Exhibit 10.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
STOCK SUBSCRIPTION WARRANT
To Purchase Common Stock of
CTC Communications Group, Inc.
Date of Initial Issuance: February 27, 2002
Number of Shares: 96,369
Initial Warrant Price: $4.10
Expiration Date: February 27, 2009
THIS CERTIFIES THAT for value received, TORONTO DOMINION (TEXAS), INC., or
its registered assigns (hereinafter called "Holder"), is entitled to
purchase from CTC COMMUNCATIONS GROUP, INC., a Delaware corporation
("Company"), at any time during the Term of this Warrant, ninety six
thousand three hundred sixty nine (96,369) shares of common stock of Company
(the "Common Stock"), at the Warrant Price, payable as provided herein. The
exercise of this Warrant shall be subject to the provisions, limitations and
restrictions herein contained. This Warrant may be exercised in whole or in
part.
SECTION 1. Definitions
For all purposes of this Warrant, the following terms shall have the
meanings indicated (any capitalized terms used herein and not otherwise
defined herein to have the meanings ascribed to them in the Agreement):
"Agreement" shall mean the Amended and Restated Credit Agreement, dated as
of August 15, 2000, among the CTC Communications Corp., as Borrower, the
Company, the various financial institutions and other Persons from time to
time thereto, as Lenders, Toronto Dominion (Texas), Inc., as Administrative
Agent, Xxxxxx Brothers, as Syndication Agent, and Credit Suisse First
Boston, as Documentation Agent, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"Common Stock" shall mean and include Company's authorized common stock, as
constituted at the date hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Term of this Warrant" shall mean the period beginning on the date of
initial issuance hereof and ending on the seventh (7th) anniversary of such
date of initial issuance.
"Warrant Price" shall mean $4.10 per share, subject to adjustment in
accordance with Section 5 hereof.
"Warrants" shall mean this Warrant and any other Warrant or Warrants issued
in connection with the Agreement to the original holder of this Warrant or
issued to any transferees of such original holder or subsequent holder.
"Warrant Shares" shall mean shares of Common Stock, subject to adjustment or
change as herein provided, purchased or purchasable by Holder upon the
exercise hereof.
SECTION 2. Exercise of Warrant.
2.1 Procedure for Exercise of Warrant.
To exercise this Warrant in whole or in part (but not as to any fractional
share of Common Stock), Holder shall deliver to Company at its office
referred to in Section 14 hereof at any time and from time to time during
the Term of this Warrant: (i) the Notice of Exercise in the form of Exhibit
A attached hereto, (ii) cash, certified or official bank check payable to
the order of Company, wire transfer of funds to Company's account, or
cancellation of any indebtedness of Company to Holder (or any combination of
any of the foregoing) in the amount of the Warrant Price for each share
being purchased, and (iii) this Warrant. Notwithstanding any provisions
herein to the contrary, if the Current Market Price (as defined in
Section 6) is greater than the Warrant Price (at the date of calculation, as
set forth below), in lieu of exercising this Warrant as hereinabove
permitted, Holder may elect to receive shares of Common Stock equal to the
value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the office of Company referred to
in Section 14 hereof, together with the Notice of Exercise, in which event
Company shall issue to Holder that number of whole shares of Common Stock
computed using the following formula:
CS = WCS x (CMP-WP)
-------------------
CMP
Where
CS equals the number of shares of Common Stock to be issued to
Holder
WCS equals the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (at the
date of such calculation)
CMP equals the Current Market Price (at the date of such
calculation)
WP equals the Warrant Price (as adjusted to the date of such
calculation)
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of Holder or such other name or names as may be
designated by Holder, shall be delivered to Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights
represented by this Warrant shall have been so exercised; and, unless this
Warrant has expired, a new Warrant representing the number of shares (except
a remaining fractional share), if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to Holder hereof
within such time. The person in whose name any certificate for shares of
Common Stock is issued upon exercise of this Warrant shall for all purposes
be deemed to have become the holder of record of such shares on the date on
which Holder shall have complied with the conditions for exercise of this
Warrant set forth above, irrespective of the date of delivery of such
certificate, except that, if the date of such compliance is a date when the
stock transfer books of Company are closed, such person shall be deemed to
have become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
2.2 Transfer Restriction Legend.
Each certificate for Warrant Shares shall bear the following legend
(and any additional legend required by (i) any applicable state securities
laws and (ii) any securities exchange upon which such Warrant Shares may, at
the time of such exercise, be listed) on the face thereof unless at the time
of exercise such Warrant Shares shall be registered under the Securities
Act:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold or transferred in the absence of such registration
or an exemption therefrom under said Act."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon
completion of a public distribution under a registration statement of the
securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for Holder thereof (which counsel shall be reasonably
satisfactory to Company) the securities represented thereby are not, at such
time, required by law to bear such legend.
