, discharge any mandatory or optional redemption, sinking
fund or other similar obligation in respect of any Junior Stock (other
than a redemption, purchase or other acquisition of shares of Common
Stock made pursuant to an employee incentive or benefit plan or
arrangement of the Corporation or any subsidiary or other agreement or
arrangement between an employee and the Corporation or any subsidiary
approved by the Board of Directors or any committee thereof and other
than dividends on Junior Stock which are payable solely in additional
shares of or by the increase in the liquidation value of Junior Stock,
in each case, pursuant to the terms thereof).
7. Procedure for Redemption.
7.1. In the event that fewer than all the outstanding
shares of Series B Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of Directors and
the shares to be redeemed shall be selected pro rata (with any
fractional shares being rounded to the nearest whole share).
7.2. In the event the Corporation shall redeem shares of
Series B Preferred Stock pursuant to Section 6.1 or 6.2, notice of such
redemption shall be given by first class mail, postage prepaid, mailed
not less than 30 days nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the
Corporation; provided that neither the failure to give such notice nor
any defect therein shall affect the validity of the giving of notice
for the redemption of any share of Series B Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to
give said notice or except as to the holder whose notice was defective.
Each such notice shall state: (i) the redemption date; (ii) the number
of shares of Series B Preferred Stock to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of
shares to be redeemed from such holder; (iii) the redemption price; and
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price.
7.3. Notice having been received by the Corporation as set
forth in Section 6.3 or having been mailed by the Corporation as set
forth in Section 7.2, from and after the redemption date, dividends on
the shares of Series B Preferred Stock so called pursuant to Sections
6.1 or 6.2 or surrendered for redemption pursuant to Section 6.3 shall
cease to accrue, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation
the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state), such share shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than
all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
8. Conversion.
8.1. Subject to the provisions of this Section 8, the
holders of the shares of Series B Preferred Stock shall have the right,
at any time and from time to time, at such holder's option, to convert
any or all outstanding shares (and fractional shares) of Series B
Preferred Stock into fully paid and non-assessable shares of Common
Stock. The number of shares of Common Stock deliverable upon
conversion of a share of Series B Preferred Stock, adjusted as
hereinafter provided, is referred to herein as the "Conversion Ratio."
The Conversion Ratio as of any date shall be an amount equal to (a) the
Liquidation Preference at such date divided by (b) $50.00, subject to
adjustment from time to time pursuant to Section 8.10 hereof. As used
herein, "Conversion Price" shall mean, at any given time, the amount
determined by dividing the Liquidation Preference by the Conversion
Ratio in effect at such time. Notwithstanding any call for redemption
pursuant to Section 6.1, the right to convert shares so called for
redemption shall terminate at the close of business on the date
immediately preceding the date fixed for such redemption unless the
Corporation shall default in making payment of the amount payable upon
such redemption.
8.2. If at any time (a) the average Market Price of the
Common Stock for a period of 30 consecutive trading days equals or
exceeds 200% of the Conversion Price or(b) there are outstanding fewer
than 15% of the number of shares of Series B Preferred Stock issued on
the Closing Date, then the Corporation shall have the right to cause
each share of the Series B Preferred Stock to convert into a number of
shares of Common Stock equal to the Conversion Ratio, subject to
adjustment pursuant to Section 8.10; provided, however, that if such
conversion pursuant to clause (a) is to occur prior to the third
anniversary of the Closing Date, the Accreted Value for each share of
Series B Preferred Stock to be converted shall include, in addition to
accrued and unpaid dividends through the date fixed for conversion,
dividends which would have accrued from such date to the third
anniversary of the Closing Date. The Corporation shall exercise such
right by sending written notice of such exercise to the holders of the
Preferred Stock.
8.3. In order to exercise the conversion privilege set
forth in Section 6.3 or 8.1, the holder of the shares of Series B
Preferred Stock to be converted shall surrender the certificate
representing such shares at the office of the Corporation, with a
written notice of election to convert completed and signed, specifying
the number of shares to be converted. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
shares of Series B Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
holder or the holder's duly authorized attorney, and an amount
sufficient to pay any transfer or similar tax. Upon any conversion of
Series B Preferred Stock pursuant to Section 8.2, the Corporation will
notify the holders of the Series B Preferred Stock of such conversion
as set forth in Section 8.2 and each holder shall surrender to the
Corporation the shares formerly representing Series B Preferred Stock.
8.4. As promptly as practicable after the surrender by the
holder of the certificates for shares of Series B Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver to such holder
(a) a certificate or certificates for the whole number of shares of
Common Stock issuable upon the conversion of such shares in accordance
with the provisions of Section 6.3 or this Section 8, (b) any cash
adjustment required pursuant to Section 8.9, and (c) in the event of a
conversion in part, a certificate or certificates for the whole number
of Preferred Shares not being so converted.
8.5. Each conversion pursuant to Section 6.3 shall be
deemed to have been effected as of the date of the Change of Control;
each conversion pursuant to Section 8.1 shall be deemed to have been
effected immediately prior to the close of business on the date on
which the certificates for shares of Series B Preferred Stock shall
have been surrendered and such notice received by the Corporation as
aforesaid; and each conversion pursuant to Section 8.2 shall be deemed
to have been effected on the date the notice described in Section 8.2
is sent to the holders of the Series B Preferred Stock; and in any such
case the person in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder of record of the shares of Common
Stock represented thereby at such time on such date and such conversion
shall be into a number of whole shares of Common Stock as set forth in
Section 6.3, 8.1 or 8.2, as the case may be. All shares of Common
Stock delivered upon conversion of the Series B Preferred Stock will
upon delivery be duly and validly issued, fully paid and non-
assessable. Upon the surrender of certificates representing the shares
of Series B Preferred Stock to be converted, the shares to be so
converted shall no longer be deemed to be outstanding and all rights of
a holder with respect to such shares surrendered for conversion shall
immediately terminate except the right to receive the Common Stock and
other amounts payable pursuant to this Section 8 and a certificate or
certificates representing the shares of Series B Preferred Stock not
converted.
8.6. Upon delivery to the Corporation by a holder of
shares of Series B Preferred Stock of a notice of election to convert,
the right of the Corporation to redeem such shares of Series B
Preferred Stock shall terminate, regardless of whether a notice of
redemption has been mailed as aforesaid.
8.7. The Corporation covenants that it will at all times
reserve such number of its authorized but unissued shares of Common
Stock as shall be required for the purpose of effecting conversions of
the Series B Preferred Stock.
8.8. The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of the Series
B Preferred Stock pursuant hereto; provided that the Corporation shall
not be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock in
a name other than that of the holder of the Series B Preferred Stock to
be converted and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
8.9. In connection with the conversion by a holder of any
shares of Series B Preferred Stock, no fractions of shares of Common
Stock shall be required to be issued to such holder, but instead the
Corporation shall pay to such holder cash in lieu of any fractional
portion of one share resulting from the calculation of the number of
shares of Common Stock (with all shares of Series B Preferred Stock
being converted by a holder being aggregated for the purpose of such
calculation) in an amount equal to such fraction multiplied by the
Market Price per share of Common Stock on the business day immediately
preceding the date on which such shares of Series B Preferred Stock are
deemed to have been converted.
8.10. Adjustment of Conversion Ratio.
8.10.1. In case the Corporation shall at any time after
the date of issue of the Series B Preferred Stock (a) declare a
dividend or make a distribution on Common Stock payable in Common
Stock, (b) subdivide or split the outstanding Common Stock, (c)
combine or reclassify the outstanding Common Stock into a smaller
number of shares, (d) issue any shares of its capital stock in a
reclassification of Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Corporation is the continuing corporation), or (e)
consolidate with, or merge with or into, any other Person, the
Conversion Ratio in effect at the time of the record date for
such dividend or distribution or of the effective date of such
subdivision, split, combination, consolidation, merger or
reclassification shall be proportionately adjusted so that the
conversion of the Series B Preferred Stock after such time shall
entitle the holder to receive the aggregate number of shares of
Common Stock or other securities of the Corporation (or shares of
any security into which such shares of Common Stock have been
combined, consolidated, merged or reclassified pursuant to clause
(c), (d) or (e) above) which, if this Series B Preferred Stock
had been converted immediately prior to such time pursuant to
Section 8.1, such holder would have owned upon such conversion
and been entitled to receive by virtue of such dividend,
distribution, subdivision, split, combination, consolidation,
merger or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
8.10.2. In case the Corporation shall issue or sell
any rights, options, warrants or other securities convertible
into or exercisable or exchangeable for shares of Common Stock
(other than such securities issued (A) pursuant to the
Corporation's existing or future stock option plans or pursuant
to any other existing or future Common Stock-related director or
employee compensation plan or arrangement of the Corporation
approved by the Board of Directors or any committee thereof, (B)
as consideration for the acquisition of a business or of assets,
but only to the extent the aggregate consideration for all such
acquisitions consummated after the Closing Date, for which the
consideration per security determined as set forth below is less
than the Conversion Price on the date of the relevant issuance,
does not exceed $200,000,000, (C) to the Corporation's joint
venture partners in exchange for interests in the relevant joint
venture, (D) issued in connection with issuances of debt
registered under the Securities Act of 1933, as amended, or in a
transaction not requiring registration pursuant to Rule 144A
thereunder or (E) upon exercise or conversion of any security the
issuance of which caused an adjustment under Section 8.10.1,
8.10.3 or 8.10.4 hereof or the issuance of which did not require
adjustment thereunder), without consideration or for a
consideration per share of Common Stock determined by dividing
(i) the number of shares of Common Stock issuable upon exercise
or conversion of such rights, options, warrants or other
securities into (ii) the sum of (x) the consideration paid by the
holders thereof as consideration therefor and (y) the
consideration payable by the holders thereof to exercise or
convert which is less than the Conversion Price on the date of
such issuance, the Conversion Ratio to be in effect after such
issuance or sale shall be determined by multiplying the
Conversion Ratio in effect immediately prior to such issuance or
sale by a fraction, (1) the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately
prior to such issuance or sale (assuming the exercise or
conversion of securities exercisable for or convertible into
Common Stock) and the number of additional shares of Common Stock
issuable on exercise or conversion, and (2) the denominator of
which shall be the sum of (x) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale
(assuming the exercise or conversion of securities exercisable
for or convertible into Common Stock) and (y) the number of
shares of Common Stock which the aggregate consideration paid by
the holders thereof for the total number of additional shares of
Common Stock issuable on exercise or conversion (such
consideration to include both the consideration paid by the
holders thereof for all such securities and the additional
consideration payable by the holders thereof on exercise or
conversion of such securities) would purchase at the Conversion
Price on the date of such issuance. In case any portion of the
consideration to be received by the Corporation shall be in a
form other than cash, the fair market value of such noncash
consideration shall be utilized in the foregoing computation.
Such fair market value shall be determined in good faith by the
Board of Directors.
8.10.3. In case the Corporation shall issue or sell any
Common Stock (other than Common Stock issued (A) pursuant to the
Corporation's existing or future stock option plans or pursuant
to any other existing or future Common Stock-related director or
employee compensation plan or arrangement of the Corporation
approved by the Board of Directors or any committee thereof, (B)
as consideration for the acquisition of a business or of assets,
but only to the extent the aggregate consideration for all such
acquisitions consummated after the Closing Date, for which the
consideration per share is less than the Conversion Price on the
date of the relevant issuance, does not exceed $200,000,000, (C)
to the Corporation's joint venture partners in exchange for
interests in the relevant joint venture, (D) issued in connection
with issuances of debt registered under the Securities Act of
1933, as amended, or in a transaction not requiring registration
pursuant to Rule 144A thereunder, (E) upon conversion of the
Series B Preferred Stock, (F) upon exercise of conversion of any
security outstanding as of the Closing Date or (G) upon exercise
or conversion of any security the issuance of which caused an
adjustment under Section 8.10.1, 8.10.2 or 8.10.4 hereof or the
issuance of which did not require adjustment thereunder), without
consideration or for a consideration per share paid by the
holders thereof which is less than the Conversion Price on the
date of such issuance, the Conversion Ratio to be in effect after
such issuance or sale shall be determined by multiplying the
Conversion Ratio in effect immediately prior to such issuance or
sale by a fraction, (1) the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately
prior to such issuance or sale (assuming the exercise or
conversion of securities exercisable for or convertible into
Common Stock) and the number of additional shares of Common Stock
to be issued or sold and (2) the denominator of which shall be
the sum of (x) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale (assuming the exercise
or conversion of securities exercisable for or convertible into
Common Stock) and (y) the number of shares of Common Stock which
the aggregate consideration paid by the holders thereof for the
total number of additional shares of Common Stock so issued or
sold would purchase at the Conversion Price on the date of such
issuance. In case any portion of the consideration to be
received by the Corporation shall be in a form other than cash,
the fair market value of such noncash consideration shall be
utilized in the foregoing computation. Such fair market value
shall be determined in good faith by the Board of Directors.
8.10.4. In case the Corporation shall redeem or
repurchase Common Stock (other than Common Stock issued pursuant
to the Corporation's existing or future stock option plans or
pursuant to any other existing or future Common Stock-related
director or employee compensation plan or arrangement of the
Corporation approved by the Board of Directors or any committee
thereof) for a consideration per share greater than the Current
Market Value on the date of such redemption or repurchase (the
amount of such consideration per share in excess of such Current
Market Value is referred to as the "Excess Consideration"), the
Conversion Ratio to be in effect after such redemption or
repurchase shall be determined by multiplying the Conversion
Ratio in effect immediately prior to such redemption or
repurchase by a fraction, (1) the numerator of which shall be the
sum of the number of shares of Common Stock outstanding
immediately prior to such issuance or sale (assuming the exercise
or conversion of securities exercisable for or convertible into
Common Stock) and (2) the denominator of which shall be the
difference of (x) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale (assuming
the exercise or conversion of securities exercisable for or
convertible into Common Stock) minus (y) the number of shares of
Common Stock which the aggregate Excess Consideration for the
total number of shares of Common Stock so redeemed or repurchased
would purchase at the Current Market Value on the date of such
redemption or repurchase.
8.10.5. No adjustment to the Conversion Ratio pursuant
to Sections 8.10.1, 8.10.2, 8.10.3 or 8.10.4 above shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Ratio. No adjustment
to the Conversion Ratio pursuant to Sections 8.10.1, 8.10.2,
8.10.3 or 8.10.4 above shall be required in connection with the
issuance of any security, or the issuance of any security issued
upon conversion or exchange of any security, issued as a
distribution in accordance with Section 4.5. All calculations
under this Section 8.10 shall be made to the nearest four decimal
points.
8.10.6. All adjustments pursuant to this Section 8.10
shall be notified to the holders of the Series B Preferred Stock
and such notice shall be accompanied by a schedule of
computations of the adjustments.
9. Voting.
9.1. Except as otherwise required by law or as provided
herein and subject to the rights of any class or series of capital
stock of the Corporation that hereafter may be issued in compliance
with the terms of this Certificate of Designation, the shares of the
Series B Preferred Stock shall vote together with the shares of the
Corporation's Common Stock and any other shares of the Corporation's
stock which, by its terms, is entitled to vote together with the Common
Stock as a single class at any annual or special meeting of
stockholders of the Corporation, or may act by written consent in the
same manner as the Corporation's Common Stock, upon the following
basis: each holder of shares of Series B Preferred Stock shall be
entitled to such number of votes for the Series B Preferred Stock held
by such holder on the record date fixed for such meeting, or on the
effective date of such written consent, as shall be equal to the whole
number of shares of the Corporation's Common Stock issuable upon
conversion of all shares of Series B Preferred Stock held by such
holder immediately after the close of business on the record date fixed
for such meeting or the effective date of such written consent.
10. General Provisions. (a) The term "person" as used herein means
any corporation, limited liability Corporation, partnership, trust,
organization, association, other entity or individual.
(b) The term "outstanding," when used with reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation or a
subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs, clauses and
subclauses of this Certificate of Designation are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
(d) The holders of a majority of the outstanding shares of Series B
Preferred Stock may waive compliance by the Corporation with any provision
of, or a breach by the Corporation of any provision of, this Certificate of
Designation.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by _______________, [TITLE] of the
Corporation, this __ day of _______, 2000.
