SECURITIES PURCHASE AGREEMENT
By and Between
BELL ATLANTIC CORPORATION (D/B/A VERIZON COMMUNICATIONS)
and
NORTHPOINT COMMUNICATIONS GROUP, INC.
Dated as of August 7, 2000
TABLE OF CONTENTS
Page
ARTICLE I
AUTHORIZATION AND SALE OF SHARES
Section 1.1 Authorization...........................................2
Section 1.2 Issuance and Sale of Shares.............................2
ARTICLE II
CLOSING
Section 2.1 Closing Date............................................2
Section 2.2 Delivery and Payments...................................2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTHPOINT
Section 3.1 Authority Relative to this Agreement
and the Registration Rights Agreement...................3
Section 3.2 No Conflict; Required Filings and Consents..............3
Section 3.3 Brokers.................................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VERIZON
Section 4.1 Authority Relative to this Agreement
and the Registration Rights Agreement...................5
Section 4.2 Investment..............................................5
Section 4.3 Rule 144................................................6
Section 4.4 Brokers.................................................6
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to Verizon's Obligation......................6
Section 5.2 Conditions to the Obligations of NorthPoint.............7
ARTICLE VI
COVENANTS OF NORTHPOINT
Section 6.1 Availability of NorthPoint Common Stock.................8
Section 6.2 Additional Agreements...................................8
ARTICLE VII
RESTRICTION ON TRANSFERABILITY OF SECURITIES
Section 7.1 Restrictive Legend......................................9
Section 7.2 Transfer Restriction....................................9
ARTICLE VIII
TERMINATION
Section 8.1 Termination............................................10
ARTICLE IX
MISCELLANEOUS
Section 9.1 Governing Law..........................................10
Section 9.2 Entire Agreement; Amendment............................10
Section 9.3 Notices................................................11
Section 9.4 Counterparts...........................................12
Section 9.5 Severability...........................................12
Section 9.6 Titles and Subtitles...................................12
Section 9.7 Further Actions; Reasonable Efforts....................12
Section 9.8 Expenses...............................................13
Exhibits
Exhibit A --Form of Certificate of Designation for 9% Convertible Preferred
Stock
Exhibit B --Form of Registration Rights Agreement
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made
as of August 7, 2000 by and between NorthPoint Communications Group, Inc.,
a Delaware corporation ("NorthPoint") and Bell Atlantic Corporation (d/b/a
Verizon Communications), a Delaware corporation ("Verizon").
WHEREAS, concurrently with the execution of this Agreement,
NorthPoint and Verizon are entering into an Agreement and Plan of Merger
(the "Merger Agreement") providing for, among other things, (i) the
contribution by Verizon to Verizon Ventures I Inc., a Delaware corporation
("Parent"), of cash and certain assets used by Verizon in connection with
its digital subscriber line operations in exchange for shares of Parent's
common stock and (ii) the merger of a wholly owned subsidiary of Parent
with and into NorthPoint, with NorthPoint surviving as a wholly owned
subsidiary of Parent;
WHEREAS, NorthPoint has authorized the sale and issuance of an
aggregate of 150,000 shares of its 9% Convertible Preferred Stock (the
"Convertible Preferred Stock");
WHEREAS, Verizon desires to purchase from NorthPoint, and
NorthPoint desires to sell to Verizon, 150,000 shares of the Convertible
Preferred Stock on the terms and subject to the conditions set forth
herein;
WHEREAS, concurrently with the execution of this Agreement,
Verizon and NorthPoint are entering into a Registration Rights Agreement
providing Verizon with certain registration rights (the "Registration
Rights Agreement");
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties set forth herein, the parties
hereby agree as follows:
ARTICLE I
AUTHORIZATION AND SALE OF SHARES
Section 1.1 Authorization. NorthPoint has heretofore authorized
(i) the issuance and sale to Verizon pursuant to this Agreement of an
aggregate of 150,000 fully paid and nonassessable shares of Convertible
Preferred Stock having the rights, preferences and privileges set forth in
the Certificate of Designation attached to this Agreement as Exhibit A (the
"Shares") and (ii) the issuance of a sufficient number of fully paid and
nonassessable shares of common stock, par value $0.001 per share (the
"Common Stock"), of NorthPoint upon conversion of the Shares.