SECTION 3. Covenants as to Common Stock.
Company covenants and agrees that all shares of Common Stock that
may be issued upon the exercise of the rights represented by this Warrant
shall, upon issuance, be validly issued, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof.
Company further covenants and agrees that it shall pay when due and payable
any and all federal and state taxes which may be payable in respect of the
issue of this Warrant or any Common Stock or certificates therefor issuable
upon the exercise of this Warrant. Company further covenants and agrees
that Company shall at all times have authorized and reserved, free from
preemptive rights, a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant. Company further
covenants and agrees that if any shares of capital stock to be reserved for
the purpose of the issuance of shares upon the exercise of this Warrant
require registration with or approval of any governmental authority under
any federal or state law before such shares may be validly issued or
delivered upon exercise, then Company shall in good faith and as
expeditiously as possible endeavor to secure such registration or approval,
as the case may be. If and so long as the Common Stock issuable upon the
exercise of this Warrant is listed on any national securities exchange,
Company shall, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of
such Common Stock issuable upon exercise of this Warrant.
SECTION 4. Representations and Warranties Regarding Capitalization Issues
.. As of the date immediately preceding the date of this Warrant :
(i) The authorized capital of the Company consists of (A) 100
million shares of common stock, of which 27,103,730 shares are issued and
outstanding, and (B) 10 million shares of preferred stock, of which 200,000
shares are issued and outstanding and are convertible into 4,000,000 shares
of common stock at $50.00 per share.
(ii) The Company has reserved (A) 4,959,606 shares of common stock
for issuance under its Nonqualified Stock Option Plan, under which 4,023,193
options are outstanding at an average price of $7.07 per share, and (B)
7,779,823 shares of common stock for issuance under its Incentive Stock
Option Plan, under which 3,934,805 options are outstanding at an average
price of $9.83 per share. There are no other options, warrants, conversion
privileges or other rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the Company's capital stock or
other securities of the Company, or any calls, commitments or claims of any
character relating to, its capital stock or other securities.
(iii) No shareholder of the Company has preemptive rights to purchase
new issuances of the Company's capital stock.
SECTION 5. Adjustment of Number of Shares
.. Upon each adjustment of the Warrant Price as provided in Section 6,
Holder shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, only the number of shares (calculated to the
nearest tenth of a share) obtained by multiplying the Warrant Price in
effect immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 6. Adjustment of Warrant Price
.. The Warrant Price shall be subject to adjustment from time to time
as follows:
(i) If Company shall at any time or from time to time during the
Term of this Warrant issue shares of Common Stock other than Excluded Stock
(as hereinafter defined) without consideration or for a consideration per
share less than the Warrant Price in effect immediately prior to the
issuance of such Common Stock, the Warrant Price in effect immediately prior
to each such issuance shall forthwith (except as provided in this clause
(i)) be adjusted to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of
(x) the total number of shares of Common Stock outstanding (including any
shares of Common Stock deemed to have been issued pursuant to subdivision
(3) of this clause (i) and to clause (ii) below) immediately prior to such
issuance multiplied by the Warrant Price in effect immediately prior to such
issuance, plus
(y) the consideration received by Company upon such issuance,
by
(B) the total number of shares of Common Stock outstanding (including
any shares of Common Stock deemed to have been issued pursuant to
subdivision (3) of this clause (i) and to clause (ii) below)
immediately after the issuance of such Common Stock.
For the purposes of any adjustment of the Warrant Price pursuant to
this clause (i), the following provisions shall be applicable:
1. In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid
therefor after deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by Company for any
underwriting or otherwise in connection with the issuance and
sale thereof.