CTC COMMUNICATIONS GROUP, INC.
By______________________________
Name:
Title
EXHIBIT 10.1
CTC COMMUNICATIONS GROUP, INC.
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of March 22, 2000
INDEX
Page
SECTION 1. PURCHASE AND SALE OF SHARES 1
1.1. Sale of Shares at Closing 1
1.2. Closing. 1
1.3. Use of Proceeds. 2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
2.1. Organization 2
2.2. Subsidiaries 2
2.3. Authorization 3
2.4. No Conflicts; Approvals 3
2.5. Capitalization 4
2.6. Financial Statements; Financial Condition 4
2.7. SEC Reports. 4
2.8. Absence of Changes. 5
2.9. Litigation. 5
2.10. Conformity with Law 5
2.11. Governmental Regulations. 6
2.12. Brokers and Finders 6
2.13. Offering of Preferred Shares. 6
2.14. Material Contracts. 6
2.15. Intellectual Property. 6
2.16. ERISA. 7
2.17. Environmental Compliance. 7
2.18. Disclosure. 8
2.19. Taxes. 8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS 8
3.1. Organization and Standing 8
3.2. Noncontravention 9
3.3. Consents and Approvals 9
3.4. Broker 9
3.5. Authorization 9
3.6. Accredited Investors 9
3.7. Own Account 9
3.8. Transfer Restrictions 9
3.9. Private Placement 10
SECTION 4. CONDITIONS TO THE CLOSINGS 10
4.1. Conditions to the Obligations of Purchasers at Closing 10
4.2. Conditions of the Company's Obligations at Closing. 11
SECTION 5. CERTAIN AGREEMENTS OF THE PARTIES 12
5.1. Expenses 12
5.2. Maintenance of Corporate Existence and Properties. 12
5.3. Composition of Board of Directors. 13
5.3.7 Information Rights. 16
5.4. Standstill Agreement 17
5.5. Restrictions on Transfer and Conversion. 18
5.6. Consent Rights. 19
5.7. Tax Consistency. 21
SECTION 6. DEFINITIONS 21
6.1. Certain Matters of Construction 21
6.2. Cross Reference Table 22
6.3. Certain Definitions 22
SECTION 7. INDEMNIFICATION 27
7.1. Survival of Representations, Warranties and Indemnities 27
7.2. Indemnification 28
SECTION 8. GENERAL 28
8.1. Amendments, Waivers and Consents 28
8.2. Survival of Covenants; Assignment 28
8.3. Section Headings 29
8.4. Counterparts 29
8.5. Notices and Demands 29
8.6. Severability 30
8.7. Construction 31
8.8. Incorporation of Exhibits, Annexes and Schedules 31
8.9. Governing Law 31
8.10. Consent to Jurisdiction 31
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement is made as of March
22, 2000 by and among the following:
(i) CTC Communications Group, Inc., a Delaware corporation (the
"Company"); and
(ii) each of the Persons named in Exhibit A hereto (each, individually
a "Purchaser," and collectively, the "Purchasers").
Certain capitalized terms are used in this Agreement as specifically
defined herein. These definitions are set forth or referred to in Section 6
hereof.
WITNESSETH:
WHEREAS, on the conditions and subject to the terms set forth in this
Agreement, the Purchasers have agreed to invest $200,000,000 in the Company;
and
WHEREAS, the Company and the Purchasers wish to set forth their
understanding with respect to certain aspects of such investment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below, the parties hereto hereby agree as
follows:
PURCHASE AND SALE OF SHARES tc \l1 "PURCHASE AND SALE OF SHARES
Sale of Shares at Closing tc \l2 "Sale of Shares at Closing . The
Company shall adopt and file with the Secretary of State of Delaware on or
prior to the Closing (as defined in Section 1.2) a Certificate of Designation
in the form attached hereto as Exhibit B ("Certificate of Designation").
Subject to all of the terms and conditions of this Agreement, and based on
the representations and warranties contained herein, each Purchaser agrees,
severally, to purchase, and the Company agrees to issue and sell to each
Purchaser at the Closing, that number of shares of the Company's Series B
Preferred Stock set forth in the column opposite each Purchaser's name on
Exhibit A hereto at the per share purchase price of $1,000.00 (the "Purchase
Price"). The shares of Series B Preferred Stock sold to the Purchasers
pursuant to this Agreement are hereinafter referred to as the "Shares." The
Shares and the Common Stock issuable upon conversion of the Shares are
hereinafter collectively referred to as the "Securities."
Closing. tc \l2 "Closing. The purchase of Shares hereunder (the
"Closing") shall take place at the offices of Ropes & Gray, One International
Place, Boston, Massachusetts at 10:00 a.m., on the fifth day after the
satisfaction or waiver of the conditions set forth in Section 4 (other than
those that shall take place on the date of Closing), or at such other time
and place as the Company and the Majority Purchasers mutually agree upon. At
the Closing, the Company shall deliver to each Purchaser a certificate
representing the Shares which such Purchaser is purchasing at the Closing
against delivery to the Company by such Purchaser of a wire transfer of
immediately available United States funds in the amount of the purchase price
therefor.
Use of Proceeds. tc \l2 "Use of Proceeds. The proceeds paid to the
Company hereunder will be used to finance the build-out of the Company's
telecommunications network and for general corporate purposes.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY tc \l1 "REPRESENTATIONS AND
WARRANTIES OF THE COMPANY .
In order to induce the Purchasers to enter into and perform this
Agreement and to consummate the transactions contemplated hereby, the Company
hereby represents and warrants to each Purchaser that:
Organization tc \l2 "Organization . The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. The Company is duly authorized and qualified to carry on its
business and is in good standing in the jurisdictions and in the manner as
now conducted, except where the failure to be so authorized, qualified or in
good standing could not reasonably be expected to have a material adverse
effect on the business, operations, assets, properties or financial condition
of the Company and its Subsidiaries, taken as a whole (a "Material Adverse
Effect"). The Company has made available to the Purchasers a true, complete
and correct copy of each of the Company's charter and bylaws, each as in
effect on the date hereof before the filing of the Certificate of Designation
(collectively, the "Company Charter Documents"). The Company is not in
default under its charter documents or its bylaws in any material respect.
Subsidiaries tc \l2 "Subsidiaries . (a) The Company's Annual Report on
Form 10-K for the year ended March 31, 1999 and Schedule 2.2 set forth the
name and jurisdiction of incorporation of each Subsidiary of the Company.
Each Subsidiary of the Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary of the Company is duly authorized and
qualified to carry on its business and is in good standing in the
jurisdictions and in the manner as now conducted, except where the failure to
be so authorized, qualified or in good standing could not reasonably be
expected to have a Material Adverse Effect. The Company has made available
to the Purchasers true, complete and correct copies of the respective charter
and bylaws of each of its Subsidiaries, each as in effect on the date hereof
(collectively, the "Subsidiary Charter Documents"). None of the Subsidiaries
is in default under its charter documents or its bylaws in any material
respect.
(b) Except as set forth in Schedule 2.5.2, all of the outstanding
capital stock or other voting securities or other equity interests of each
Subsidiary of the Company is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other voting securities or other equity interests).
There are no outstanding (i) securities of the Company or any Subsidiary of
the Company convertible into or exchangeable for shares of capital stock or
voting securities or other equity securities of any Subsidiary of the Company
or (ii) options or other rights to acquire from the Company or any Subsidiary
of the Company, or other obligation of the Company or any Subsidiary of the
Company to issue, any capital stock, voting securities, other equity
interests or securities convertible into or exchangeable for capital stock or
voting securities or other equity interests of any Subsidiary of the Company
(the items in clauses (b)(i) and (b)(ii) being referred to collectively as
the "Subsidiary Securities"). There are no outstanding obligations of the
Company or any Subsidiary of the Company to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
Authorization tc \l2 "Authorization . The Company has the corporate
power and authority to enter into and perform this Agreement and the other
documents and instruments to be delivered pursuant to this Agreement, and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery by the Company of this and each other document and instrument to
which it is a party to be delivered pursuant to this Agreement and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action on the part of the Company. This Agreement and each other document
and instrument to which the Company is a party to be delivered pursuant to
this Agreement have been duly and validly executed and delivered by the
Company and each constitutes the legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors and
secured parties and general principles of equity regardless of whether
applied in a proceeding in equity or at law.
No Conflicts; Approvals tc \l2 "No Conflicts; Approvals .
Except as set forth on Schedule 2.4.1, neither the execution,
delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (a)
conflict with or result in a material breach of any provision of the Company
Charter Documents or the Subsidiary Charter Documents, (b) result in any
material conflict with or material breach of any of the terms, conditions or
provisions of, or default or event that with the passage of time would be a
material default (or give rise to any right to termination, cancellation or
acceleration or loss of any material right or benefit) under, any material
Contractual Obligation to which the Company or any of its Subsidiaries is a
party or by which it or its respective properties or assets is subject or
bound, (c) result in the imposition of a material Lien upon or with respect
to any assets of the Company or any of its Subsidiaries, or (d) violate in
any material respect any Legal Requirement applicable to the Company or any
of its Subsidiaries, or by which it or its properties or assets is subject or
bound.
Except as set forth on Schedule 2.4.2, no material authorization,
action, consent, approval or other order of, declaration to, or filing by the
Company with, any federal, state, municipal, foreign or other court or
governmental body or agency, or any other regulatory body, or any other
person or entity is required in connection with the valid and lawful
authorization, execution, delivery and performance by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
hereby.
Capitalization tc \l2 "Capitalization .
The authorized and issued capital stock of the Company and each
of its Subsidiaries is as set forth on Schedule 2.5.1. All shares of capital
stock of the Company and each of its Subsidiaries outstanding immediately
prior to the Closing are duly authorized, validly issued and fully paid and
non-assessable. When issued, sold and delivered in accordance with the terms
of this Agreement and the Certificate of Designation, the Securities will be
duly authorized, validly issued, fully paid, nonassessable and free and clear
of all Liens of any kind created by the Company.
Except as set forth in the Company Charter Documents or on
Schedule 2.5.1 or Schedule 2.5.2 and except as those not issued or contracted
for by the Company, there is no (i) warrant, right, option, conversion
privilege, stock purchase plan, call or other Contractual Obligation
obligating the Company to issue or sell any shares of capital stock, or (ii)
Contractual Obligation restricting the voting or transfer of any outstanding
shares of the Company's capital stock. Other than as set forth in the
Company Charter Documents or Schedule 2.5.2, (a) there are no existing rights
with respect to registration or sale or resale under the Securities Act of
1933, as amended (the "Securities Act"), of any securities of the Company and
(b) there are no preemptive rights (or similar rights) with respect to the
issuance or sale of the capital stock of the Company.
Financial Statements; Financial Condition tc \l2 "Financial Statements;
Financial Condition . The consolidated financial statements of the Company
(including any related schedules and notes thereto) included in the SEC
Reports have been prepared in accordance with generally accepted accounting
principals ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be noted in the notes thereto) and present fairly in
all material respects the consolidated financial condition of the Company and
its Subsidiaries at the respective dates thereof and the results of its
operations for the periods covered thereby in conformity with GAAP, except,
in the case of interim statements, for the absence of notes and year-end
adjustments. Except as set forth in Schedule 2.6 or in the SEC Reports, to
the knowledge of the Company, the Company does not have any material
Liability, except for Liabilities that have arisen after December 31, 1999 in
the Ordinary Course of Business of the Company and its Subsidiaries.
SEC Reports. tc \l2 "SEC Reports. The Company has filed all reports
and other documents required to be filed by it under the Exchange Act since
March 1, 1999 (collectively, the "SEC Reports"). Each SEC Report was on the
date of its filing (except if revised or superseded by a subsequent filing)
in compliance in all material respects with the requirements of its
respective report form and the Exchange Act and did not, on the date of
filing (except if revised or superseded by a subsequent filing), contain any
untrue statement of a material fact or omit 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, not misleading.
Absence of Changes. tc \l2 "Absence of Changes. Except as set forth
on Schedule 2.8 or as disclosed in the SEC Reports, since December 31, 1999
neither the Company nor any of its Subsidiaries has (a) suffered any change,
event or development or series of changes, events or developments which could
reasonably be expected to have a Material Adverse Effect or a materially
adverse effect on the ability of the Company to perform its obligations under
this Agreement or (b) received written notice of any Litigation or
governmental investigation that could reasonably be expected to have a
Material Adverse Effect.
Litigation. tc \l2 "Litigation. Except as set forth on Schedule 2.9
or as disclosed in the SEC Reports:
there is no claim, action, suit, investigation or proceeding
("Litigation") pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or involving any of their
respective properties or assets by or before any court, arbitrator or other
governmental authority which (a) challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement or
(b) if resolved adversely to the Company or any such Subsidiary could
reasonably be expected to have a Material Adverse Effect.
neither the Company nor any of its Subsidiaries is in material
default under or in material breach of any order, judgment or decree of any
court, arbitrator or other governmental authority, and neither the Company
nor any of its Subsidiaries is a party or subject to any order, judgment or
decree of any court, arbitrator or other governmental authority.
Conformity with Law tc \l2 "Conformity with Law ; Permits. Except as
set forth in Schedule 2.10 or as disclosed in the SEC Reports, neither the
Company nor any of its Subsidiaries is in default or noncompliance under any
applicable Legal Requirement, except where such default could not reasonably
be expected to have a Material Adverse Effect. The Company and each of the
Subsidiaries has all material certificates, franchises, permits, licenses,
consents, concessions, variances, exemptions, orders and other authorizations
of governmental, regulatory or administrative agencies or authorities,
whether foreign, federal, state or local, including without limitation all
material certificates, permits, licenses, authorizations or approvals from
the Federal Communications Commission and any state public utilities
commissions or agencies (collectively, "Permits"), required to own and
operate their properties and assets and to conduct their business as now
conducted. The Company and each of the Subsidiaries is in compliance with
the terms of the Permits, except to the extent that the failure to be in
compliance could not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary knows of any reason why any
governmental or regulatory authority might revoke any material Permits.
Governmental Regulations. tc \l2 "Governmental Regulations. Neither
the Company nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended; nor is the Company or any of its subsidiaries an
"investment company," or an "affiliated person" or a "principal underwriter"
of an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
Brokers and Finders tc \l2 "Brokers and Finders . Except for fees of
TD Securities (USA), Inc., which will be paid by the Company, neither the
Company nor any of its Subsidiaries nor any officer, director, or employee of
the Company or any of its Subsidiaries has incurred any Liabilities for any
financial advisory fees, brokerage fees, commissions or finder's fees in
connection with this Agreement or the transactions contemplated hereby.
Offering of Preferred Shares. tc \l2 "Offering of Preferred Shares.
Neither the Company nor any Person acting on its behalf has taken or will
take any action which could reasonably be expected to subject the offering,
issuance or sale of the Shares to the registration requirements of Section 5
of the Securities Act.
Material Contracts. tc \l2 "Material Contracts. Each of the
agreements, contracts, leases and commitments listed as an exhibit to the 10-
K, any of the 10-Qs or any Form 8-K filed with the Commission since March 31,
1999 (each, a "Material Contract") is a legal, valid and binding agreement of
the Company or a Subsidiary of the Company, as the case may be, and is in
full force and effect, and none of the Company, such Subsidiary or, to the
knowledge of the Company, any other party thereto is in default or breach, in
each case except for any such failure to be legal, valid and binding and any
such default or breach that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and, to the
knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder, except as could not reasonably be expected to have a Material
Adverse Effect.