Section 1.2 Issuance and Sale of Shares. Upon the terms and
subject to the conditions set forth herein, on the Closing Date (as defined
below), NorthPoint will issue and sell to Verizon, and Verizon will
purchase from NorthPoint, 150,000 Shares at a purchase price of $1,000 per
Share in cash (the "Purchase Price").
ARTICLE II
CLOSING
Section 2.1 Closing Date. The closing of the purchase and sale
of the Shares under this Agreement (the "Closing") shall take place as soon
as practicable after the satisfaction or waiver of all of the conditions
set forth in Article V (the date of the Closing is hereinafter referred to
as the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, Four Times Square, New York, New York, or at such other time or
place as Verizon and NorthPoint may mutually agree.
Section 2.2 Delivery and Payments At the Closing, subject to
the terms and conditions hereof, NorthPoint will deliver to Verizon one
certificate representing 150,000 Shares registered in the name of Verizon.
Payment of the purchase price for the Shares to be purchased by Verizon
under this Agreement shall be made or caused to be made by Verizon to
NorthPoint by check or by wire transfer payable to the order of NorthPoint.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTHPOINT
Except as set forth in the disclosure schedule delivered by
NorthPoint to Verizon on the date hereof (the "NorthPoint Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant as specified therein), NorthPoint
hereby represents and warrants to Verizon as follows:
Section 3.1 Authority Relative to this Agreement and the
Registration Rights Agreement. NorthPoint has the necessary corporate power
and authority to enter into this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights
Agreement by NorthPoint, and the consummation by NorthPoint of the
transactions contemplated hereby and thereby, including the issuance and
sale of the Shares and the issuance of the shares of Common Stock upon
conversion of the Shares, have been duly authorized by all necessary
corporate action on the part of NorthPoint. This Agreement and the
Registration Rights Agreement has been duly executed and delivered by
NorthPoint and, assuming the due authorization, execution and delivery
thereof by Verizon, constitute legal, valid and binding obligations of
NorthPoint, enforceable against it in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
Section 3.2 No Conflict; Required Filings and Consents. (a)
Except as described in subsection (b) below or except as set forth in
Section 3.2(a) of the NorthPoint Disclosure Schedule, the execution and
delivery of this Agreement and the Registration Rights Agreement by
NorthPoint do not, and the performance of this Agreement and the
Registration Rights Agreement by NorthPoint will not, (i) violate or
conflict with the Certificate of Incorporation or By-laws of NorthPoint,
(ii) conflict with or violate any law, regulation, court order, judgment or
decree applicable to NorthPoint or any of its Subsidiaries (as defined in
the Merger Agreement) or by which any of their respective property or
assets (including investments) is bound or affected, (iii) violate or
conflict with the Certificate of Incorporation or By-laws of any of
NorthPoint's Subsidiaries, or (iv) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of a lien or encumbrance on any
of the properties or assets (including investments) of NorthPoint or any of
its Subsidiaries pursuant to, result in the loss of any material benefit
under, or result in any modification or alteration of, or require the
consent of any other party to, any contract, instrument, permit, license or
franchise to which NorthPoint or any of its Subsidiaries is a party or by
which NorthPoint, any of such Subsidiaries or any of their respective
property or assets (including investments) is bound or affected, except in
the case of this clause (iv) for conflicts, violations, breaches, defaults,
results or consents which, individually or in the aggregate, would not have
a Material Adverse Effect (as defined in the Merger Agreement) on
NorthPoint.