2. In the case of the issuance of Common Stock for a consideration
in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as
determined by the Board of Directors of Company, irrespective of
any accounting treatment; provided, however, that such fair
market value as determined by the Board of Directors, together
with any cash consideration being paid, shall not exceed an
aggregate amount equal to the product of (i) the aggregate
Current Market Price per share of Common Stock as determined as
provided in clause (vii) below, multiplied by (ii) the number of
shares of Common Stock being issued in such issuance.
3. In the case of the issuance of (i) options to purchase or rights
to subscribe for Common Stock, (ii) securities or obligations by
their terms convertible into or exchangeable for Common Stock or
(iii) options to purchase or rights to subscribe for such
convertible or exchangeable securities or obligations:
(A) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were
issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and
(2) above with the proviso in subdivision (2) being
applied to the number of shares of Common Stock
deliverable upon such exercise), if any, received by
Company upon the issuance of such options or rights plus
the minimum purchase price provided in such options or
rights for the Common Stock covered thereby;
(B) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or obligations or
upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities
or obligations and subsequent conversions or exchanges
thereof shall be deemed to have been issued at the time
such securities or obligations were issued or such options
or rights were issued and for a consideration equal to the
consideration received by Company for any such securities
or obligations and related options or rights (excluding
any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if
any, to be received by Company upon the conversion or
exchange of such securities or obligations or the exercise
of any related options or rights (the consideration in
each case to be determined in the manner provided in
subdivisions (1) and (2) above with the proviso in
subdivision (2) being applied to the number of shares of
Common Stock deliverable upon such conversion, exchange or
exercise);
(D) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or
exchangeable securities or obligations, other than a
change resulting from the antidilution provisions thereof,
the Warrant Price shall forthwith be readjusted to such
Warrant Price as would have obtained had the adjustment
made upon the issuance of such options, rights or
securities or obligations not converted prior to such
change or options or rights related to such securities or
obligations not converted prior to such change being made
upon the basis of such change; and
(D) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or
the expiration of any options or rights related to such
convertible or exchangeable securities or obligations, the
Warrant Price shall forthwith be readjusted to such
Warrant Price as would have obtained had the adjustment
made upon the issuance of such options, rights, securities
or options or rights related to such securities or
obligations being made upon the basis of the issuance of
only the number of shares of Common Stock actually issued
upon the conversion or exchange of such securities or
obligations or upon the exercise of the options or rights
related to such securities or obligations. "Excluded
Stock" shall mean shares of Common Stock issued by Company
(1) under any circumstance for which an adjustment is
provided in clauses (iii) or (iv) of this Section 6 or in
Section 8, and (2) in connection with the issuance of
Common Stock (including any share of Common Stock deemed
to have been issued pursuant to subdivision (3) of
clause (i) above) (appropriately adjusted for stock splits
and combinations) to directors, officers, or employees of,
or consultants to, Company under any stock option or other
similar incentive plan approved by the Board of Directors
of Company as in effect on the date of this Warrant.
(ii) "Excluded Stock" shall mean shares of Common Stock issued by
Company (1) under any circumstance for which an adjustment is provided in
clauses (iii) or (iv) of this Section 6 or in Section 8, and (2) in
connection with the issuance of Common Stock (including any share of Common
Stock deemed to have been issued pursuant to subdivision (3) of clause (i)
above) (appropriately adjusted for stock splits and combinations) to
directors, officers, or employees of, or consultants to, Company under any
stock option or other similar incentive plan approved by the Board of
Directors of Company as in effect on the date of this Warrant.
(iii) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend, subdivision
or split-up, the Warrant Price shall be appropriately decreased so that the
number of shares of Common Stock issuable upon the exercise hereof shall be
increased in proportion to such increase in outstanding shares.
(iv) If, at any time during the Term of this Warrant, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for such
combination, the Warrant Price shall appropriately increase so that the
number of shares of Common Stock issuable upon the exercise hereof shall be
decreased in proportion to such decrease in outstanding shares.