Intellectual Property. tc \l2 "Intellectual Property. The Company and
each of its Subsidiaries owns, or has the legal right to use, all material
patents, patent applications, trademarks, trademark applications, tradenames,
copyrights, technology, know-how and processes and other intellectual
property rights necessary for each of them to conduct its business as
currently conducted (the "Intellectual Property"). Except as set forth in
Schedule 2.15, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Company know of any facts or circumstances that could provide a reasonable
basis for any such claim. Except as set forth in Schedule 2.15, to the
knowledge of the Company, the use of such Intellectual Property by the
Company and its Subsidiaries does not infringe on the rights of any Person,
except for such infringements which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
ERISA. tc \l2 "ERISA. Each member of the ERISA Group has fulfilled
its obligations, if any, under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all respects with the
presently applicable provisions of ERISA and the Code with respect to each
Plan to the extent the ERISA Group maintains such plans, except where the
failure to fulfill such obligations or to so comply could not reasonably be
expected to have a Material Adverse Effect. No member of the ERISA Group has
(a) sought a waiver of the minimum funding standards under Section 412 of the
Code in respect of any Plan, (b) failed to make any contribution or payment
to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement,
or made any amendment to any Plan or Benefit Arrangement, which has resulted
or could result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Code or (c) incurred any liability under Title IV
of ERISA other than a liability to the Pension Benefit Guaranty Corporation
for premiums under Section 4007 of ERISA, except in each case as could not
reasonably be expected to have a Material Adverse Effect.
Environmental Compliance. tc \l2 "Environmental Compliance.
No notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending, or to the Company's knowledge, threatened by any governmental or
other entity (i) with respect to any alleged material violation by the
Company or any of its Subsidiaries of any Environmental Law, (ii) with
respect to any alleged failure by the Company or any of its Subsidiaries to
have any material permit, certificate, license, approval, registration or
authorization required under any Environmental Law in connection with the
conduct of their businesses or (iii) with respect to any Regulated Activity
or any release, as defined in 42 U.S.C. 9601(22), of any Hazardous Substance,
which could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(i) Neither the Company nor any of its Subsidiaries has engaged
in any Regulated Activity other than in compliance in all material respects
with all applicable Environmental Laws and (ii) to the knowledge of the
Company, no release, as defined in 42 U.S.C. 9601(22), of any Hazardous
Substance has occurred at or on any property now or previously owned or
leased by the Company or any of its Subsidiaries which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
To the knowledge of the Company, there are no Environmental
Liabilities that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Disclosure. tc \l2 "Disclosure. This Agreement (taken as a whole
together with the schedules attached hereto), when read in conjunction with
the SEC Reports, does not contain any untrue statement of a material fact nor
does it omit to state a material fact necessary in order to make the
statements contained herein not misleading. The financial forecasts dated
February 28, 2000 furnished by the Company to the Purchasers were based upon
assumptions believed by the Company to be reasonable as of the date hereof,
but do not give effect to the transactions contemplated hereby, it being
understood that actual results may differ from such forecasts and such
differences may be material.
Taxes. tc \l2 "Taxes. Except as would not reasonably be expected to
have a Material Adverse Effect, (a) the Company and each of its Subsidiaries
has filed in accordance with applicable law, all material Tax returns, state-
ments, reports and forms (collectively, "Returns") required to be filed with
any Taxing Authority when due (taking into account any extension of a
required filing date); (b) at the time filed, such Returns were true, correct
and complete in all material respects; (c) the Company and each of its
Subsidiaries has timely paid all Taxes shown as due and payable on the
Returns that have been filed; (d) there is no action, suit, proceeding,
investigation, audit or claim pending or, to the knowledge of the Company,
threatened against or with respect to it in respect of any Tax; (e) neither
the Company nor any of its Subsidiaries has any obligation under any Tax
sharing agreement, Tax allocation agreement or Tax indemnity agreement or any
other agreement or arrangement in respect of any Tax with any Person other
than the Company or its Subsidiaries; (f) proper and adequate amounts have
been withheld by the Company and its Subsidiaries from their respective
employees and other Persons for all periods in compliance in all material
respects with the Tax, social security and unemployment, excise and other
withholding provisions of all federal, state, and local laws; (g) there is no
Tax lien, whether imposed by any federal, state, local, or foreign taxing
authority, outstanding against the assets, properties or business of the
Company or any of its Subsidiaries, other than any liens that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (h) the Company is not now and has not been within the
past five years, a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Treasury regulations thereunder.
REPRESENTATIONS AND WARRANTIES OF PURCHASERS tc \l1 "REPRESENTATIONS AND
WARRANTIES OF PURCHASERS
In order to induce the Company to enter into and perform this Agreement
and to consummate the transactions contemplated hereby, each Purchaser hereby
severally represents and warrants (solely as to itself) to the Company that:
Organization and Standing tc \l2 " Organization and Standing . Each
Purchaser is a corporation or other entity duly organized and validly
existing, and has the power and authority to execute and deliver this
Agreement and all other documents, certificates and instruments contemplated
hereby, and to carry out the transactions contemplated hereby and thereby.
Noncontravention tc \l2 "Noncontravention . The execution, delivery
and performance by each Purchaser of this Agreement and all other documents,
certificates and instruments contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and
the consummation by each Purchaser of the transactions contemplated hereby
and thereby do not and will not conflict with, or violate any provision of,
any legal requirement having applicability to such Purchaser.
Consents and Approvals tc \l2 "Consents and Approvals . Other than
filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
no consent, approval, authorization or determination of, or declaration,
filing or registration with, or other action by, any governmental entity or
any other person is required to be made or sought by a Purchaser in
connection with the execution, delivery and performance of this Agreement or
any other document, certificate or instrument executed or delivered pursuant
to this Agreement, and the consummation by such Purchaser of the transactions
contemplated hereby and thereby.
Broker tc \l2 "Broker . Each Purchaser represents that it has no
contract, arrangement or understanding with any broker, finder or similar
agent with respect to the transactions contemplated by this Agreement.
Authorization tc \l2 "Authorization . The execution, delivery and
performance of this Agreement, the Stockholders Agreement and the documents
and instruments executed pursuant hereto have been duly authorized by all
necessary action on the part of such Purchaser, and this Agreement and each
other document and instrument which it is required to deliver hereunder
constitutes the valid, legal and binding obligation of such Purchaser,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and secured parties and general
principles of equity regardless of whether applied in a proceeding in equity
or at law..
Accredited Investors tc \l2 "Accredited Investors . Such Purchaser is
an "accredited investor" as such term is defined under Rule 501 under the
Securities Act. The Purchaser's investment decisions are made by persons
having such knowledge and experience in business and financial matters as to
be capable of evaluating the merits and risk of the investment contemplated
hereby. The Purchaser is capable of bearing the economic risks associated
with the investment contemplated hereby.
Own Account tc \l2 "Own Account . The Purchaser is acquiring the
Securities for its own account, for investment, and not with a view to any
"distribution" thereof within the meaning of the Securities Act.
Transfer Restrictions tc \l2 "Transfer Restrictions . Such Purchaser
understands that the Securities are subject to certain restrictions on
transfers set forth herein and that the Company may, as a condition to a
permitted transfer of any of the Securities, require that the request for
transfer be accompanied by an opinion of counsel, in form and substance
reasonably satisfactory to the Company, to the effect that the proposed
transfer does not result in violation of the Securities Act, unless such
transfer is covered by an effective registration statement under the
Securities Act or by Rule 144(k) of the Securities Act. Such Purchaser
understands that each certificate representing the Securities will bear the
following legend or one substantially similar thereto:
The securities represented by this certificate were issued
in a private placement, without registration under the
Securities Act of 1933, as amended (the "Act"), and may not
be sold, assigned, pledged or otherwise transferred in the
absence of an effective registration under the Act covering
the transfer or an opinion of counsel, reasonably
satisfactory to the issuer, that registration under the Act
is not required.
Private Placement tc \l2 "Private Placement . Such Purchaser has been
advised that the Securities have not been and are not being registered under
the Securities Act, and that the Company in issuing the Securities is relying
upon, among other things, the representations and warranties of each
Purchaser contained in this Section 3 in concluding that the offer and sale
of the Securities shall be exempt from the provisions of Section 5 of the
Securities Act.
CONDITIONS TO THE CLOSINGS tc \l1 "CONDITIONS TO THE CLOSINGS .
Conditions to the Obligations of Purchasers at Closing tc \l2
"Conditions to the Obligations of Purchasers at Closing . The obligations of
each of the Purchasers under Section 1 of this Agreement to purchase Shares
at the Closing is subject to the fulfillment on or before the Closing of each
of the following conditions unless waived in accordance with Section 8.1:
Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the date of the Closing with the same
effect as though such representations and warranties had been made on and as
of the date of the Closing (other than representations and warranties that
specifically refer to a particular date) and the Purchasers shall have
received a certificate of an officer of the Company to that effect.
Performance. The Company shall have performed and complied in
all material respects with all agreements, obligations, and conditions
contained in this Agreement that are required to be performed or complied
with by it on or before the Closing.
Filing of Certificate of Designation. The Company shall have
filed with the Secretary of State of Delaware the Certificate of Designation
in the form attached hereto as Exhibit B and the Certificate of Designation
shall have become effective.
Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and
sale of the Shares to the Purchasers or the execution, delivery and
performance by the Company of this Agreement, including without limitation
the lapse of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), shall have been duly obtained and
shall be effective on and as of the Closing.
Opinion of Company Counsel. The Purchasers shall have received
from Ropes & Gray, counsel for the Company, an opinion customary for a
transaction of the type contemplated hereby and reasonably satisfactory to
the Purchasers covering organization, authorization, enforceability and
governmental approvals or filings (other than regulatory approvals and
filings, which will be addressed in an opinion of the Company's regulatory
counsel) except under the HSR Act.
Secretary's Certificate. The Secretary of the Company shall have
delivered to the Purchasers at the Closing a Certificate, dated as of the
Closing, certifying: (a) that attached thereto is a true and complete copy
of the by-laws of the Company as in effect on the date of such certification;
(b) that attached thereto is a true and complete copy of all resolutions
adopted by the board of directors of the Company authorizing the execution,
delivery and performance of this Agreement and the issuance, sale and
delivery of the Shares, and that all such resolutions are in full force and
effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; (c) that there are no amendments
to the Company's Certificate of Incorporation approved by the Stockholders of
the Company that have not been filed with the Secretary of State of Delaware
and (d) to the incumbency and specimen signature of certain officers of the
Company.
Registration Rights Agreement. The Company shall have executed
and delivered to the Purchasers a Registration Rights Agreement in the form
of Exhibit C.
No Prohibitions. No law or court order or order of any other
governmental authority shall exist which prohibits or prevents the
consummation of the transactions contemplated hereby.
Nasdaq Listing. The Company shall have listed with the Nasdaq
Stock Market the maximum number of shares of Common Stock issuable upon
conversion of the Preferred Stock pursuant to the Certificate of Designation
(other than shares issuable upon an adjustment pursuant to Section 8.10 of
the Certificate of Designation).
Board of Directors. The Company shall have taken all the steps
necessary to cause the individual designated pursuant to Section 5.3.2 to be
elected to the Board of Directors immediately after the Closing.
Conditions of the Company's Obligations at Closing. tc \l2 "Conditions
of the Company's Obligations at Closing. The obligations of the Company to
each Purchaser under this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions, the waiver of which
shall not be effective unless consented to in writing by the Company:
Representations and Warranties. The representations and
warranties of each Purchaser contained in Section 3 shall be true and correct
in all material respects on and as of the date of the Closing with the same
force and effect as though such representations and warranties had been made
on and as of such date and the Company shall have received a certificate of
an officer of each Purchaser to that effect.
Payment of Purchase Price. The Purchasers shall have delivered
the applicable purchase price specified in Section 1.
Performance. The Purchasers shall have performed and complied in
all material respects with all agreements, obligations, and conditions
contained in this Agreement that are required to be performed or complied
with by them on or before the Closing.
Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and
sale of the Shares to the Purchasers or the execution, delivery and
performance by the Company of this Agreement, including without limitation
the lapse of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, shall have been duly obtained and shall be
effective on and as of the Closing.
CERTAIN AGREEMENTS OF THE PARTIES tc \l1 "CERTAIN AGREEMENTS OF THE PARTIES
Expenses tc \l2 "Expenses . The Company shall pay all reasonable out-
of-pocket expenses incurred by the Purchasers with respect to the
negotiation, execution and delivery of this Agreement and the other documents
contemplated hereby, including, without limitation, the Purchasers'
reasonable legal, accounting and other out-of-pocket fees and expenses;
provided, however, that the Purchasers shall use their reasonable best
efforts to ensure that the maximum reimbursement obligation of the Company
pursuant to this Section 5.1 shall not exceed $350,000, excluding all filing
fees under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Fees"). The Purchasers shall provide estimates of all such expenses to the
Company approximately 72 hours prior to the Closing Date.
Maintenance of Corporate Existence and Properties. tc \l2 "Maintenance
of Corporate Existence and Properties. From the date hereof until the
Closing:
The Company and each of its Subsidiaries will at all times do or
cause to be done all things necessary to maintain, preserve and renew its
corporate charter and its leases, privileges, franchises, qualifications and
rights that are necessary in the ordinary conduct of its business as
presently conducted.
The Company and each of its Subsidiaries will provide or cause to
be provided for itself insurance with reputable insurers against loss or
damage of the kinds customarily insured against by corporations similarly
situated.
The Company and each of its Subsidiaries will keep true books of
records and accounts in which full and correct entries will be made of all
its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with
GAAP.
The Company and each of its Subsidiaries will comply in all
material respects with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, foreign countries, states
and municipalities and of any governmental department, commission, board,
regulatory authority, bureau, agency, and instrumentality of the foregoing,
and of any court, arbitrator or grand jury, in respect of the conduct of its
business and the ownership of its properties .
Composition of Board of Directors. tc \l2 "Composition of Board of
Directors.
If the Permitted Assignment does not occur, the following
provisions shall apply:
The Company shall take all necessary action (a) to elect
one nominee (a "Purchaser Nominee") of Credit Suisse
First Boston Equity Partners, L.P. ("CSFB USA") to
the Company's board of directors (the "Board")
effective immediately after the Closing and (b) as
soon as practicable after the CSFB Holders notify the
Company that they have become financial securities
holding companies, to elect an additional nominee
(also a "Purchaser Nominee") of CSFB USA to the
Board. One Purchaser Nominee shall be elected to the
class of directors whose term expires in 2001 (the
"2001 Class") and the other Purchaser Nominee shall
be elected to the class of directors whose term
expires in 2000 (the "2000 Class"). CSFB USA's right
to nominate nominees for election to the Board as set
forth in this Section 5.3.1(i) shall terminate as set
forth below. Upon any such termination, the term of
office of any director nominated by CSFB USA shall
terminate immediately and any such directors will
submit their resignations if requested by the
Company.
Subject to the final sentence of Section 5.3.1(i), until
the date the CSFB Holders no longer own a number of
shares of Preferred Stock or Common Stock greater
than or equal to 50% of the corresponding number of
shares of Preferred Stock issued hereunder on the
Closing Date (or Common Stock into which such
Preferred Stock was convertible), as adjusted as
appropriate to reflect stock splits, stock
combinations, stock dividends, stock
reclassifications or similar events, CSFB USA will
have the right to nominate one Purchaser Nominee for
each of the 2001 Class and the 2002 Class upon each
regular election of such classes of directors.
Subject to the final sentence of Section 5.3.1(i), in the
event the conditions of Section 5.3.1(ii) are no
longer satisfied, until the date the CSFB Holders no
longer own a number of shares of Preferred Stock or
Common Stock greater than or equal to 30% of the
corresponding number of shares of Preferred Stock
issued hereunder on the Closing Date (or Common Stock
into which such Preferred Stock was convertible), as
adjusted as appropriate to reflect stock splits,
stock combinations, stock dividends, stock
reclassifications or similar events, CSFB USA will
have the right to nominate one Purchaser Nominee for
the 2002 Class upon each regular election of such
class of directors. At the time when the condition
set forth in the preceding sentence is no longer
satisfied, the term of office of any director
nominated by CSFB USA shall terminate immediately and
any such directors will submit their resignations if
requested by the Company.