(b) (i) Except for applicable requirements, if any, under
the DGCL and any filings required under any state securities or blue sky
laws and the premerger notification requirements of the HSR Act, neither
NorthPoint nor any of its Subsidiaries is required to submit any notice,
report or other filing with any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental U.S. or foreign
self- regulatory agency, commission or authority or any arbitral tribunal
(each, a "Governmental Entity") in connection with the execution, delivery
or performance of this Agreement and the Registration Rights Agreement and
(ii) no waiver, consent, approval or authorization of any Governmental
Entity is required to be obtained by NorthPoint or any of its Subsidiaries
in connection with its execution, delivery or performance of this Agreement
or the Registration Rights Agreement.
Section 3.3 Brokers. Except for Goldman, Sachs & Co., a true
and complete copy of whose engagement letter has been provided to Verizon
prior to the execution hereof, and Frank Yeary, the terms of whose
engagement have been disclosed to Verizon prior to the execution hereof, no
broker, finder or investment banker is entitled to any brokerage, finder's,
investment banking or other fee or commission in connection with the
transactions contemplated by this Agreement and the Registration Rights
Agreement based upon arrangements made by or on behalf of NorthPoint or any
of its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VERIZON
Verizon hereby represents and warrants to NorthPoint as
follows:
Section 4.1 Authority Relative to this Agreement and the
Registration Rights Agreement. Verizon has the necessary corporate power
and authority to enter into this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights
Agreement by Verizon, and the consummation by Verizon of the transactions
contemplated hereby and thereby, including the purchase of the Shares and
the shares of Common Stock upon conversion of the Shares, have been duly
authorized by all necessary corporate action on the part of Verizon. This
Agreement and the Registration Rights Agreement have been duly executed and
delivered by Verizon and, assuming the due authorization, execution and
delivery thereof by Verizon, constitute legal, valid and binding
obligations of Verizon, enforceable against it in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the rights and remedies
of creditors generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
Section 4.2 Investment. (a) Verizon is acquiring the Shares for
investment for its own account, and not with a view to any distribution
thereof in violation of the securities laws. NorthPoint understands that
such Shares and the shares of NorthPoint Common Stock issuable upon
conversion of such Shares have not been registered under the Securities Act
by reason of specific exemptions therefrom which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of
the NorthPoint's representations as expressed herein.
(b) Verizon's financial condition and investments are such that
it is in a position to hold the Shares and the shares of NorthPoint Common
Stock issuable upon conversion of such Shares for an indefinite period,
bear the economic risks of the investment and withstand the complete loss
of the investment. Verizon has extensive knowledge and experience in
financial and business matters and has the capability to evaluate the
merits and risks of the Shares and the shares of NorthPoint Common Stock
issuable upon conversion of such Shares. Verizon qualifies as an
"accredited investor" as such term is defined in Section 2(15) of the
Securities Act and Regulation D promulgated thereunder.
Section 4.3 Rule 144. Verizon acknowledges that the Shares to
be purchased by Verizon and the shares of NorthPoint Common Stock issuable
upon conversion of the Shares must be held indefinitely unless subsequently
registered under the Securities Act or any applicable state securities laws
or unless exemptions from such registrations are available. Verizon is
aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of securities purchased in a private placement
subject to the satisfaction of certain conditions.
Section 4.4 Brokers. Except for Morgan, Stanley & Co.
Incorporated, the fees of which will be paid by Verizon, no broker, finder
or investment banker is entitled to any brokerage, finder's, investment
banking or other fee or commission in connection with the transactions
contemplated by this Agreement and the Registration Rights Agreement based
upon arrangements made by or on behalf of Verizon.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to Verizon's Obligation. The obligation
of Verizon to consummate the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) Representations and Warranties. The representations
and warranties of NorthPoint contained in this Agreement shall be true and
correct on the date hereof and (except to the extent such representations
and warranties speak as of a date earlier than the date hereof) shall also
be true and correct on the date hereof and on and as of the Closing Date,
with the same force and effect as if made on and as of the Closing Date.