(v) In case, at any time during the Term of this Warrant, Company
shall declare a cash dividend upon its Common Stock payable otherwise than
out of earnings or earned surplus or shall distribute to holders of its
Common Stock shares of its capital stock (other than Common Stock), stock or
other securities of other persons, evidences of indebtedness issued by
Company or other persons, assets (excluding cash dividends and
distributions) or options or rights (excluding options to purchase and
rights to subscribe for Common Stock or other securities of Company
convertible into or exchangeable for Common Stock), then, in each such case,
immediately following the record date fixed for the determination of the
holders of Common Stock entitled to receive such dividend or distribution,
the Warrant Price in effect thereafter shall be determined by multiplying
the Warrant Price in effect immediately prior to such record date by a
fraction of which the numerator shall be an amount equal to the difference
of (x) the Current Market Price of one share of Common Stock minus (y) the
fair market value (as determined by the Board of Directors of Company, whose
determination shall be conclusive) of the amount of cash, stock, securities,
evidences of indebtedness, assets, options or rights, as the case may be, so
distributed in respect of one share of Common Stock, and of which the
denominator shall be such Current Market Price.
(vi) All calculations under this Section 6 shall be made to the
nearest cent or to the nearest one-tenth (1/10) of a share, as the case may
be.
(vii) For the purpose of any computation pursuant to this Section 6,
the Current Market Price at any date of one share of Common Stock shall be
deemed to be the average of the daily closing prices for the 15 consecutive
business days ending on the last business day before the day in question (as
adjusted for any stock dividend, split, combination or reclassification that
took effect during such 15 business day period). The closing price for each
day shall be the last reported sales price regular way or, in case no such
reported sales took place on such day, the average of the last reported bid
and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading or as reported by Nasdaq (or if the Common Stock is not at the time
listed or admitted for trading on any such exchange or if prices of the
Common Stock are not reported by Nasdaq then such price shall be equal to
the average of the last reported bid and asked prices on such day as
reported by The National Quotation Bureau Incorporated or any similar
reputable quotation and reporting service, if such quotation is not reported
by The National Quotation Bureau Incorporated); provided, however, that if
the Common Stock is not traded in such manner that the quotations referred
to in this clause (vii) are available for the period required hereunder, the
Current Market Price shall be determined in good faith by the Board of
Directors of Company or, if such determination cannot be made or if Holder
disputes in writing any determination so made by the Company's Board of
Directors within 30 days of being informed of such determination, by a
nationally recognized independent investment banking or accounting firm
selected by the Board of Directors of Company (or if such selection cannot
be made, by a nationally recognized independent investment banking or
accounting firm selected by the American Arbitration Association in
accordance with its rules).
(viii) Whenever the Warrant Price shall be adjusted as provided in this
Section 6, Company shall prepare a statement showing the facts requiring
such adjustment and the Warrant Price that shall be in effect after such
adjustment. Company shall cause a copy of such statement to be sent by
mail, first class postage prepaid, to each Holder at its, his or her address
appearing on Company's records. Where appropriate, such copy may be given
in advance and may be included as part of the notice required to be mailed
under the provisions of clause (x) of this Section 6.
(ix) Adjustments made pursuant to clauses (iii), (iv) and (v) above
shall be made on the date such dividend, subdivision, split-up, combination
or distribution, as the case may be, is made, and shall become effective at
the opening of business on the business day next following the record date
for the determination of stockholders entitled to such dividend,
subdivision, split-up, combination or distribution.
(x) In the event Company shall propose to take any action of the
types described in clauses (iii), (iv), or (v) of this Section 6, Company
shall forward, at the same time and in the same manner, to Holder such
notice, if any, which Company shall give to the holders of capital stock of
Company.
(xi) In any case in which the provisions of this Section 6 shall
require that an adjustment shall become effective immediately after a record
date for an event, Company may defer until the occurrence of such event
issuing to Holder of all or any part of this Warrant which is exercised
after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such exercise by reason of
the adjustment required by such event over and above the shares of capital
stock issuable upon such exercise before giving effect to such adjustment
exercise; provided, however, that Company shall deliver to such Holder a due
xxxx or other appropriate instrument evidencing such Holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment.
SECTION 7. Ownership.
7.1 Ownership of This Warrant.
Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than Company) for all
purposes and shall not be affected by any notice to the contrary until
presentation of this Warrant for registration of transfer as provided in
this Section 7.
7.2 Transfer and Replacement.
This Warrant and all rights hereunder are transferable in whole or
in part upon the books of Company by Holder hereof in person or by duly
authorized attorney, and a new Warrant or Warrants, of the same tenor as
this Warrant but registered in the name of the transferee or transferees
(and in the name of Holder, if a partial transfer is effected) shall be made
and delivered by Company upon surrender of this Warrant duly endorsed, at
the office of Company referred to in Section 14 hereof, together with a
properly executed Assignment (in the form of Exhibit B or Exhibit C hereto,
as the case may be). Upon receipt by Company of evidence reasonably
satisfactory to it of the loss, theft or destruction, and, in such case, of
indemnity or security reasonably satisfactory to it, and upon surrender of
this Warrant if mutilated, Company shall make and deliver a new Warrant of
like tenor, in lieu of this Warrant. This Warrant shall be promptly
cancelled by Company upon the surrender hereof in connection with any
transfer or replacement. Except as otherwise provided above, in the case of
the loss, theft or destruction of a Warrant, Company shall pay all expenses,
taxes and other charges payable in connection with any transfer or
replacement of this Warrant, other than stock transfer taxes (if any)
payable in connection with a transfer of this Warrant, which shall be
payable by Holder. Holder shall not transfer this Warrant and the rights
hereunder except in compliance with federal and state securities laws.
SECTION 8. Mergers, Consolidation, Sales.
In the case of any proposed consolidation or merger of Company with
another entity, or the proposed sale of all or substantially all of its
assets to another person or entity, or any proposed reorganization or
reclassification of the capital stock of Company, then, as a condition of
such consolidation, merger, sale, reorganization or reclassification,
Company shall give 30 days' prior written notice thereof to Holder hereof
and lawful and adequate provision shall be made whereby Holder shall
thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein, in lieu of the shares of the Common Stock of
Company immediately theretofore purchasable hereunder, such shares of stock,
securities or assets as may (by virtue of such consolidation, merger, sale,
reorganization or reclassification) be issued or payable with respect to or
in exchange for the number of shares of such Common Stock purchasable
hereunder immediately before such consolidation, merger, sale,
reorganization or reclassification. In any such case appropriate provision
shall be made with respect to the rights and interests of Holder to the end
that the provisions hereof shall thereafter be applicable as nearly as may
be practicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of this Warrant.
SECTION 9. Notice of Dissolution or Liquidation.
In case of any distribution of the assets of Company in dissolution
or liquidation (except under circumstances when the foregoing Section 8
shall be applicable), Company shall give notice thereof to Holder hereof and
shall make no distribution to shareholders until the expiration of thirty
(30) days from the date of mailing of the aforesaid notice and, in any case,
Holder hereof may exercise this Warrant within thirty (30) days from the
date of the giving of such notice, and all rights herein granted not so
exercised within such thirty-day period shall thereafter become null and
void.
SECTION 10. Notice of Extraordinary Dividends.
If the Board of Directors of Company shall declare any dividend or
other distribution on its Common Stock except out of earned surplus or by
way of a stock dividend payable in shares of its Common Stock, Company shall
mail notice thereof to Holder hereof not less than thirty (30) days prior to
the record date fixed for determining shareholders entitled to participate
in such dividend or other distribution, and Holder hereof shall not
participate in such dividend or other distribution unless this Warrant is
exercised prior to such record date. The provisions of this Section 10
shall not apply to distributions made in connection with transactions
covered by Section 8.
SECTION 11. Fractional Shares.
Fractional shares shall not be issued upon the exercise of this
Warrant but in any case where Holder would, except for the provisions of
this Section 11, be entitled under the terms hereof to receive a fractional
share upon the complete exercise of this Warrant, Company shall, upon the
exercise of this Warrant for the largest number of whole shares then called
for, pay a sum in cash equal to the excess of the value of such fractional
share (determined in such reasonable manner as may be prescribed in good
faith by the Board of Directors of Company) over the Warrant Price for such
fractional share.
SECTION 12. Special Arrangements of Company.
Company covenants and agrees that during the Term of this Warrant,
unless otherwise approved by Holder:
12.1 Shall Not Amend Certificate.
Company shall not amend its certificate or articles, as the case may
be, of incorporation to eliminate as an authorized class of capital stock
that class denominated as "Common Stock" on the date hereof.
12.2 Shall Bind Successors.
This Warrant shall be binding upon any corporation or other person
or entity succeeding to Company by merger, consolidation or acquisition of
all or substantially all of Company's assets.
SECTION 13. Registration.
Company covenants and agrees that the shares of Common Stock
issuable upon the exercise of this Warrant shall be entitled to the benefits
of the registration rights set forth in Exhibit D attached hereto.
SECTION 14. Notices.
Any notice or other document required or permitted to be given or
delivered to Holder shall be delivered at, or sent by certified or
registered mail to, Holder at its address for notices set forth in the
Agreement or to such other address as shall have been furnished to Company
in writing by Holder. Any notice or other document required or permitted to
be given or delivered to Company shall be delivered at, or sent by certified
or registered mail to, Company at its address for notices set forth in the
Agreement or to such other address as shall have been furnished in writing
to Holder by Company. Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice so
addressed and otherwise delivered shall be deemed to be given when actually
received by the addressee.
SECTION 15. No Rights as Stockholder; Limitation of Liability.
This Warrant shall not entitle Holder to any of the rights of a
shareholder of Company except upon exercise in accordance with the terms
hereof. No provision hereof, in the absence of affirmative action by Holder
to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of Holder, shall give rise to any liability of Holder
for the Warrant Price hereunder or as a shareholder of Company, whether such
liability is asserted by Company or by creditors of Company.
SECTION 16. Law Governing.
THE VALIDITY, INTERPRETATION, AND ENFORCEMENT OF THIS WARRANT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 17. Amendments.
This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by both
parties (or any respective predecessor in interest thereof). The headings
in this Warrant are for purposes of reference only and shall not affect the
meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by
its duly authorized officer this 27th day of February, 2002.
CTC COMMUNICATIONS GROUP, INC.
By:
Title:
EXHIBIT A
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE ATTACHED WARRANT
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of
the attached Warrant according to the conditions thereof, and herewith
[check appropriate box(es)]
? makes payment of $__________ therefor in cash;
? makes payment of $__________ therefor through cancellation of
indebtedness; or
? directs Company to issue ______ shares, and to withhold ____ shares in
lieu of payment of the Warrant Price, as described in Section 2.1 of the
Warrant.
All shares to be issued pursuant hereto shall be issued in the name of and
the initial address of such person to be entered on the books of CTC
Communications Group, Inc. shall be:
The shares are to be issued in certificates of the following denominations:
[Type Name of Holder]
By:
Title:
Dated:
EXHIBIT B
FORM OF ASSIGNMENT
(ENTIRE)
[To be signed only upon transfer of entire Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________________ all rights of the undersigned
under and pursuant to the attached Warrant, and the undersigned does hereby
irrevocably constitute and appoint _____________________ Attorney to
transfer said Warrant on the books of CTC Communications Group, Inc., with
full power of substitution.
[Type Name of Holder]
By:
Title:
Dated:
NOTICE:
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
EXHIBIT C
FORM OF ASSIGNMENT
(PARTIAL)
[To be signed only upon partial transfer of Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________ (i) the rights of the
undersigned to purchase ___ shares of Common Stock under and pursuant to the
attached Warrant, and (ii) on a non-exclusive basis, all other rights of the
undersigned under and pursuant to the attached Warrant, it being understood
that the undersigned shall retain, severally (and not jointly) with the
transferee(s) named herein, all rights assigned on such non-exclusive basis.
The undersigned does hereby irrevocably constitute and appoint
__________________________ Attorney to transfer said Warrant on the books of
CTC Communications Group, Inc., with full power of substitution.
[Type Name of Holder]
By:
Title:
Dated:
NOTICE:
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
EXHIBIT D
REGISTRATION RIGHTS
The Common Stock issuable upon exercise of the attached Warrant shall be
deemed "registrable securities" under, and Holder of the attached Warrant
shall otherwise be entitled to the benefit of, the following agreement (the
"Agreement") between Company and its investor(s):
None
[Identify Agreement by date, title and parties.]
Company agrees that no amendments shall be made to the Agreement which would
have an adverse impact on Holder's registration rights thereunder without
the consent of Holder. By acceptance of the Warrant to which this Exhibit D
is attached, Holder shall be deemed to be a party to the Agreement.