If a Permitted Assignment occurs, then the provisions of this
Section 5.3.2 shall apply: The Company shall take all necessary action (a)
subject to the following sentence to elect one nominee of CSFB USA (the "CSFB
Nominee") to the Company's Board effective immediately after the Closing,
(b) to elect one nominee of the Bain Holders (the "Bain Nominee") to the
Company's Board effective immediately after the Closing, and (c) to elect one
nominee of the THL Holders (the "THL Nominee") to the Company's Board
effective immediately after the Closing. Each of the CSFB Nominee, the Bain
Nominee and the THL Nominee is a "Purchaser Nominee." The CSFB Nominee must
be satisfactory to the Company in its sole discretion. The Bain Nominee
shall be elected to the class of directors whose term expires in 2002 (the
"2002 Class") and the THL Nominee and the CSFB Nominee shall be elected to
the class of directors whose term expires in 2000 (the "2000 Class"). CSFB
USA, the Bain Holders and the THL Holders, respectively, will have the right
to nominate its Purchaser Nominee for the 2000, 2002 and 2000 Class,
respectively, upon each regular election of such classes of directors. The
rights of each of CSFB USA, the Bain Holders and the THL Holders,
respectively, to nominate nominees for election to the Board as set forth in
this Section 5.3.2 shall terminate when the CSFB Holders, the Bain Holders or
the THL Holders, as the case may be, no longer owns a number of shares of
Preferred Stock or Common Stock greater than or equal to 50% of the
corresponding number of shares of Preferred Stock originally issued to the
CSFB Holders, the Bain Holders or the THL Holders, as the case may be, on the
Closing Date (or Common Stock into which such Preferred Stock was
convertible), as adjusted as appropriate to reflect stock splits, stock
combinations, stock dividends, stock reclassifications or similar events.
Upon any such termination, the term of office of any director nominated by
the party whose rights have terminated shall terminate immediately and any
such director will submit his or her resignation if requested by the Company.
If and whenever the Company fails to comply with the provisions
of Section 5.6 and has not cured such failure within 60 days of receipt by
the Corporation of notice from the holders of a majority of the Series B
Preferred Stock held by the CSFB Holders, the Bain Holders and the THL
Holders, the Company shall cause the total number of directors then
constituting the whole Board to increase by a number such that such holders
holding a majority of the Series B Preferred Stock held by CSFB Holders, the
Bain Holders and the THL Holders shall be entitled to nominate such number of
additional directors to serve on the Board so that after the election of such
nominees (also referred to as "Purchaser Nominees") such holders will have
nominated a majority of the members of the Board (including any directors
already serving on the Board who have been nominated by such holders as set
forth above) at any annual meeting of stockholders or special meeting held in
place thereof. Whenever any such failure to comply with the provisions of
Section 5.6 shall have been cured or waived by holders of a majority of the
Series B Preferred Stock held by CSFB Holders, the Bain Holders and the THL
Holders, then the right of the such holders to nominate such additional
directors shall cease, and the term of office of any person elected as
director pursuant to this Section 5.3.4 shall forthwith terminate and the
Company shall cause the total number of directors then constituting the whole
Board to be reduced to the number of directors constituting the whole Board
immediately prior to such increase in number.
CSFB USA, the Bain Holders, and the THL Holders shall each
appoint a representative (each a "Representative") to act on their behalf for
purposes of this Section 5.3 and the Company shall be entitled to rely and
act upon the instructions of such Representatives. The Representative shall
notify the Company in writing of the identity of the Purchaser Nominee for
election to the Board at the same time shareholder proposals are due as set
forth in the Company's proxy statement filed the preceding year for an
election year when the relevant parties have such a right, which notice shall
be conclusive evidence of the consent of such nominee to serve as a director
of the Company. In the event the Representative fails to provide such
notice, the then-serving Purchaser Nominee, subject to the Company's consent
right described in the second sentence of Section 5.3.2 with respect to the
CSFB Nominee, for the class of directors being elected shall be deemed to be
renominated. The notice shall include all information with respect to such
nominee as is required to be included in a proxy statement soliciting proxies
for the election of directors pursuant to Regulation 14A of the Exchange Act.
In each year when any party has such a right under this Section
5.3, the Company shall cause the Purchaser Nominee nominated by the
appropriate Representative for election to the Board to be included in the
slate of nominees presented by the Board to the stockholders of the Company
for election as directors at the relevant annual meeting of the stockholders,
and shall use reasonable efforts to cause the election of such Purchaser
Nominee, including soliciting proxies in favor of the election of such
Purchaser Nominee. The Company shall not solicit proxies of the stockholders
of the Company to vote against any Purchaser Nominee or for the approval of
any stockholder or other proposals that are inconsistent with the rights
afforded pursuant to this Section 5.3. In the event of any vacancy arising
by reason of the resignation, death, removal or inability of a Purchaser
Nominee to serve, the appropriate Representative shall notify the Company of
the individual to fill such vacancy, and the Company shall, subject to the
Company's consent right described in the second sentence of Section 5.3.2
with respect to the CSFB Nominee, use reasonable efforts to have such person
elected to serve until the next meeting of stockholders for the election of
directors of the Company. For so long as CSFB USA has the right to nominate
nominees for election to the Board as set forth in this Section 5.3, any
Finance Committee of the Board shall include the CSFB Nominee.
The Company shall use best efforts at all times to take such
action as is necessary to ensure that the Board nominates and presents to
stockholders the proposed election of the Purchaser Nominee. As a condition
precedent to the inclusion of any proposed nominee to be presented to
stockholders by the Board pursuant to this Section 5.3, the Board or, if
established, the nominating committee of the Board, may review the
information provided pursuant to Section 5.3.4 to evaluate in good faith such
nominee's character and fitness to serve as a director. If the Board or the
nominating committee, as the case may be, determines in good faith that any
such nominee lacks the character or fitness to serve as a director based on
applicable legal and reasonable commercial standards, the Board or the
nominating committee, as the case may be, shall inform the appropriate party
of such determination, and such party shall then have the right to propose an
alternative nominee.
Information Rights. tc \l2 "Information Rights.
So long as CSFB Holders own at least 50% of the shares of
Series B Preferred Stock issued to them on the
Closing Date (or Common Stock into which such
Preferred Stock was convertible), as adjusted as
appropriate to reflect stock splits, stock
combinations, stock dividends, stock
reclassifications or similar events, the Company
shall deliver to the CSFB Holders on a timely basis
(i) all information filed by the Company with the
Securities and Exchange Commission or otherwise
furnished or made available to its shareholders
generally (including, without limitation, copies of
all financial statements, reports, proxy statements
and any other information or reports so furnished or
made available), (ii) copies of management reports as
mutually agreed upon between CSFB USA's
Representative and the Company, and (iii) shall
provide reasonable access to management on a
quarterly basis to discuss, among other things,
quarterly results.
So long as Bain Holders own at least 50% of the shares of
Series B Preferred Stock issued to them on the
Closing Date (or Common Stock into which such
Preferred Stock was convertible), as adjusted as
appropriate to reflect stock splits, stock
combinations, stock dividends, stock
reclassifications or similar events, the Company
shall deliver to the Bain Holders on a timely basis
(i) all information filed by the Company with the
Securities and Exchange Commission or otherwise
furnished or made available to its shareholders
generally (including, without limitation, copies of
all financial statements, reports, proxy statements
and any other information or reports so furnished or
made available), (ii) copies of management reports as
mutually agreed upon between the Bain Holders'
Representative and the Company, and (iii) shall
provide reasonable access to management on a
quarterly basis to discuss, among other things,
quarterly results.
So long as THL Holders own at least 50% of the shares of
Series B Preferred Stock issued to them on the
Closing Date (or Common Stock into which such
Preferred Stock was convertible), as adjusted as
appropriate to reflect stock splits, stock
combinations, stock dividends, stock
reclassifications or similar events, the Company
shall deliver to the THL Holders on a timely basis
(i) all information filed by the Company with the
Securities and Exchange Commission or otherwise
furnished or made available to its shareholders
generally (including, without limitation, copies of
all financial statements, reports, proxy statements
and any other information or reports so furnished or
made available), (ii) copies of management reports as
mutually agreed upon between the THL Holders'
Representative and the Company, and (iii) shall
provide reasonable access to management on a
quarterly basis to discuss, among other things,
quarterly results.
Standstill Agreement tc \l2 "Standstill Agreement . (a) During the
period commencing on the date hereof and ending on the seventh anniversary of
the Closing Date (the "Standstill Period"), except as (x) specifically
permitted by this Agreement or (y) specifically approved in writing in
advance by the Board of Directors of the Company, the Purchasers shall not,
and shall cause any Controlled Affiliates to not, in any manner, directly or
indirectly, either individually or together with any person or persons acting
in concert of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act):
(i) acquire, or offer or agree to acquire, or become the beneficial
owner of or obtain any rights in respect of any capital stock of the Company,
except, for any shares of Common Stock that may be issuable upon the
conversion of the Preferred Stock or otherwise as permitted pursuant to this
Agreement, provided, that the foregoing limitation shall not prohibit the
acquisition of securities of the Company or any of its successors issued as
dividends or as a result of stock splits and similar reclassifications or
received in a consolidation, merger or other business combination in respect
of, in exchange for or upon conversion of Preferred Stock or Securities held
by the Purchasers or any of their Controlled Affiliates at the time of such
dividend, split or reclassification, consolidation or merger or business
combination;
(ii) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A under the
Exchange Act) of proxies or consents with respect to any voting securities of
the Company or any of its successors or initiate or become a participant in
any stockholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 under the Exchange Act) with respect to the Company or
any of its successors or induce others to initiate the same, or otherwise
seek to advise or influence any person with respect to the voting of any
voting securities of the Company or any of its successors (except for
activities undertaken by the Purchasers or Purchaser Nominees in connection
with solicitations by the Board of Directors);
(iii) publicly or privately propose, encourage, solicit or
participate in the solicitation of any person or entity to acquire, offer to
acquire or agree to acquire, by merger, tender offer, purchase or otherwise,
the Company or a substantial portion of its assets or more than 5% of the
outstanding capital stock (except in connection with the registration of
securities pursuant to the Registration Rights Agreement); or
(iv) directly or indirectly join in or in any way participate in a
pooling agreement, syndicate, voting trust or other similar arrangement with
respect to the Company's voting securities or otherwise act in concert with
any other Person (other than Controlled Affiliates), for the purpose of
acquiring, holding, voting or disposing of the Company's securities.
(b) Nothing contained in this Section 5.4 shall be deemed to restrict
the manner in which Purchaser Nominees participate in deliberations or
discussions of the Board of Directors or the exercise of rights under the
Registration Rights Agreement.
Restrictions on Transfer and Conversion. tc \l2 "Restrictions on
Transfer and Conversion. The Purchasers and subsequent holders of the
Securities will not sell, transfer, assign, convey, gift, mortgage, pledge,
encumber, hypothecate, or otherwise dispose of, directly or indirectly
("Transfer"), any of the Securities except for (i) Transfers between and
among the Purchasers and their Controlled Affiliates provided such Transfer
is done in accordance with the transfer restrictions applicable to the
Securities under federal and state securities laws and the Controlled
Affiliate transferee agrees to be bound by the restrictions applicable to
such Securities, including without limitation the agreements set forth in
this Section 5.5, (ii) Transfers to the Company in connection with any
conversion or redemption of the Preferred Stock, (iii) Transfers of Common
Stock permitted by, and consummated pursuant to, the Registration Rights
Agreement, (iv) Transfers of Common Stock or Preferred Stock pursuant to a
cash or stock merger or consolidation involving the Company as a constituent
corporation, (v) Transfers of Common Stock or Preferred Stock in connection
with a tender offer approved by the Board of Directors of the Company, (vi)
pro rata distributions to partners or members of the transferor, (vii) only
if the Permitted Assignment does not occur, Transfers by the Purchasers of up
to 50% of the shares of Preferred Stock issued on the Closing date, as
adjusted as appropriate to reflect stock splits, stock combinations, stock
dividends, stock reclassifications or similar events, with the prior written
consent of the Company which may be given or withheld by the Company in its
sole discretion, and (viii) Transfers to the public pursuant to Rule 144
under the Securities Act of 1933, as amended; provided, however, that
notwithstanding the foregoing the Purchasers and subsequent holders of the
Securities may Transfer Securities after the third anniversary of the Closing
Date in accordance with the transfer restrictions applicable to the
Securities under federal and state securities laws to any person other than
(x) a Person if a significant portion of the business engaged in by such
Person directly competes with the business of the Company or its Subsidiaries
or (y) a Person which is engaged in a significant business that directly
competes with the business of the Company or its Subsidiaries, but in each
case not including a Person who is a financial institution or investment fund
(i.e., not an operating company). Notwithstanding any other provision of this
Section 5.5, no Purchaser or subsequent holder of the Securities shall avoid
the provisions of this Section 5.5 by making one or more transfers to one or
more Affiliates and then disposing of all or any portion of such Purchaser's
or holder's interest in any such Affiliate. Each certificate evidencing any
Security shall bear a legend consistent with the foregoing.
Any attempted Transfer of Securities not permitted by this Section 5.5
shall be null and void, and the Company shall not in any way give effect to
any such impermissible Transfer.
Consent Rights. tc \l2 "Consent Rights.
So long as any shares of Series B Preferred Stock are
outstanding, without the written consent of holders of a majority of the
outstanding shares of Series B Preferred Stock, the Company shall not take
any of the following actions:
Increase or decrease the authorized number of shares of any
class of Senior Stock;
Create (by reclassification or otherwise) any new class or
series of Senior Stock;
Take any action that would result in the issuance by the
Company of any Senior Stock or any other equity
securities convertible into Senior Stock; or
Alter or change the rights, preferences or privileges of
the Series B Preferred Stock or amend or waive any of
the provisions of the Certificate of Incorporation of
the Company, as amended, or the By-laws of the
Company in any manner that would adversely affect the
rights, preferences, powers and privileges of the
Series B Preferred Stock.
So long as the CSFB Holders, the Bain Holders and the THL Holders
collectively own at least 30% of the shares of Series B Preferred Stock
issued on the Closing Date, as adjusted as appropriate to reflect stock
splits, stock combinations, stock dividends, stock reclassifications or
similar events, without the written consent of holders of a majority of the
outstanding shares of Series B Preferred Stock held by such holders, the
Company shall not take any of the following actions:
Increase or decrease the authorized number of shares of any
class or series of Parity Stock;
Create (by reclassification or otherwise) any new class or
series of Parity Stock;
Take any action that would result in the issuance by the
Company of any Parity Stock or any other equity
securities convertible into Parity Stock;
Engage in any Prohibited Merger;
Declare and pay any cash dividends or distributions to the
holders of shares of Common Stock;
Issue any debt securities if the proceeds to the Company of
all such issuances after the Closing Date exceed
$200,000,000;
Repurchase or redeem any Junior Stock at a repurchase or
redemption price per share above the Current Market
Value in effect on the date of such repurchase or
redemption, to the extent the aggregate repurchase or
redemption price of all such repurchases or
redemptions paid by the Company after the Closing
Date exceeds $50,000,000, other than any redemption,
purchase or other acquisition of shares of Common
Stock made pursuant to an employee incentive or
benefit plan or arrangement of the Company or any
subsidiary or other agreement or arrangement between
an employee and the Company or any subsidiary
approved by the Board of Directors or any committee
thereof; and
Enter into any Prohibited Transaction.
provided, however, that nothing contained in this Section 5.6
shall restrict the Company from authorizing or issuing Parity
Stock to the extent that the proceeds to the Company from all
such issuances after the Closing Date do not exceed $100,000,000.
Tax Consistency. tc \l2 "Tax Consistency. The Company and the
Purchasers confirm that the Series B Preferred Stock is intended to be
"common stock" for the purposes of Section 305 of the Code and agree not to
take any action inconsistent with such intention unless the Company
determines in good faith that there is no reasonable basis to take such
position.
DEFINITIONS tc \l1 "DEFINITIONS
For purposes of this Agreement:
Certain Matters of Construction tc \l2
"Certain Matters of Construction . In addition to the definitions referred
to as set forth below in this Section 6:
The words "hereof," "herein," "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement except as expressly provided in this
Agreement, and reference to a particular Section of this Agreement shall
include all subsections thereof.
The words "party" and "parties" shall refer to each of the
Purchasers and the Company.
Definitions shall be equally applicable to both the singular and
plural forms of the terms defined, and references to the masculine, feminine
or neuter gender shall include each other gender.
Accounting terms used herein and not otherwise defined herein are
used herein as defined by GAAP in the United States in effect as of the date
hereof.
Cross Reference Table tc \l2 "Cross Reference Table . The following
terms defined elsewhere in this Agreement in the Sections set forth below
shall have the respective meanings therein defined:
Term Section
Closing 1.2
Company Preamble Company Charter
Documents 2.1
GAAP 2.6
HSR Fee 5.1
Litigation 2.9
Material Adverse Effect 2.1
Permits 2.16
Permitted Assignment 8.2
Purchase Price 1.1
Purchaser(s) Preamble
Purchaser Nominee 5.3
Representative 5.3
Registration Rights Agreement 4.1.8
Securities 1.1
Securities Act 2.5.2
Shares 1.1
Subsidiary Charter Documents 2.2
Transfer 5.7
2002 Class 5.3
2001 Class 5.3
Certain Definitions tc \l2 "Certain Definitions . The following terms
shall have the following meanings:
"Affiliate" means, as to any specified Person at any time (i) any other
Person that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person (for the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise).
"Agreement" means this Series B Preferred Stock Purchase Agreement as
amended and in effect from time to time.
"Bain Holders" is defined in Section 8.2.
"Benefit Arrangement" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the
ERISA Group.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks are required or authorized to be closed for business in
Boston, Massachusetts or New York, New York.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's Common Stock, par value $0.01 per
share.
"Contractual Obligation" means, with respect to any Person, any written
contract, agreement, understanding, deed, mortgage, lease, license,
commitment, undertaking, arrangement or understanding or other document or
instrument including, without limitation, any document or instrument
evidencing or otherwise relating to any indebtedness but excluding the
charter and by-laws of such Person, to which or by which such Person is a
party or otherwise subject or bound.
"Controlled Affiliate" means, with respect to any Person, (i) any
Subsidiary of such Person, or (ii) any other Person over which such Person
has and exercises the actual power, through shareholdings, voting rights,
contract or otherwise, to direct the management or policies of such other
Person.
"CSFB Holders" means each of Credit Suisse First Boston Equity
Partners, L.P., Credit Suisse First Boston Equity Partners (Bermuda), L.P.,
Credit Suisse First Boston U.S. Executive Advisors, L.P., and EMA Private
Equity Fund 1999, L.P. and their respective Controlled Affiliates.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority
or other third party, whether now or hereafter in effect, relating to human
health and safety, the environment or to pollutants, contaminants, wastes or
chemicals or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials.
"Environmental Liabilities" means all liabilities of the Company and
each of its Subsidiaries, whether contingent or fixed, known or unknown,
which (i) arise under or relate to matters covered by Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Group" means the Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Company, are treated as a
single employer under Section 414 of the Code.
"Excepted Transaction" means any transaction pursuant to a contract or
agreement in existence on the Closing Date, the payment of fees and the
provision of indemnification and similar arrangements to directors, the
payment of consulting fees, the payment of employees' salaries and bonuses
and the reimbursement of employees' expenses and the provision of other
employee benefits, in each case in the Ordinary Course of Business of the
Company.
"Hazardous Substance" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, including, without
limitation, any substance regulated under Environmental Laws.
"Junior Stock" means all classes of Common Stock and each other class
of capital stock of the Company or series of preferred stock of the Company
established hereafter by the Board of Directors, the terms of which do not
expressly provide that such class or series ranks senior to, or on a parity
with, the Series B Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company.
"Legal Requirement" means any United States federal, state, local or
foreign law, statute, standard, ordinance, code, order, rule, regulation,
resolution or promulgation, or any order, judgment or decree of any
governmental authority, or any license, franchise, permit or similar right
granted under any of the foregoing, or any similar provision having the force
and effect of law.
"Liability" means any liability or obligation of any kind or nature
(whether known or unknown and whether asserted or unasserted).
"Lien" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, adverse claim, restriction on transfer
(excluding, in the case of property constituting a contract listed on a
schedule hereto and furnished to the Purchasers, restrictions on transfer of
the contract contained in the terms of the contract itself), conditional sale
or other title retention device or arrangement (including, without
limitation, a capital lease but excluding any lessor's interest in the leased
property under any operating lease), transfer for the purpose of subjection
to the payment of any indebtedness, or restriction on the creation of any of
the foregoing, whether relating to any property or right or the income or
profits therefrom; provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes to the extent that the payment thereof is not
in arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the use of real
property, if the same do not materially detract from the value of such
property or materially impair its use in the Company's business as currently
conducted, (iii) statutory or common law liens to secure landlords, lessors
or renters under leases or rental agreements confined to property on the
premises rented to the extent that no payment or performance under any such
lease or rental agreement is in arrears or is otherwise due, (iv) deposits or
pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated under
applicable Legal Requirements or other social security, and (v) statutory or
common law liens in favor of carriers, warehousemen, mechanics and
materialmen, statutory or common law liens to secure claims for labor,
materials or supplies and other like liens that secure obligations, to the
extent that payment thereof is not in arrears or otherwise due.
"Majority Purchasers" means Purchasers who hold a majority of the
outstanding Preferred Stock held by the Purchasers, determined by vote.
"Market Price" means, with respect to the Common Stock, on any given
day, (i) the price of the last trade, as reported on the Nasdaq Stock Market,
not identified as having been reported late to such system, or (ii) if the
Common Stock is so traded, but not so quoted, the average of the last bid and
ask prices, as those prices are reported on the Nasdaq Stock Market, or (iii)
if the Common Stock is not listed or authorized for trading on the Nasdaq
Stock Market or any comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If the Common Stock is not listed and traded in a manner that the
quotations referred to above are available for the period required hereunder,
the Market Price per share of Common Stock shall be deemed to be the fair
value per share of such security as determined in good faith by the Board.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period.
"Ordinary Course of Business" with respect to a Person means the
ordinary course of business in accordance with past practice of such Person.
"Parity Stock" means each class of capital stock of the Company or
series of preferred stock of the Company established hereafter by the Board
of Directors, the terms of which expressly provide that such class or series
will rank on a parity with the Series B Preferred Stock as to dividend rights
and rights on liquidation, winding-up and dissolution.
"Permitted Assignment" shall have the meaning set forth in Section 8.2.
"Person" means any individual, partnership, corporation, association,
trust, joint venture, unincorporated organization or other entity, and any
government, governmental department or agency or political subdivision
thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees
of any member of the ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person which was at
such time a member of the ERISA Group for employees of any Person which was
at such time a member of the ERISA Group.
"Prohibited Merger" means a consolidation by the Company with, or a
merger of the Company with or into, another person, or a consolidation by any
person with, or merger by any person with or into, the Company, in any such
event pursuant to a transaction in which (a) the Company is not the surviving
entity or (b) the Company is the surviving entity and immediately after such
transaction any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than holders of the outstanding voting
stock of the Company immediately prior to such transaction is the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of more than 25% of the total voting stock of the Company, in
each case other than reorganizations, recapitalizations, mergers or
consolidations of the Company immediately after which holders of the
outstanding voting stock of the Company immediately prior to such transaction
hold 100% of the outstanding voting stock of the surviving company or its
parent company.
"Prohibited Transaction" means any agreement or transaction with any
director, executive officer or holder of 10% or more of the outstanding
voting stock of the Company involving an obligation of the Company to pay an
amount in excess of $250,000 per year unless such agreement or transaction is
on a basis at least as favorable to the Company than would be the case if
such agreement or transaction had been effected with a party other than such
director, executive officer or holder of 10% or more of the outstanding
voting stock of the Company; provided, however, that "Prohibited Transaction"
shall not include any Excepted Transaction and shall not include any
transaction involving the acquisition of Comm-Tract Corp. or Comm-Tract Corp.
of New York.
"Senior Stock" means each class of capital stock of the Company or
series of preferred stock of the Company established hereafter by the Board
of Directors of the Company, the terms of which expressly provide that such
class or series will rank senior to the Series B Preferred Stock as to
dividend rights or rights on liquidation, winding-up and dissolution of the
Company.
"Stockholder" means any holder of shares of the Company's capital
stock.
"Subsidiary" means with respect to any Person: (a) any corporation at
least a majority of whose outstanding voting stock is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (b) any general partnership,
joint venture or similar entity, at least a majority of whose outstanding
partnership or similar interests shall at the time be owned by such Person,
or by one or more of its Subsidiaries, or by such Person and one or more of
its Subsidiaries, and (c) any limited partnership of which such Person or any
of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person.
"Tax" (and, with correlative meaning, "Taxes") shall include (i) any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
withholding on amounts paid by the Company or any of its Subsidiaries,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount due from,
or in respect of the Company or any of its Subsidiaries, as the case may be,
imposed by any governmental authority (a "Taxing Authority") responsible for
the imposition of any such tax (domestic or foreign) and (ii) any liability
of the Company or any of its Subsidiaries for the payment of any amount as a
result of being a party to any tax sharing agreement or with respect to the
payment of any amount of the type described in (i) as a result of any
existing express or implied agreement or arrangement (including, but not
limited to, an indemnification agreement or arrangement).
"THL Holders" is defined in Section 8.2.
INDEMNIFICATION tc \l1 "INDEMNIFICATION
Survival of Representations, Warranties and Indemnities tc \l2
"Survival of Representations, Warranties and Indemnities .
Representations, Warranties and Indemnities of the Company. All
of the representations and warranties of the Company contained herein and the
related indemnities of the Company for breach or inaccuracy of such
representations and warranties, shall survive the Closing and continue in
full force and effect until the first anniversary of the Closing Date. The
termination of any such representation and warranty, however, shall not
affect any claim for any breach of any representation or warranty if (i)
written notice thereof is given to the breaching party or parties prior to
such termination date, or (ii) such breach is a result of fraud or the
violation of any criminal law.
Representations, Warranties and Indemnities of the Purchasers.
All of the representations and warranties of the Purchasers contained in
Section 3 shall survive the Closing and shall continue in full force and
effect until the first anniversary of the Closing Date.
Indemnification tc \l2 "Indemnification .
The Company hereby agrees to indemnify each of the Purchasers
(each in its capacity as indemnified party, an "Indemnitee") and hold each of
the Purchasers harmless from, against and in respect of the following (herein
called a "Loss" or "Losses"): any and all actual and established damages,
deficiencies, claims, actions, charges, suits, proceedings, demands,
assessments, judgments, orders, decrees, awards, penalties, fines, amounts
paid in settlement, losses, costs, expenses, fees, obligations and
liabilities arising out of (i) any breach of or inaccuracy in any
representation or warranty made by the Company in this Agreement (including,
without limitation, the Schedules hereto) or (ii) any breach or violation of
any covenant or agreement made by or on behalf of the Company in this
Agreement (including, without limitation, the Schedules which relate to such
Sections).
Any amount paid by the Company or the Purchaser under Section
7.2.1 will be treated as an adjustment to the Purchase Price unless a final
determination causes any such amount not to constitute an adjustment to the
Purchase Price for Federal tax purposes.
GENERAL tc \l1 "GENERAL
Amendments, Waivers and Consents tc \l2 "Amendments, Waivers and
Consents . For the purposes of this Agreement and all agreements, documents
and instruments executed pursuant hereto, except as otherwise specifically
set forth herein or therein, no course of dealing between the Company and any
Purchaser and no delay on the part of any party hereto in exercising any
rights hereunder or thereunder shall operate as a waiver of the rights hereof
and thereof. No covenant or other provision hereof or thereof may be waived
otherwise than by a written instrument signed by the party so waiving such
covenant or other provision; provided, however, that except as otherwise
provided herein or therein, changes in or additions to, and any consents
required by this Agreement, and omissions or waivers of compliance with any
term, covenant, condition or provision set forth herein (either generally or
in a particular instance, and either retroactively or prospectively) may be
made by the written consent of the Majority Purchasers and the Company. Any
amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at
the time outstanding.
Survival of Covenants; Assignment tc \l2 "Survival of Covenants;
Assignment . All covenants, agreements, representations and warranties of
the Company made herein, except as provided otherwise in this Agreement,
shall survive the delivery of the Securities and shall bind the Company and
its successors and assigns, whether so expressed or not. This Agreement
shall not be assigned by operation of law or otherwise; provided, however,
that notwithstanding anything herein to the contrary, within 21 days of the
date of this Agreement, the CSFB Holders shall be permitted to assign (the
"Permitted Assignment") the right to purchase thirty-seven and one-half
percent (37.5%) of the shares of Series B Prefered Stock to be issued on the
Closing Date to funds managed by Bain Capital, Inc. (the "Bain Holders") and
thirty-seven and one-half percent (37.5%) of the shares of Series B Prefered
Stock to be issued on the Closing Date to Thomas H. Lee Partners, L.P. or its
affiliates (the "THL Holders"), but as a condition to the effectiveness of
any such assignment such assignees shall execute an instrument reasonably
satisfactory to the Company pursuant to which such assignees agree to be
bound by the terms and conditions of this Agreement as if they were
originally parties hereto.
Section Headings tc \l2 "Section Headings . The descriptive headings
in this Agreement have been inserted for convenience only and shall not be
deemed to limit or otherwise affect the construction of any provision thereof
or hereof.
Counterparts tc \l2 "Counterparts . This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed
and delivered shall be taken to be an original; but such counterparts shall
together constitute but one and the same document.
Notices and Demands tc \l2 "Notices and Demands . All notices,
requests, payments, instructions or other documents to be given hereunder
shall be in writing or by written telecommunication, and shall be deemed to
have been duly given if (i) delivered personally (effective upon delivery),
(ii) mailed by certified mail, return receipt requested, postage prepaid
(effective two (2) business days after dispatch), (iii) sent by a reputable,
established courier service that guarantees next business day delivery
(effective the next business day), or (iv) sent by telecopier followed within
twenty-four (24) hours by confirmation by one of the foregoing methods
(effective upon receipt of the telecopy in complete, readable form),
addressed as follows (or to such other address as the recipient may have
furnished for the purpose pursuant to this Section 8.5):
if to the Company, to:
CTC Communications Group, Inc.
220 Bear Hill Road
Waltham, MA 02451
(781) 890-1613
Attention: Chief Financial Officer
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Facsimile: (617) 951-7050
Attention: Mary E. Weber
and to:
Leonard R. Glass, Esq.
45 Central Avenue
Tenafly, New Jersey 07670
Facsimile: (201) 894-1718
if to the Purchasers, to them at the addresses set forth on the
signature pages hereto, with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-4000
Attention: Paul Kingsley
and if to a permitted assignee of a Purchaser, to its address as
designated to the Company in writing (or if none, to the last address of the
assignor given to the Company pursuant to this Section 8.5).
Severability tc \l2 "Severability . Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall
be deemed prohibited or invalid under such applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, and
such prohibition or invalidity shall not invalidate the remainder of such
provision or the other provisions of this Agreement.
Construction tc \l2 "Construction . The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The word "including" shall mean
including without limitation. The parties hereto intend that each
representation, warranty, and covenant contained herein shall have
independent significance. If any party hereto has breached any
representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating
to the same subject matter (regardless of the relative levels of specificity)
that the party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty, or
covenant.
Incorporation of Exhibits, Annexes and Schedules tc \l2 "Incorporation
of Exhibits, Annexes and Schedules . The exhibits, annexes and schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
Governing Law tc \l2 "Governing Law . This Agreement shall be governed
by and construed in accordance with the domestic substantive laws of the
State of New York without giving effect to any choice or conflict of laws
provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction.
Consent to Jurisdiction tc \l2 "Consent to Jurisdiction . Each party
to this Agreement, by its execution hereof, (a) hereby irrevocably submits to
the nonexclusive jurisdiction of the state courts of the Commonwealth of
Massachusetts and the State of New York in the Borough of Manhattan or the
United States District Court for the District of Massachusetts and the United
States District Court for the Southern District of New York for the purpose
of any action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or based upon
this Agreement or relating to the subject matter hereof, (b) hereby waives to
the extent not prohibited by applicable law, and agrees not to assert, and
agrees not to allow any of its subsidiaries to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property
is exempt or immune from attachment or execution, that any such proceeding
brought in one of the above-named courts is improper, or that this Agreement
or the subject matter hereof or thereof may not be enforced in or by such
court and (c) hereby agrees not to commence or maintain any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding
or investigation arising out of or based upon this Agreement or relating to
the subject matter hereof or thereof other than before one of the above-named
courts nor to make any motion or take any other action seeking or intending
to cause the transfer or removal of any such action, claim, cause of action
or suit (in contract, tort or otherwise), inquiry, proceeding or
investigation to any court other than one of the above-named courts whether
on the grounds of inconvenient forum or otherwise. Notwithstanding the
foregoing, to the extent that any party hereto is or becomes a party in any
litigation in connection with which it may assert indemnification rights set
forth in this agreement, the court in which such litigation is being heard
shall be deemed to be included in clause (a) above. Each party hereto hereby
consents to service of process in any such proceeding in any manner permitted
by Massachusetts or New York law, and agrees that service of process by
registered or certified mail, return receipt requested, at its address
specified pursuant to Section 8.5 hereof is reasonably calculated to give
actual notice.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument as of the day and year first above written.
The Company: CTC COMMUNICATIONS GROUP, INC.
By:________________________________
Name:
Title:
[Signatures continue on following page]
The Purchasers: The CSFB Holders:
CREDIT SUISSE FIRST BOSTON EQUITY PARTNERS, L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By:
Name:
Title:
Address for notices:
11 Madison Avenue
New York, NY 10010
Facsimile: (212) 325-2291
Attention: Hartley R. Rogers
Michael Schmertzler
CREDIT SUISSE FIRST BOSTON EQUITY PARTNERS (BERMUDA),
L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By:
Name:
Title:
Address for notices:
11 Madison Avenue
New York, NY 10010
Facsimile: (212) 325-2291
Attention: Hartley R. Rogers
Michael Schmertzler
CREDIT SUISSE FIRST BOSTON U.S. EXECUTIVE ADVISORS,
L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By:
Name:
Title:
Address for notices:
11 Madison Avenue
New York, NY 10010
Facsimile: (212) 325-2291
Attention: Hartley R. Rogers
Michael Schmertzler
EMA PRIVATE EQUITY FUND 1999, L.P.
By: Credit Suisse First Boston (Bermuda) Limited,
as General Partner
By:
Name:
Title:
Address for notices:
c/o Credit Suisse First Boston Advisory
Partners, LLC
11 Madison Avenue
New York, NY 10010
Facsimile: (212) 325-2291
Attention: Hartley R. Rogers
Michael Schmertzler
The Bain Holders:
BAIN CAPITAL FUND VI, L.P.
By: Bain Capital Partners VI, L.P., its general
partner
By: Bain Capital Investors VI, Inc., its
general partner
By:_______________________________
Name:
Title: Managing Director
BAIN CAPITAL VI COINVESTMENT FUND, L.P.
By: Bain Capital Partners VI, L.P., its general
partner
By: Bain Capital Investors VI, Inc., its
general partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP TRUST ASSOCIATES II
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II-B
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP TRUST ASSOCIATES II-B
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II-C
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
PEP INVESTMENTS PTY LTD.
By: Bain Capital, Inc., its attorney-in-fact
By:_______________________________
Name:
Title: Managing Director
BROOKSIDE CAPITAL PARTNERS FUND, L.P.
By:_______________________________
Name:
Title: Managing Director
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By:_______________________________
Name:
Title: Managing Director
SANKATY HIGH YIELD PARTNERS II, L.P.
By:_______________________________
Name:
Title: Managing Director
Address for notices:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Facsimile: (617) 572-3274
Attention:
with a copy to:
Skadden, Arps, Slate, Meagher & Flom,
L.L.P.
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Attention: Eric Cochran, Esq.
The THL Holders:
THOMAS H. LEE EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, L.L.C.
as General Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE FOREIGN FUND IV, L.P.
By: THL Equity Advisors IV, L.L.C.
as General Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE FOREIGN FUND IV-B, L.P.
By: THL Equity Advisors IV, L.L.C.
as General Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP
By:_______________________________
Name:
Title:
THOMAS E. LEE CHARITABLE INVESTMENT
LIMITED PARTNERSHIP
By: Thomas H. Lee
as General Partner
By:_______________________________
PUTNAM INVESTMENT HOLDINGS, LLC
By:_______________________________
Name:
Title:
1997 THOMAS H. LEE NOMINEE TRUST
By: State Street Bank and Trust Company, as
Trustee
__________________________________
Name:
Title:
__________________________________
DAVID V. HARKINS
__________________________________
THE HARKINS 1995 GIFT TRUST
__________________________________
SCOTT A. SCHOEN
__________________________________
C. HUNTER BOLL
___________________________________
SCOTT M. SPERLING
___________________________________
ANTHONY J. DINOVI
___________________________________
THOMAS M. HAGERTY
__________________________________
WARREN C. SMITH, JR.
__________________________________
SETH W. LAWRY
__________________________________
KENT R. WELDON
__________________________________
TERRENCE M. MULLEN
__________________________________
TODD M. ABBRECHT
__________________________________
CHARLES A. BRIZIUS
__________________________________
SCOTT L. JAECKEL
__________________________________
SOREN L. OBERG
__________________________________
THOMAS R. SHEPHERD
__________________________________
WENDY L. MASLER
__________________________________
ANDREW D. FLASTER
__________________________________
ROBERT SCHIFF LEE 1988 TRUST
__________________________________
STEPHEN ZACHARY LEE
__________________________________
CHARLES W. ROBINS AS CUSTODIAN
FOR JESSE LEE
__________________________________
CHARLES W. ROBINS AS CUSTODIAN
FOR NATHAN LEE
__________________________________
CHARLES W. ROBINS
__________________________________
JAMES WESTRA
Address for notices:
c/o Thomas H. Lee Company
75 State Street
Suite 2600
Boston, MA 02109
Facsimile: (617) 227-3514
Attention: Anthony DiNovi and Scott
Sperling
with a copy to:
Skadden, Arps, Slate, Meagher & Flom,
L.L.P.
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Attention: Eric Cochran, Esq.
Exhibit A
Purchasers
Shares
Purchaser at Closing
Credit Suisse First Boston 35,142.72982
Equity Partners, L.P.
Credit Suisse First Boston 9,823.29637
Equity Partners (Bermuda), L.P.
Credit Suisse First Boston 33.97381
U.S. Executive Advisors, L.P.
EMA Private Equity Fund 1999, L.P. 5,000.00000
Bain Capital Fund VI, L.P.* 35,092.857
Bain Capital Fund VI Coinvestment Fund, L.P.* 35,669.988
BCIP Associates II* 1.000
BCIP Trust Associates II* 1.000
BCIP Associates II-B* 1.000
BCIP Trust Associates II-B* 1.000
BCIP Associates II-C* 1.000
PEP Investments PTY Ltd.* 107.156
Brookside Capital Partners Fund, L.P.* 2,625.000
Sankaty High Yield Asset Partners, L.P.* 375.000
Sankaty High Yield Partners II, L.P.* 1,125.000
Putnam Investment Holdings, LLC 1,030.00
Thomas H. Lee Equity Fund IV, L.P. 62,650.00
1997 Thomas H. Lee Nominee Trust 742.00
David V. Harkins 221.00
The Harkins 1995 Gift Trust 25.00
Scott A. Schoen 184.00
C. Hunter Boll 184.00
Scott M. Sperling 184.00
Anthony J. DiNovi 184.00
Thomas M. Hagerty 184.00
Warren C. Smith, Jr. 184.00
Seth W. Lawry 77.00
Kent R. Weldon 51.00
Terrence M. Mullen 41.00
Todd M. Abbrecht 41.00
Charles A. Brizius 31.00
Scott L. Jaeckel 12.00
Soren L. Oberg 12.00
Thomas R. Shepherd 21.00
Wendy L. Masler 20.00
Andrew D. Flaster 17.00
Robert Schiff Lee 1988 Trust 50.00
Stephen Zachary Lee 50.00
Charles W. Robins as Custodian for Jesse Lee 25.00
Charles W. Robins as Custodian for Nathan Lee 25.00
harles W. Robins 20.00
James Westra 20.00
Thomas H. Lee Foreign Fund IV, L.P. 2,144.00
Thomas H. Lee Foreign Fund IV-B, L.P. 6,085.00
Thomas H. Lee Charitable Investment L.P. 407.00
Thomas H. Lee Investors Limited Partnership 79.00
TOTAL: 200,000.00000
*Prior to the Closing Date, the Bain Holders shall be permitted to reallocate
the 75,000 shares of Series B Preferred Stock they have agreed to purchase
among themselves in any manner whatsoever provided that the aggregate number
of shares to be purchased by the Bain Holders collectively shall equal
75,000. In order for the Bain Holders to reallocate such shares of Series B
Preferred Stock, they shall notify the Company in writing of the new
allocation prior to the Closing Date, and the number of shares to be
purchased by each Bain Holder at the Closing, as set forth on this Exhibit A,
shall be revised to reflect such new allocation.
EXHIBIT 10.2
EXHIBIT C
CTC COMMUNICATIONS GROUP, INC.
SERIES B PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of March __, 2000
REGISTRATION RIGHTS AGREEMENT
This Agreement (the "Agreement") is made as of _________, 2000 by and
among CTC COMMUNICATION GROUP, INC., a Delaware corporation (the "Company")
and the parties listed as Investors on Exhibit A hereto (the "Investors").
WHEREAS, the Company and the other parties hereto wish to provide
certain arrangements with respect to the registration of shares of Common
Stock of the Company under the Securities Act.
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained herein, the parties agree as follows:
Definitions tc \l3 "Definitions .
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange
Act.
"Common Stock" means the Common Stock, $0.01 par value of the Company.
"Closing Date" means _______, 2000
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations of the Commission thereunder, and any successor to such
statute or such rules and regulations.
"Form S-1", "Form S-3", "Form S-4" and "Form S-8" mean respective forms
under the Securities Act and any successor registration forms.
"Holder" means any person owning Registrable Securities or any assignee
thereof in accordance with Section 10 hereof.
"Initiating Holder" means, with respect to any registration of
securities of the Company, the holder or holders under the agreement pursuant
to which holder or holders first proposed registration of its securities and
exercised its right to initiate the registration of its securities for the
registration statement in question (i.e. by exercising its so called "demand"
rights).
"Majority Participating Holders" means, with respect to any
registration of Registrable Securities, the holder or holders at the relevant
time of at least a majority of the Registrable Securities to be included in
the registration statement in question.
"Preferred Stock" means the Company's Series B Convertible Preferred
Stock, $1.00 par value.
"Register", "registered", and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Securities Act, and the automatic effectiveness or the
declaration or ordering of effectiveness of such registration statement or
document.
"Registrable Securities" means (i) any Common Stock (including Common
Stock into which shares of Preferred Stock are convertible) issued or
issuable to a Purchaser under the Stock Purchase Agreement, or (ii) any
common stock or other securities issued or issuable with respect to any
Registrable Securities by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. Registrable Securities
shall cease to be Registrable Securities (i) when a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) when such securities shall
have been publicly distributed pursuant to an exemption from the registration
requirements of the Securities Act or (iii) when all of the Registrable
Securities held by a Holder could be sold under Rule 144 in a three (3) month
period. For purposes of this Agreement, the number of shares of Registrable
Securities outstanding at any time shall be determined by adding the number
of shares of Common Stock outstanding which are, and the maximum number of
shares of Common Stock issuable pursuant to then convertible or exercisable
securities which upon issuance would be, Registrable Securities.
"Registration Expenses" means all expenses incident to performance of
or compliance with Sections 2, 3 and 4 hereof by the Company, including
without limitation all registration and filing fees, all listing fees, all
fees and expenses of complying with securities or blue sky laws, all printing
and automated document preparation expenses, all messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
required by or incident to such performance and compliance, and the fees and
disbursements of one counsel for the Holders on whose behalf Registrable
Securities are being registered, but excluding underwriting discounts and
commissions and applicable transfer taxes, if any, which shall be borne by
the sellers of the Registrable Securities in all cases.
"Rule 144" means Rule 144 promulgated under the Securities Act, and any
successor rule or regulation thereto, and in the case of any referenced
section of such rule, any successor section thereto, collectively and as from
time to time amended and in effect.
"Securities Act" means the Securities Act of 1933 or any successor
federal statute, and the rules and regulations of the Commission thereunder,
and in the case of any referenced section of any such statute, rule or
regulation, any successor section thereto, collectively and as from time to
time amended and in effect.
"Stock Purchase Agreement" means the Series B Preferred Stock Purchase
Agreement dated _______ by and between the Company and the Holders.
Required Registrations.
Registration on Request tc \l3 "Registration on Request .
(i) At any time after the first anniversary of the Closing, one
or more Holders of a majority of then outstanding Registrable
Securities may, by written notice to the Company, request that
the Company effect the registration under the Securities Act of
not less than the lesser of 20% or $30 million of the then
outstanding Registrable Securities held by such Holders as a
group. If the Holders initiating such registration intend to
distribute the Registrable Securities in an underwritten
offering, they shall so state in their request. Promptly after
receipt of such notice, the Company will give written notice of
such requested registration to all other holders of Registrable
Securities. The Company will then use reasonable efforts to
effect the registration as promptly as possible under the
Securities Act of the Registrable Securities which the Company
has been requested to register by such Holders, and all other
Registrable Securities which the Company has been requested to
register by other Holders of Registrable Securities by notice
delivered to the Company within fifteen (15) days after the
giving of such notice by the Company.
(ii) If within twelve (12) months of the Closing Date Robert
Fabbricatore sells in excess of thirty percent (30%) of the total
number of shares of Common Stock beneficially owned by him
(including shares issuable upon the exercise or conversion of any
options, warrants, or other securities convertible into the
capital stock of the Company) as of the Closing Date, the Company
shall so notify the Holders and thereafter the Holders may
request in writing that the Company effect the registration under
the Securities Act of all or part of the Registrable Securities,
provided that such request is delivered prior to the later of (x)
the first anniversary of the Closing Date and (y) fifteen (15)
days following delivery by the Company of such notice.
Effective Registration. A registration requested pursuant to this
Section 2 shall not be deemed to be effected (i) if a registration statement
with respect thereto shall not have become effective, or (ii) if after it has
become effective, such registration is interfered with for any reason by any
stop order, injunction or other order or requirement of the Commission or any
other governmental agency or any court, and the result of such interference
is to prevent the Holder from disposing of the Registrable Securities to be
sold thereunder in accordance with the intended methods of disposition.
Underwriting. If the Holders so elect, the offering of Registrable
Securities pursuant to a registration request under this Section 2 shall be
in the form of an underwritten offering. The Company shall select the book-
running lead underwriter and any additional investment bankers and managers
in connection with the offering each of which shall be reasonably
satisfactory to the Holders.
Postponement tc \l3 "Effective Registration. A registration requested
pursuant to this Section 2 shall not be deemed to be effected (i) if a
registration statement with respect thereto shall not have become effective,
or (ii) if after it has become effective, such registration is interfered
with for any reason by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or any court,
and the result of such interference is to prevent the Holder from disposing
of the Registrable Securities to be sold thereunder in accordance with the
intended methods of disposition.Underwriting. If the Holders so elect, the
offering of Registrable Securities pursuant to a registration request under
this Section 2 shall be in the form of an underwritten offering. The Company
shall select the book-running lead underwriter and any additional investment
bankers and managers in connection with the offering each of which shall be
reasonably satisfactory to the Holders.Postponement and Suspension. The
Company may postpone the filing or the effectiveness of any registration
requested pursuant to this Section 2 for a period of up to ninety (90) days
if the Board of Directors of the Company in good faith determines that such
registration is likely to have an adverse effect on the Company; provided,
however, that the Company may not exercise such right of postponement more
frequently than one time in any twelve (12) month period. The Company may
suspend the effectiveness of any "shelf" registration statement if the Board
of Directors of the Company in good faith determines that such registration
is likely to have an adverse effect on the Company; provided, however, that
the Company may not suspend the effectiveness of any "shelf" registration
statement for more than a total of ninety (90) days.