(b) Agreements and Covenants. NorthPoint shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or before the Closing Date.
(c) Legality. No federal, state or foreign statute, rule,
regulation, executive order, decree, injunction or administrative order
shall have been enacted, entered, promulgated or enforced by any
governmental entity which is in effect and has the effect of making the
purchase and sale of the Shares or the shares of Common Stock issuable upon
conversion of the Shares illegal or otherwise prohibiting the consummation
of the transactions contemplated by this Agreement or the Registration
Rights Agreement.
(d) Consents Under NorthPoint Agreements. NorthPoint
shall have obtained the consent or approval of any person whose consent or
approval shall be required under any agreement or instrument in order to
permit the consummation of the transactions contemplated by this Agreement
and entering into the Registration Rights Agreement.
(e) Blue Sky. NorthPoint shall have obtained all
necessary "blue sky" law permits and qualifications, or have the
availability of exemptions therefrom, required by any state for the offer
and sale of the Shares and the underlying shares of NorthPoint Common Stock
issuable upon conversion of the Shares.
(f) Certificate of Designation. The Certificate of
Designation shall have been filed in the office of the Secretary of State
of the State of Delaware.
(g) Registration Rights Agreement. NorthPoint shall have
executed and delivered the Registration Rights Agreement in substantially
the form attached hereto as Exhibit B.
(h) Amendments to Credit Agreement. The conditions set
forth in paragraphs F and G under the caption "Conditions to Signing the
Credit Agreement" in Exhibit A to the Commitment Letter, dated as of August
7, 2000, between Verizon and NorthPoint Communications, Inc., shall have
been satisfied.
Section 5.2 Conditions to the Obligations of NorthPoint. The
respective obligation of NorthPoint to consummate the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Verizon contained in this Agreement shall be true and
correct on the date hereof and (except to the extent such representations
and warranties speak as of a date earlier than the date hereof) shall also
be true and correct on the date hereof and on and as of the Closing Date,
with the same force and effect as if made on and as of the Closing Date.
(b) Performance of Obligations. Verizon shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or before the Closing Date.
ARTICLE VI
COVENANTS OF NORTHPOINT
NorthPoint hereby covenants with Verizon as follows:
Section 6.1 Availability of NorthPoint Common Stock. NorthPoint
shall at all times reserve and keep available out of the authorized but
unissued NorthPoint Common Stock, for the purpose of effecting the
conversion of the Shares, the full number of shares of NorthPoint Common
Stock then issuable upon the conversion of the Shares. NorthPoint will,
from time to time, in accordance with the laws of the State of Delaware,
increase the authorized amount of NorthPoint Common Stock if at any time
the number of shares of NorthPoint Common Stock remaining unissued and
available for issuance shall be insufficient to permit conversion of the
Shares.
Section 6.2 Additional Agreements. NorthPoint agrees to use all
commercially reasonable efforts to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary and filings,
and to use all commercially reasonable efforts to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly
as practicable the transactions contemplated by this Agreement and to
effect all necessary filings under the Hart- Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
Communications Act of 1934, as amended, as Verizon may request. Without
limiting the generality of the foregoing, at the request of Verizon,
NorthPoint shall assist with the preparation and filing of the proper
notification in accordance with the HSR Act, shall promptly comply with any
requests for additional information, and shall use its commercially
reasonable efforts to obtain termination of the waiting period thereunder
as promptly as practicable.