If no Agreement is identified above, then Holder shall be entitled to the
benefits of the following registration rights (hereinafter referred to as
the "Registration Rights") which shall be incorporated into and deemed part
of the attached Warrant; provided, that the Registration Rights granted
pursuant to Section 4 below shall be effective notwithstanding the existence
of non-existence of any Agreement:
1. Certain Definitions.
As used herein, the following terms shall have the following respective
meanings (any capitalized terms used in these Registration Rights and not
otherwise defined below to have the meanings ascribed to them in the
attached Warrant):
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Holder" shall mean any holder of Registrable Securities.
"Other Shareholders" shall mean holders of securities of Company who
are entitled by contract with Company or who are permitted by Company to
have securities included in a registration of Company's securities.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the effectiveness of such registration statement.
"Registrable Securities" shall mean the Warrant Shares less any
Warrant Shares theretofore sold to the public or in a private placement.
"Registration Expenses" shall mean all expenses incurred by Company in
compliance with Section 2 and 4 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but
excluding the compensation of regular employees of Company, which shall be
paid in any event by Company).
2. Company Registration.
(a) Notice of Registration. If Company shall determine to register any
of its Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock either for its own account or for the account
of any Other Shareholder other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Commission
Rule 145 transaction, or any other registration on any registration form
which does not permit secondary sales, Company shall:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which Company intends to attempt to
qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any Holder within fifteen (15) days after receipt of the
written notice from Company described in clause (i) above, subject to (a)
requirements and rights existing as of the date of this Warrant of Other
Shareholders, and (b) any limitations on the number of shares as set forth
in Section 2(b) below.
(b) Underwriting. If the registration of which Company gives notice is
for a registered public offering involving an underwriting, Company shall so
advise Holders as part of the written notice given pursuant to
Section 2(a)(i). In such event, the right of any Holder to registration
pursuant to Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with Company, directors and officers and the Other Shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by Company.
Notwithstanding any other provision of this Section 2, if the
underwriter determines that marketing or other factors require a limitation
on the number of shares to be underwritten, the underwriter may (subject to
the allocation priority set forth below) exclude from such registration and
underwriting some or all of the Registrable Securities which would otherwise
be underwritten pursuant hereto. Company shall so advise all holders of
securities requesting registration, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall
be allocated in the following manner. The number of shares that may be
included in the registration and underwriting on behalf of such Holders,
directors and officers and Other Shareholders (if any) shall be allocated
among such Holders, directors and officers and Other Shareholders in
proportion, as nearly as practicable, to the respective amounts of
Registrable Securities and other securities which they had requested to be
included in such registration at the time of filing the registration
statement.
If any Holder of Registrable Securities or any officer, director or Other
Shareholder disapproves of the terms of any such underwriting, it, he or she
may elect to withdraw therefrom by written notice to Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
3. Registration Rights.
In the event that Company grants after the date hereof registration
rights, including demand registration rights, to any other holder of
securities of Company, Company shall promptly give to Holder written notice
thereof and, if in the opinion of Holder such registration rights are more
favorable than the registration rights provided under the attached Warrant,
Holder shall so notify Company within thirty (30) days of receipt of the
foregoing notice from Company. Holder shall have the right, upon notice to
Company after receipt of the Company's notice to Holder as set forth
immediately above, to deem such registration rights to be incorporated into
the attached Warrant, whereupon such registration rights shall automatically
be deemed to be incorporated in the attached Warrant.
4. Demand Registration Rights. After receipt of a written request
from a Holder representing at least an aggregate of twenty percent (20%) of
the total of all Warrant Shares then subject to purchase upon exercise of
the Warrant, requesting that the Company register Warrant Shares issuable
upon Holder's exercise of the Warrant or any of the Warrant Shares under the
Securities Act and specifying the intended method or methods of disposition
thereof, the Company shall promptly notify all Holders of Warrants or
Warrant Shares in writing of the receipt of such request and each such
Holder may elect, by written notice to the Company within fifteen (15)
business days from the date of such Holders's receipt of the Company's
notice, to have its Warrant Shares included in such registration. The
Company shall, as expeditiously as possible following such request, use its
best efforts to effect the registration under the Securities Act of all
Warrant Shares which the Company has been requested to register by Holder
for sale, all to the extent requested to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Warrant Shares so registered; provided, that the Company shall not be
required to effect more than three (3) registrations of any Warrant Shares
pursuant to this Section 4, not including registration statements on Form S-
3 which shall not count for purposes of this limitation. No holder of any
other warrant issued after the date of this Warrant shall receive or be
entitled to receive registration rights that are more favorable than the
registration rights available to Holder pursuant to this Section 4.
5. Expenses of Registration.
Company (or Other Shareholders) shall bear all Registration Expenses
incurred in connection with any registration, qualification and compliance
by Company (or such Other Shareholders) pursuant to Sections 2 and 4. .
6. Registration Procedures.
In the case of each registration effected by Company pursuant to
these Registration Rights, Company shall keep each Holder advised in writing
as to the initiation of each registration and as to the completion thereof.
Company shall, at its expense:
(i) keep such registration effective for a period of one hundred
twenty (120) days or until Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs;
(ii) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request; and
(iii) use its best efforts to register or qualify the Registrable
Securities under the securities laws or blue-sky laws of such jurisdictions
as any Holder may request; provided, however, that Company shall not be
obligated to register or qualify such Registrable Securities in any
particular jurisdiction in which Company would be required to execute a
general consent to service of process in order to effect such registration,
qualification or compliance, unless Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder.
7. Indemnification.
(i) Company, with respect to each registration, qualification and
compliance effected pursuant to these Registration Rights, shall indemnify
and hold harmless each Holder, each of its officers, directors, partners,
and agents, and each party controlling such Holder, and each underwriter, if
any, and each party who controls any underwriter, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or
based on 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, or any violation by Company of the Securities Act or any
rule or regulation thereunder applicable to Company and relating to action
or inaction required of Company in connection with any such registration,
qualification or compliance, and shall reimburse each such Holder, each of
its officers, directors, partners, and agents, and each party controlling
such Holder, each such underwriter and each party who controls any such
underwriter, for any legal and any other expenses incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, provided that Company shall not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission based solely upon written
information furnished to Company by such Holder or underwriter, as the case
may be, and stated to be specifically for use in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification
or compliance.
(ii) Each Holder shall, if Registrable Securities held by it, him or
her are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and hold harmless
Company, each of its directors and officers and each underwriter, if any, of
Company's securities covered by such a registration statement and each party
who controls Company or such underwriter against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular
or other document, or 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 shall reimburse Company and such
directors, officers, partners, agents, parties, underwriters or control
persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus,
offering circular or other document solely in reliance upon and in
conformity with written information furnished to Company by such Holder and
stated to be specifically for use in any prospectus, offering circular or
other document (including any related registration statement, notification
or the like) incident to any such registration, qualification or compliance;
provided, however, that the obligations of such Holder hereunder shall be
limited to an amount equal to the proceeds to each such Holder of securities
sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense (unless the
Indemnified Party shall have been advised by counsel that actual or
potential differing interests or defenses exist or may exist between the
Indemnifying Party and the Indemnified Party, in which case such expense
shall be paid by the Indemnifying Party), and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under these Registration
Rights. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party,
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 such Indemnified Party of a release from all liability in
respect to such claim or litigation. Each Indemnified Party shall provide
such information as may be reasonably requested by an Indemnifying Party in
order to enable such Indemnifying Party to defend a claim as to which
indemnity is sought.
8. Information by Holder.
Each Holder shall furnish to Company such information regarding such
Holder as Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in these Registration Rights.
9. Rule 144 Reporting.
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of the Registrable
Securities to the public without registration, Company agrees to:
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times
that Holder holds Registrable Securities from and after ninety (90) days
following the effective date of the first registration under the Securities
Act filed by Company for an offering of its securities to the general
public;
(ii) File with the Commission in a timely manner all reports and
other documents required of Company under the Exchange Act at any time after
it has become subject to such reporting requirements; and
(iii) So long as Holder owns any Registrable Securities, furnish to
Holder forthwith upon request a written statement by Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after the end of the ninety (90) day period referred to in clause (i)), and
of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of Company, and such other reports and documents so filed
as Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing Holder to sell any such securities
without registration.