Number of Requests; Form tc \l3 "Number of Requests; Form . The Company
shall not be required to effect more than three (3) registrations pursuant to
Section 2(a)(i). Each registration requested pursuant to Section 2(a) shall
be effected by the filing of a registration statement on Form S-1 or S-3, at
the Company's discretion; provided, that, if the Company elects Form S-3, it
will include such additional information that would have been required by
Form S-1 upon the reasonable request of the managing underwriter. The
Company shall not be required to effect more than one (1) registration under
this section 2 during any six (6) month period.
Payment of Expenses tc \l3 "Payment of Expenses . The Company hereby
agrees to pay, all Registration Expenses in connection with all registrations
effected pursuant to Section 2. However, the Company shall not be required
to pay for any expenses of such registration proceeding if the registration
request is withdrawn at any time at the request of the Majority Participating
Holders (in which case all participating Holders shall bear such expenses),
unless in the case of a registration requested pursuant to Section 2, the
Holders of a majority of the Registrable Securities agree to forfeit their
right to one demand registration pursuant to Section 2 at the time of any
such withdrawal, which forfeiture shall bind all holders of Registrable
Securities.
tc \l2 " Piggyback Registration.
If the Company at any time proposes to register any of its equity
securities under the Securities Act, for its own account or for the account
of any holder of its securities other than Registrable Securities (other than
on a Form S-4, S-8, or any form which not would permit registration of
Registrable Securities for sale to the public under the Securities Act), the
Company will each such time give written notice to all holders of Registrable
Securities. Any such holder may by written response delivered to the Company
within fifteen (15) days after the giving of any such notice request that all
or a specified part of the Registrable Securities held by such holder be
included in such registration. Such response shall also specify the intended
method of disposition of such Registrable Securities. The Company thereupon
will use reasonable efforts as a part of its filing of such form to effect
the registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by the holders of Registrable
Securities, to the extent required to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities
so to be registered. If any Holder wishes to register securities of the same
class or series as the Company or any other holder, such registration shall
be on the same terms and conditions as the registration of the Company's or
other holder's securities. The Company shall be under no obligation to
complete any offering of its securities it proposes to make and shall incur
no liability to any holder for its failure to do so.
Payment of Expenses. The Company hereby agrees to pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 3.
Registration Procedures tc \l2 "Registration Procedures . If and whenever the
Company is required to use reasonable efforts to effect the registration and
sale of any Registrable Securities under the Securities Act as provided in
Sections 2 or 3 hereof, subject to Section 2(c), the Company will use
reasonable efforts to:
Registration Statement tc \l3 "Registration Statement . Prepare and
(in the case of a registration pursuant to Section 2 hereof, promptly and in
any event within ninety (90) days after the end of the period within which
requests for registration may be delivered to the Company) file with the
Commission a registration statement with respect to such Registrable
Securities and use reasonable efforts to cause such registration statement to
become and remain effective. Such registration statement shall be for an
offering to be made on a continuous or delayed basis (a so-called "shelf"
registration statement) if the Company is eligible for the use thereof and
the Majority Participating Holders have requested a shelf registration
statement.
Amendments and Supplements to Registration Statement tc \l3 "Amendments
and Supplements to Registration Statement . Prepare 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 provisions of the
Securities Act with respect to the disposition of all Registrable Securities
and other securities, if any, covered by such registration statement until
the later of (i) such time as all of such Registrable 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 in no
event for a period of more than ninety (90) days after such registration
statement becomes effective, plus, in the case of a "shelf" registration, the
number of days for which the effectiveness of such registration was suspended
pursuant to Section 2(b)) or (ii) the expiration of the time when a
prospectus relating to such registration is required to be delivered under
the Securities Act.
Furnishing of Copies of Registration Statements and Other Documents tc
\l3 "Furnishing of Copies of Registration Statements and Other Documents .
Furnish to each seller 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, except that the
Company shall not be obligated to furnish any such seller with more than two
copies of such exhibits other than incorporated documents), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and any summary prospectus), each in conformity
with the requirements of the Securities Act, such documents incorporated by
reference in such registration statement or prospectus and such other
documents as such seller may reasonably request in order to facilitate the
disposition of its Registrable Securities covered by such registration
statement.
State Securities Laws tc \l3 "State Securities Laws . Use reasonable
efforts to register or qualify such Registrable Securities under such
securities or blue sky laws of such jurisdictions as the sellers shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable each seller to consummate the disposition in
such jurisdictions of its Registrable Securities covered by such registration
statement; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation or subject the Company to taxation in any jurisdiction in which
it is not so qualified.
Opinion of Counsel; Comfort Letter tc \l3 "Opinion of Counsel; Comfort
Letter . Use reasonable efforts to obtain all legal opinions, auditors'
consents and comfort letters as may be required in an underwritten offering,
including furnishing to any underwriter of such Registrable Securities (i) an
opinion of counsel for the Company and (ii) a "cold comfort" letter signed by
the independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially
the same matters as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.
Notice of Prospectus Defects tc \l3 "Notice of Prospectus Defects .
Notify each seller of 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 the light of the circumstances then
existing, and at the request of any such seller prepare and furnish to such
seller 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 Registrable 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 therein not
misleading in the light of the circumstances then existing.
After the filing of the registration statement, the Company will
promptly notify the registering Holders of any stop order issued or
threatened by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
General Compliance with Federal Securities Laws; Section 11(a) Earning
Statement tc \l3 "General Compliance with Federal Securities Laws;
Section 11(a) Earning Statement . Otherwise use reasonable efforts to comply
with the Securities Act, the Exchange Act and any other applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earning statement covering the period of
at least twelve (12) months after the effective date of such registration
statement, which earning statement shall satisfy Section 11(a) of the
Securities Act and any applicable regulations thereunder, including Rule 158.
Exchange Listing tc \l3 "Exchange Listing . Use reasonable efforts to
list such Registrable Securities on Nasdaq or on any securities exchange on
which any equity security of the Company is then listed.
Transfer Agent tc \l3 "Transfer Agent . Provide a transfer agent for
all such Registrable Securities not later than the effective date of such
registration statement.
Conversion only Upon Consummation of Offering. tc \l3 "Conversion only
Upon Consummation of Offering. No Holder shall be required by this
Agreement to convert any Registrable Security into Common Stock except at the
applicable closing or closings of an underwritten registered offering and
except upon the sale of such Registrable Security in the case of other
registered offerings.
Additional Procedures in Underwritten Offerings; Holder Lockups; Cutbacks
"Additional Procedures in Underwritten Offerings; Holder Lockups; Cutbacks .
Registrations Upon Request Pursuant to Section 2 tc \l3 "Registrations
Upon Request Pursuant to Section 2 . In the case of a registration pursuant
to Section 2 hereof, whenever the Majority Participating Holders shall
request that such registration shall be effected pursuant to an underwritten
offering, such registration shall be so effected, and only securities which
are to be distributed by the underwriters of that offering may be included in
such registration. If requested by such underwriters, the Company and each
participating seller will enter into an underwriting agreement with such
underwriters for such offering containing terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including, without limitation, indemnity and contribution.
(i) Cutbacks on Holder Demands. If the managing underwriter
advises the Holders requesting registration pursuant to Section
2(a) that the number of shares to be included in a registration
pursuant to Section 2(a) should be limited due to market
conditions, then the securities to be included in such
registration shall be reduced to the extent recommended by the
managing underwriter in the following order: (1) first,
securities proposed to be included by the Company or other
holders without rights to participate therein as determined by
the Company, (2) second, Common Stock of all holders with rights
to be included therein, except for those of the Holders, will be
excluded pro rata among all such Common Stock requested to be
included therein and (3) third, Registrable Securities of the
Holders, to be excluded pro rata based on the number of
Registrable Securities requested to be included therein by such
Holder (whether pursuant to Section 2 or Section 3 hereof).
b. Piggyback Registrations Pursuant to Section 3; Cutbacks tc \l3
"Piggyback Registrations Pursuant to Section 3; Cutbacks . In
connection with the exercise of any registration rights granted
to holders of Registrable Securities pursuant to Section 3
hereof, if the registration is to be effected by means of an
underwritten offering of Common Stock, the Company may condition
participation in such registration by such holders upon inclusion
of the Registrable Securities being so registered in such
underwriting and such holders executing such underwriting
agreements, questionnaires and related documents customarily
required of selling holders in an underwritten offering.
(i) Cutbacks on Company Registrations. If the managing
underwriter for an offering initiated by the Company shall advise
the Company in writing that the total amount of securities,
including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities to be
sold other than by the Company that can be successfully offered,
then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities,
which the managing underwriter believes will not jeopardize the
success of the offering. In such case, the securities so included
shall be reduced in the following order: (1) first, all securities
proposed to be included, except for those of the Company, will be
excluded pro rata among all such securities requested to be
included therein and (2) second, securities proposed to be
included by the Company.
(ii) Cutbacks on other Holders Demands. If the managing
underwriter for an offering initiated by a holder other than the
Holders or the Company shall advise the Company in writing that
the total amount of securities, including Registrable Securities,
requested by shareholders to be included in such offering exceeds
the amount of securities that can be successfully offered, then
the Company shall be required to include in the offering only that
number of such securities, including Registrable Securities, which
the managing underwriter believes will not jeopardize the success
of the offering. In such case, the securities so included shall
be reduced in the following order: (1) first, securities proposed
to be included by the Company or other holders without rights to
participate therein as determined by the Company, (2) second,
securities of all holders except for those of the Initiating
Holder, will be excluded pro rata among all such securities
requested to be included therein and (3) third, registrable
securities of the Initiating Holders pro rata on the basis set
forth in the applicable agreement.
c. Sellers Party to Underwriting Agreement tc \l3 "c. Sellers
Party to Underwriting Agreement . The holders of Registrable
Securities to be distributed in any underwritten offering shall be
parties to the underwriting agreement entered into by the Company
in connection therewith.
Holder Lockup Agreements in Connection with Public Offering
Each Holder agrees that
without the consent of the managing underwriter it will not, for a period of
ninety (90) days following the effective date of the registration statement
for any underwritten offering by the Company of its equity securities,
directly or indirectly sell, offer to sell, grant any option for the sale of,
or otherwise dispose of any common equity or securities convertible into
common equity, except (i) for the Registrable Securities sold pursuant to
such registration statement, and (ii) transfers to Controlled Affiliates (as
defined in the Stock Purchase Agreement), or as part of a pro rata
distribution to partners or members of such Holder (each of whom shall have
furnished to the Company and the managing underwriter their written consent
to be bound by this Section 6 during such lockup period).
Term . This Agreement shall terminate on the earlier of: (i) the date
all Registrable Securities hereunder have been registered and sold.
Indemnification and Contribution tc \l2 "Indemnification and Contribution .
Indemnities of the Company and the Issuer tc \l3 "Indemnities of the
Company and the Issuer . In the event of any registration of any Registrable
Securities under the Securities Act pursuant to Section 2 or 3 hereof, the
Company will, and hereby does, indemnify and hold harmless each seller of
Registrable Securities and each other Person, if any, who controls any such
seller within the meaning of Section 15 of the Securities Act (each such
Person being referred to herein as a "Covered Person"), against any losses,
claims, damages, liabilities or expenses joint or several, to which such
Covered Person may be or become subject under the Securities Act, the
Exchange Act, any other securities or other law of any jurisdiction, common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in any registration
statement under the Securities Act, any preliminary prospectus or final
prospectus included therein, or any related summary prospectus, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (ii) 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, and will reimburse such Covered Person for any legal
or any other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company shall not be liable to any Covered Person
in any such case for any such loss, claim, damage, liability, action or
proceeding (i) to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement or incorporated
document, in reliance upon and in conformity with written information
furnished to the Company or on behalf of such Covered Person expressly for
inclusion therein or (ii) such untrue statement or alleged untrue statement
or omission or alleged omission was contained in a preliminary prospectus and
corrected in a final or amended prospectus, and such Holder received and
failed to deliver a copy of the final or amended prospectus at or prior to
the confirmation of the sale of the Registrable Securities to the person
asserting any such loss, claim, damage or liability in any case in which such
delivery is required by the Securities Act. The indemnities of the Company
contained in this Section 8 shall remain in full force and effect regardless
of any investigation made by or on behalf of such Covered Person and shall
survive any transfer of Registrable Securities.
Indemnities to the Company tc \l3 "Indemnities to the Company . In the
event of any registration of Registrable Securities pursuant to Section 2 or
3, each selling Holder will, and hereby does, indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section 8(a) hereof)
the Company, and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, with respect to any statement in
or omission from such registration statement, any preliminary prospectus or
final prospectus included therein, or any amendment or supplement thereto, or
any document incorporated therein, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller expressly for inclusion therein,
provided that the Holder shall not be liable to the Company in any case in
which such untrue statement or alleged untrue statement or omission or
alleged omission was contained in a preliminary prospectus and corrected in a
final or amended prospectus, and the Company failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of
the securities to the person asserting any such loss, claim, damage or
liability in any case in which such delivery is required by the Securities
Act. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive any transfer of Registrable
Securities.
Indemnification Procedures tc \l3 "Indemnification Procedures .
Promptly after receipt by an indemnified party of notice of the commencement
of any action or proceeding involving a claim of the type referred to in the
foregoing provisions of this Section 8, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, give
written notice to each such indemnifying party of the commencement of such
action; provided, however, that the failure of any indemnified party to give
notice to such indemnifying party as provided herein shall not relieve such
indemnifying party of its obligations under the foregoing provisions of this
Section 8, except to the extent that such indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, each indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
such an indemnifying party), and after notice from an indemnifying party to
such indemnified party of its election so to assume the defense thereof, such
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof; provided, however, that (i) if the indemnified party
reasonably determines that there may be a conflict between the positions of
such indemnifying party and the indemnified party in conducting the defense
of such action or that there may be defenses available to such indemnified
party different from or in addition to those available to such indemnifying
party, then counsel for the indemnified party shall conduct the defense to
the extent reasonably determined by such counsel to be necessary to protect
the interests of the indemnified party and such indemnifying party shall
employ separate counsel for its own defense, (ii) in any event, the
indemnified party shall be entitled to have counsel chosen by such
indemnified party participate in, but not conduct, the defense and (iii) the
indemnifying party shall bear the legal expenses incurred in connection with
the conduct of, and the participation in, the defense as referred to in
clauses (i) and (ii) above and all such fees and expenses shall be reimbursed
as they are incurred. If, within a reasonable time after receipt of the
notice, such indemnifying party shall not have elected to assume the defense
of the action, such indemnifying party shall be responsible for any legal or
other expenses incurred by such indemnified party in connection with the
defense of the action, suit, investigation, inquiry or proceeding. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its consent, but if settled with such consent, or if there
be a final judgement for the plaintiff, the indemnifying party shall
indemnify and hold harmless such indemnified parties from and against any
loss or liability (to the extent stated above) by reason of such settlement
or judgement. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the indemnified party
subject to such proceeding of a release from all liability in respect to such
claim or litigation.
Contribution tc \l3 "Contribution . If the indemnification provided
for in Sections 8(a) or 8(b) hereof is unavailable to a party that would have
been an indemnified party under any such Section in respect of any losses,
claims, damages, liabilities or expenses (or actions or proceedings in
respect thereof) referred to therein, then each party that would have been an
indemnifying party thereunder shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or expenses (or actions
or proceedings in respect thereof) in such proportion as is appropriate to
reflect the relative fault of such indemnifying party on the one hand and
such indemnified party on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof). The relative fault 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 such indemnifying
party or such indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) 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 preceding sentence. The
amount paid or payable by a contributing party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(d) shall include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
Limitation on Liability of Holders of Registrable Securities tc \l3
"Limitation on Liability of Holders of Registrable Securities . The
liability of each Holder in respect of any indemnification or contribution
obligation of such holder arising under this Section 8 shall not in any event
exceed an amount equal to the proceeds to such Holder (after deduction of all
underwriters' discounts and commissions) from the disposition of the
Registrable Securities disposed of by such Holder pursuant to such
registration.
Reports Under Securities Exchange Act of 1934 tc \l3 "Reports Under Securities
Exchange Act of 1934 . With a view to making available to the Holders the
benefits of Rule 144 and any other rule or regulation of the SEC that may at
any time permit a Holder to sell securities of the Company to the public
without registration, and with a view to making it possible for Holders to
register the Registrable Securities pursuant to a registration on Form S-3,
the Company agrees to:
(a) use reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
and
(b) use reasonable efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
Assignment of Registration Rights. The
rights to cause the Company to register Registrable Securities pursuant to
Sections 2 and 3 may be assigned by any Holder to a permitted transferee, and
by such transferee to a subsequent permitted transferee, but only if such
rights are transferred (a) to Controlled Affiliate (as defined in the Stock
Purchase Agreement), (b) as part of a pro rata distribution to partners or
members of such Holder or (c) in connection with the sale or other transfer
of not less than an aggregate of 200,000 Registrable Securities or some
lesser number, if such lesser number represents all the Registrable
Securities then held by such Holder. Any transferee to whom rights under
this Agreement are transferred shall (i) as a condition to such transfer,
deliver to the Company a written instrument by which such transferee agrees
to be bound by the obligations imposed upon Holders under this Agreement to
the same extent as if such transferee were a Holder under this Agreement and
(ii) be deemed to be a Holder hereunder.
Notices. All notices, requests, consents and demands shall be in
writing and shall be personally delivered, mailed, postage prepaid,
telecopied or telegraphed or delivered by any nationally recognized overnight
delivery service to the Company at:
CTC Communications Group, Inc.
360 Second Avenue
Waltham, MA 02154
Attention: President
Facsimile No.: 617-890-1613
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attn: Mary Weber, Esq.
Fax No.: (617) 951-7050
to each Investor at its address set forth on Exhibit A hereto with a
copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-4000
Attention: Paul Kingsley
or such other address as may be furnished in writing to the other
parties hereto. All such notices, requests, demands and other
communication shall, when mailed (registered or certified mail,
return receipt requested, postage prepaid), personally delivered, or
telegraphed, be effective four days after deposit in the mails, when
personally delivered, or when delivered to the telegraph company,
respectively, addressed as aforesaid, unless otherwise provided
herein and, when telecopied or delivered by any nationally
recognized overnight delivery service, shall be effective upon
actual receipt.
Entire Agreement tc \l3 "Entire Agreement . This Agreement and the Stock
Purchase Agreement constitute the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede
any and all prior understandings and agreements, whether written or
oral, with respect to such subject matter.
Amendments, Waivers and Consents tc \l3 "Amendments, Waivers and Consents .
Any provision in this Agreement may be made, and the observance
thereof may be waived, if the Company (a) shall obtain consent
thereto in writing from persons holding a majority of the Registrable
Securities then outstanding and (b) shall deliver copies of such
consent to any Holders who did not execute the same.
Binding Effect; Assignment tc \l3 "Binding Effect; Assignment . This
Agreement shall be binding upon and inure to the benefit of the
personal representatives, successors and assigns of the respective
parties hereto. Notwithstanding the foregoing sentence, the Company
shall not have the right to assign its obligations hereunder or any
interest herein without obtaining the prior written consent of the
Holders holding a majority of the Registrable Securities then
outstanding, provided in accordance with Section 13.
General. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.
Severability. If any provision of this Agreement shall be found by any
court of competent jurisdiction to be invalid or unenforceable, the
parties hereby waive such provision to the extent that it is found to
be invalid or unenforceable. Such provision shall, to the maximum
extent allowable by law, be modified by such court so that it becomes
enforceable, and, as modified, shall be enforced as any other
provision hereof, all the other provisions hereof continuing in full
force and effect.
Counterparts. This Agreement may be executed in counterparts, all of which
together shall constitute one and the same instrument.
[Remainder of the page intentioanlly left blank]
IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement as of the date and year first above written.
The Company: CTC COMMUNICATIONS GROUP, INC.
By: _________________________
Name:
Title:
The Investors: CREDIT SUISSE FIRST BOSTON EQUITY PARTNERS, L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By: _________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON EQUITY PARTNERS (BERMUDA),
L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By: _________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON U.S. EXECUTIVE ADVISORS, L.P.
By: Credit Suisse First Boston Advisory
Partners, LLC, as Investment Advisor
By: _________________________
Name:
Title:
EMA PRIVATE EQUITY FUND 1999, L.P.
By: Credit Suisse First Boston (Bermuda) Limited, as
General Partner
By: _________________________
Name:
Title:
The Bain Funds:
BAIN CAPITAL FUND VI, L.P.
By: Bain Capital Partners VI, L.P., its general
partner
By: Bain Capital Investors VI, Inc., its general
partner
By:_______________________________
Name:
Title: Managing Director
BAIN CAPITAL VI COINVESTMENT FUND, L.P.
By: Bain Capital Partners VI, L.P., its general
partner
By: Bain Capital Investors VI, Inc., its general
partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP TRUST ASSOCIATES II
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II-B
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP TRUST ASSOCIATES II-B
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
BCIP ASSOCIATES II-C
By: Bain Capital, Inc., its Managing Partner
By:_______________________________
Name:
Title: Managing Director
PEP INVESTMENTS PTY LTD.
By: Bain Capital, Inc., its attorney-in-fact
By:_______________________________
Name:
Title: Managing Director
BROOKSIDE CAPITAL PARTNERS FUND, L.P.
By:_______________________________
Name:
Title: Managing Director
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By:_______________________________
Name:
Title: Managing Director
SANKATY HIGH YIELD PARTNERS II, L.P.
By:_______________________________
Name:
Title: Managing Director
The TH Lee Investors:
THOMAS H. LEE EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, L.L.C. as General
Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE FOREIGN FUND IV, L.P.
By: THL Equity Advisors IV, L.L.C. as General
Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE FOREIGN FUND IV-B, L.P.
By: THL Equity Advisors IV, L.L.C. as General Partner
By:_______________________________
Name:
Title:
THOMAS H. LEE INVESTORS LIMITED PARTNERSHIP
By:_______________________________
Name:
Title:
THOMAS E. LEE CHARITABLE INVESTMENT LIMITED
PARTNERSHIP
By: Thomas H. Lee
as General Partner
By:_______________________________
1997 THOMAS H. LEE NOMINEE TRUST
By: State Street Bank and Trust Company, as
Trustee
By:__________________________________
Name:
Title:
__________________________________
DAVID V. HARKINS
__________________________________
THE HARKINS 1995 GIFT TRUST
__________________________________
SCOTT A. SCHOEN
__________________________________
C. HUNTER BOLL
___________________________________
SCOTT M. SPERLING
___________________________________
ANTHONY J. DINOVI
___________________________________
THOMAS W. HAGERTY
__________________________________
WARREN C. SMITH, JR.
__________________________________
SETH W. LAWRY
__________________________________
KENT R. WELDON
__________________________________
TERRENCE M. MULLEN
__________________________________
TODD M. ABBRECHT
__________________________________
CHARLES A. BRIZIUS
__________________________________
SCOTT L. JAECKEL
__________________________________
SOREN L. OBERG
__________________________________
THOMAS R. SHEPHERD
__________________________________
WENDY L. MASLER
__________________________________
ANDREW D. FLASTER
__________________________________
ROBERT SCHIFF LEE 1988 TRUST
__________________________________
STEPHEN ZACHARY LEE
__________________________________
CHARLES W. ROBINS AS CUSTODIAN
FOR JESSE LEE
__________________________________
CHARLES W. ROBINS AS CUSTODIAN
FOR NATHAN LEE
__________________________________
CHARLES W. ROBINS
__________________________________
JAMES WESTRA
PUTNAM INVESTMENT HOLDINGS, LLC.
By:_______________________________
Name:
Title:
Exhibit A
NAMES AND ADDRESSES OF INVESTORS
Name Address
The Bain Investors:
5. Bain Capital Fund VI, L.P. c/o
6. Bain Capital VI Coinvestment Fund, L.P. Bain Capital, Inc.
7. BCIP Associates II Two Copley Place
8. BCIP Trust Associates II Boston, Ma 02116
9. BCIP Associates II-B Facsimile: (617) 572-3274
10. BCIP Trust Associates II-B
11. BCIP Associates II-C
12. PEP Investments Pty Ltd.
13. Brookside Capital Partners Fund, L.P.
14. Sankaty High Yield Asset Partners, L.P.
15. Sankaty High Yield Partners II, L.P.
with a copy to:
Skadden, Arps, Slate,
Meagher & Flom, L.L.P.
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Attention: Eric Cochran, Esq.
Name Address
The THL Investors:
16. Thomas H. Lee Equity Fund IV, L.P. c/o
17. Thomas H. Lee Foreign Fund IV, L.P. Thomas H. Lee Company
18. Thomas H. Lee Foreign Fund IV-B, L.P. 75 State Street
19. Thomas H. Lee Investors Limited Suite 2600
Partnership Boston, MA 02109
20. Thomas E. Lee Charitable Facsimile: (617) 227-3514
Investment Limited Partnership Attention: Anthony DiNovi
21. 1997 Thomas H. Lee Nominee Trust and Scott Sperling
22. David V. Harkins
23. The Harkins 1995 Gift Trust
24. Scott A. Schoen
25. C. Hunter Boll
26. Scott M. Sperling
27. Anthony J. Dinovi
28. Thomas W. Hagerty
29. Warren C. Smith, Jr.
30. Seth W. Lawry
31. Kent R. Weldon
32. Terrence M. Mullen
33. Todd M. Abbrecht
34. Charles A. Brizius with a Copy To:
35. Scott L. Jaeckel Skadden, Arps, Slate,
36. Soren L. Oberg Meagher & Flom, L.l.p.
37. Thomas R. Shepherd Four Times Square
38. Wendy L. Masler New York, New York 10036
39. Andrew D. Flaster Facsimile: (212) 735-2000
40. Robert Schiff Lee 1988 Trust Attention: Eric Cochran, Esq.
41. Stephen Zachary Lee
42. Charles W. Robins as Custodian
for Jesse Lee
43. Charles W. Robins as Custodian
for Nathan Lee
44. Charles W. Robins
45. James Westra
46. Putnam Investment Holdings, Llc.
EXHIBIT 99.1
Bain Capital, Thomas H. Lee Partners and CSFB Private Equity Invest $200
Million of Strategic Equity in CTC Communications Group - 03/29/2000
- - -Leading Industry Investment Firms Fuel CTC's Accelerated Marketing and
Technology Initiatives-
WALTHAM, Mass., March 29, 2000-CTC Communications Group Inc. (NASDAQ:CPTL)-
a rapidly expanding provider of state-of-the-art integrated communications
solutions for medium-to-large enterprises in the Northeast United States-
today announced that Bain Capital Inc., Thomas H. Lee Partners, L.P. and
CSFB Private Equity will participate in its previously announced $200
million preferred stock financing. The $200 million will be used by the
Company to fund strategic marketing and technology initiatives that form
the cornerstones of CTC's accelerated business plan.
The investment is in the form of 8.25% Series B convertible preferred stock
which converts to common stock at $50.00 per share, a 7.5 % premium to
CTC's 30-day trailing average stock price on March 23, 2000.
Bain Capital and Thomas Lee will each invest $75 million and CSFB Private
Equity will invest $50 million. Under the terms of the agreement, Bain
Capital, Thomas H. Lee Partners and CSFB Private Equity each have the right
to designate a member to CTC's Board of Directors. Toronto Dominion
Securities acted as exclusive advisor and placement agent to CTC
Communications Group Inc. and its Board of Directors in this transaction.
The closing of this agreement is subject to receiving certain regulatory
approvals.
Commenting on the investment, CTC's Chairman and CEO Robert J. Fabbricatore
said, "I am pleased to welcome our preeminent new partners to the CTC
family. We look forward to their strategic contributions to the continued
growth of our business and the enhancement of CTC shareholder value. This
investment, by such notable firms, underscores CTC's mission to create a
new, highly successful paradigm in converged business communications that
is second to none."
With regard to use of the additional funds, Mr. Fabbricatore added, "This
$200 million in equity will provide capital for CTC to pursue strategic
marketing and technology initiatives that we believe will further leverage
our Integrated Communications Network, expand our reach even closer to the
customer premises, increase the Company's overall market penetration and
fuel profitable growth."
Bain Capital Managing Director, Mark Nunnelly, said, "We are pleased to be
able to invest in one of the country's leading providers of advanced data
and voice services. CTC possesses one of the best and most experienced
management and technical teams in the industry, providing it with the
leadership necessary to sustain and profitably manage its rapid growth."
"CTC has coupled its market leading presence with one of the most advanced
integrated data/voice networks in the country" said Scott Sperling, Thomas
H. Lee Managing Director. "This combination allows the Company to provide
the lowest cost, yet highest quality, offering in the market, giving
customers a package of data, Internet, and voice services and technology
without match."
Michael Schmertzler, Managing Director and Co-Head of CSFB Private Equity's
U.S. Group, said, "CTC has built an extremely impressive, customer-focused
organization and is poised to become a market leader. We are excited by the
opportunity to partner with the CTC management team and are committed to
helping the company realize its vision."
About Bain Capital Inc.
Bain Capital is a private investment firm with offices in Boston, London,
New York and San Francisco. Since its founding in 1984, Bain Capital has
made over 120 acquisitions and significant equity investments. Recent
communications industry investments include Advanced Telecommunications,
Inc., a competitive local exchange carrier focused on Tier I and II markets
in the Midwest and West, and Clarity Telecommunications, a centrex and long
distance reseller. Bain Capital manages several pools of capital, which in
aggregate exceed $6.5 billion.
About Thomas H. Lee Partners, L.P.
THL is a Boston-based private investment firm, managing over $6 billion of
capital, focused on identifying and taking substantial equity positions in
growth-oriented companies through recapitalizations, direct investments and
leveraged acquisitions. Since its founding in 1974, THL has invested in
more than 100 businesses. Transactions include MJD Communications, Inc.,
PriCellular Corp, Experian Inc, Big Flower Holdings, and Metris Companies.
About CSFB Private Equity
CSFB Private Equity, investing since 1979, is the global private equity arm
of the Credit Suisse Group, a global financial services company. CSFB
Private Equity has committed capital of approximately $3.6 billion and has
completed more than 70 investments worldwide. The firm maintains offices in
New York, London, Hong Kong, Sao Paulo and Moscow. CSFB Private Equity
recently co-led a $900 million investment in Winstar Communications Inc., a
broadband fixed wireless company.
About CTC Communications
CTC is a rapidly growing, full-service Integrated Communications Provider
(ICP) delivering converged voice, data, Internet and video solutions to
medium and larger business customers in the most robust telecommunications
region in the world-the Washington D.C. to Boston corridor. Recently
designated by Bloomberg Personal Finance Magazine as one of the top "one
hundred fastest growing U.S. technology companies," CTC was serving more
than 12,000 customers with 269,000+ access lines as of December 31, 1999.
Central to the Company's performance and future growth is its Cisco-powered
IP+ATM Integrated Communications Network (ICN) named IntelliNETSM, which is
deployed across 8 contiguous northeast states.
CTC markets its full portfolio of services through its over 400 member
sales and service representatives located in 30 branch offices throughout
the New England States, New York, New Jersey and Maryland. The Company,
through its dedicated commitment to exceptional customer service, has
achieved an industry-leading market share in the northeast and an industry-
leading line retention rate in excess of 99 percent. CTC can be found on
the worldwide web at www.ctcnet.com
The statements in this press release that relate to future plans, events or
performance are forward-looking statements that involve risk and
uncertainties that could cause actual results to differ materially from
those reflected in the forward-looking statements including, strategic
marketing and technology initiatives, future growth initiatives, executing
an accelerated business plan and increasing shareholder value. Readers are,
accordingly, cautioned not to place undue reliance on these forward-looking
statements, which speak only as to the date hereof. Additional information
about these risks and uncertainties is set forth in the Company's most
recent report on Form 10-Q. CTC undertakes no obligation to release
publicly the results of any revisions to these forward-looking statements
that may be made to reflect results, events or circumstances after the date
hereof.
# # #
Contact:
John Dinsmore
Feldman Communications Inc.
410-571-8900 (t)
[email protected] (e)
http://www.FeldmanCommunications.com
John Pittenger
CTC Communications
781-466-1302 (t)
[email protected] (e)
http://www.ctcnet.com