ARTICLE VII
RESTRICTION ON TRANSFERABILITY OF SECURITIES
Section 7.1 Restrictive Legend. Each certificate representing
(a) the Shares, (b) shares of NorthPoint Common Stock issuable upon
conversion of any Shares, and (c) any other securities issued in respect of
the Shares or NorthPoint Common Stock issued upon conversion of any Shares
upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event (each of the foregoing securities in clauses
(a) through (c) being referred to herein as "Restricted Securities"), shall
be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to the legend required under any applicable
state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR EXEMPTION
THEREFROM UNDER SAID ACT OR LAWS. SUCH SHARES ARE ALSO SUBJECT TO THE
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT, DATED AS OF AUGUST 7,
2000, BETWEEN BELL ATLANTIC CORPORATION (D/B/A VERIZON COMMUNICATIONS
) AND NORTHPOINT COMMUNICATIONS GROUP, INC., AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH.
NorthPoint will promptly, upon request, remove any such legend when
transfer is no longer restricted by applicable law.
Section 7.2 Transfer Restriction. Verizon agrees that it shall
not, without the prior written consent of NorthPoint, transfer or assign
any of the Convertible Preferred Stock acquired by it pursuant to this
Agreement to any third party, other than one or more wholly-owned
subsidiaries of Verizon, prior to the earlier of (i) the termination of the
Merger Agreement or (ii) the consummation of the transactions contemplated
by the Merger Agreement.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Notwithstanding anything contained
herein to the contrary, this Agreement may be terminated at any time prior
to the Closing Date:
(a) by the mutual written consent of Verizon and
NorthPoint; or
(b) by either Verizon or NorthPoint if the Merger
Agreement shall have been terminated prior to the Closing.
In the event that this Agreement shall be terminated pursuant
to this Article VIII, all further obligations of the parties under this
Agreement shall be terminated without further liability of any party to any
other party, provided that nothing herein shall relieve any party from
liability for its willful breach of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF).
Section 9.2 Entire Agreement; Amendment. This Agreement,
including the exhibits hereto, constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other
party in any matter by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the
party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
Section 9.3 Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested), sent by overnight courier or sent by telecopy,
to the parties at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) if to Verizon:
Bell Atlantic Corporation (d/b/a Verizon Communications)
1717 Arch Street, 29th Fl.
Philadelphia, Pennsylvania 19103
Attention: Stephen E. Smith
Telecopy: (215) 557-7249
with copies to:
Bell Atlantic Corporation (d/b/a Verizon Communications)
1095 Avenue of the Americas
New York, New York 10036
Attention: Marianne Drost
Telecopy: (212) 764-2739
and
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Peter Allan Atkins, Esq.
Martha E. McGarry, Esq.
Telecopy: (212) 735-2000
(b) if to NorthPoint:
NorthPoint Communications Group, Inc.
303 Second Street, South Tower
San Francisco, California 94107
Attention: Michael P. Glinsky
Telecopy No.:(415) 403-4004
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004
Attention: James F. Rogers, Esq.
Telecopy: (202) 637-2201
Section 9.4 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by only one of the
parties hereto, each of which shall be enforceable against the party
actually executing such counterpart, and all of which together shall
constitute one instrument.
Section 9.5 Severability. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provisions; provided that no such
severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
Section 9.6 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The terms
"affiliate" and "associate" shall have the meanings ascribed to them in
Rule 12b-2 promulgated under the Exchange Act and the term "beneficial
ownership" shall have the meaning as such term is used in Rule 13d-3
promulgated under the Exchange Act.
Section 9.7 Further Actions; Reasonable Efforts. Upon the terms
and subject to the conditions hereof, each of the parties agrees to use its
reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including without limitation the obtaining
of all necessary consents, approvals, or waivers from third parties.
Section 9.8 Expenses. NorthPoint and Verizon shall each bear
its own expenses incurred on its behalf with respect to this Agreement and
the transactions contemplated hereby.
IN WITNESS WHEREOF, each of the undersigned has caused the
foregoing Agreement to be executed as of the date first above written.
BELL ATLANTIC CORPORATION (D/B/A
VERIZON COMMUNICATIONS)
By:
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Name:
Title:
NORTHPOINT COMMUNICATIONS GROUP, INC.
By:
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Name:
Title:
