Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of April 10, 1998 between CTC COMMUNICATIONS CORP., a
Massachusetts corporation (the "Company"), and those entities whose names
appear on the signature pages hereof (the "Holders").
This Agreement is made in connection with the Securities Purchase
Agreement, dated the date hereof (the "Purchase Agreement") between the
Company and the Holders, pursuant to which the Holders are acquiring
Series A Convertible Preferred Stock of the Company and Warrants to
acquire Common Stock in the Company. The execution of and delivery of
this Agreement is a condition precedent to the obligations of the Holders
under the Purchase Agreement.
Unless otherwise defined herein, capitalized terms so used herein and not
defined shall have the same meaning as provided in the Purchase Agreement.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
(a) "Business Day" means any day, other than a Saturday, Sunday or
legal holiday, on which banks in the State of New York are open for
business.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Common Stock" means the Common Stock, par value $.01 per
share, of the Company, as constituted on the date hereof, any shares into
which such Common Stock shall have been changed, or any shares resulting
from any reclassification of such Common Stock.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute thereto, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in
effect at the time.
(e) "Holders" means the Holders referred to in the Preamble and
any other person holding Registrable Securities to whom these registration
rights have been assigned pursuant to Section 9(f) of this Agreement.
(f) "Other Securities" shall mean Common Stock or other equity
securities (excluding Registrable Securities) issued by the Company
following the date of this Agreement.
(g) "Preferred Stock Derivatives" shall have the meaning set forth
in the Certificate of Designation designating the Series A Preferred
Stock.
(h) "Person" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision
thereof.
(i) "Registrable Securities" means (i) the Common Stock held by
any Holder issued or issuable pursuant to the conversion of the Series A
Preferred Stock or the exercise of the Warrants; (ii) any Common Stock or
other securities issued or issuable pursuant to the conversion of, or with
respect to, the Series A Preferred Stock or Warrants held by any Holder
upon any stock split, stock dividend, recapitalization, or similar event;
and (iii) securities issued in replacement or exchange of any of the
securities issued in clauses (i) or (ii) above.
(j) "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all registration, filing, listing and National
Association of Securities Dealers, Inc. ("NASD") fees, all fees and
expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, all messenger and delivery
expenses, any transfer taxes, the fees and expenses of the Company's legal
counsel and independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, fees and disbursements of one counsel for all
of the Holders, and any fees and disbursements of underwriters customarily
paid by insurers or sellers of securities; provided, however, that
Registration Expenses shall not include underwriting discounts and
commissions.
(k) "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at
the time.
(l) "Series A Preferred Stock" means the Series A Convertible
Preferred Stock, $1.00 par value per share, of the Company, as constituted
on the date hereof, any shares into which such Series A Preferred Stock
shall have been changed or any shares resulting from any reclassification
of such Series A Preferred Stock.
(m) "Warrants" means the Warrants issued pursuant to the Purchase
Agreement, entitling the holders thereof to purchase 133,333 shares of
Common Stock, together with any replacement warrants issued with respect
thereto or any securities issued pursuant thereto.
2. Registration.
(a) Requested Registration and Shelf Registration. (i) At any
time after October 9, 1998, upon written request by those Persons holding
Series A Preferred Stock, Warrants and/or Registrable Securities
representing, at the time, a majority of all Registrable Securities on a
fully diluted basis after giving effect to the conversion of all Series A
Preferred Stock and the exercise of all Warrants (the "Requisite Holders")
that the Company effect the registration under the Securities Act of all
or part of the Registrable Securities (a "Requested Registration"), the
Company will use its best efforts to effect and maintain the registration
under the Securities Act of the Registrable Securities which the Company
has been so requested to register by the Holders within ninety (90) days
after receipt of such request or within sixty (60) days after receipt of
such request if the Company is qualified to file a registration statement
on Commission Form X-0, X-0 or any successor or similar short-form
registration statement (collectively, "Commission Form S-3"); provided,
however, that the Company shall not be obligated to effect a Requested
Registration pursuant to this subdivision during the 180 day period
immediately following the commencement of the Company's public offering of
equity securities nor shall the Company be obligated to effect more than
three (3) Requested Registrations under this Section 2(a)(i). Subject to
subdivision (f), the Company may include in such Requested Registration
other securities of the Company for sale, for the Company's account or for
the account of any other person, if and to the extent that the managing
underwriter determines that the inclusion of such additional shares will
not interfere with the orderly sale of the underwritten securities at a
price range acceptable to the requesting Holders. Upon receipt of a
written request pursuant to this subdivision (a) the Company shall
promptly give written notice of such request to all Holders, and all
Holders shall be afforded the opportunity to participate in such request
as follows: The Company will be obligated to include in the Requested
Registration such number of Registrable Securities of any Holder joining
in such request as are specified in a written request by the Holder
received by the Company within 20 days after receipt of such written
notice from the Company.
(ii) In addition to the rights of the Holders under Section 2(a)(i)
above, as a condition to the mandatory conversion of the Series A
Preferred Stock pursuant to the Certificate of Designation designating the
Series A Preferred Stock, the Company shall file and cause to become
effective at the time set forth in the Certificate of Designation a shelf
registration statement on Commission Form S-3 or another appropriate form
pursuant to Rule 415 under the Securities Act or any similar rule that may
be adopted by the Commission, with respect to all the Registrable
Securities requested by such Holders to be included in such shelf
registration statement (each, a "Shelf Registration"). The Company will
use its best efforts to amend such Shelf Registration from time to time at
the request of any Holders to cover additional Registrable Securities held
by such Holders, to keep such Shelf Registration continuously effective
for a period of one year following the mandatory conversion of the Series
A Preferred Stock or, if earlier, until all Registrable Securities covered
thereby have been sold and to take all actions required to permit the sale
of Registrable Securities thereunder. All other provisions of this
Agreement regarding registration procedures shall apply to a Shelf
Registration.
(iii) In the event the Requisite Holders request the assistance of
the Company in order to effect a sale of Registrable Securities under such
Shelf Registration pursuant to an underwritten offering, then (aa) the
Company will use its best efforts to assist in the sale of Registrable
Securities in such underwritten offering under such Shelf Registration as
if such offering were a Requested Registration under this Agreement, (bb)
all Holders shall have a right to participate in such underwritten
offering on the same basis as if such underwritten offering were a
Requested Registration under Section 2(a)(i), with the cutback provisions
of Section 2(f) being applied with respect to such offering and (cc) the
other provisions of this Agreement relating to Requested Registrations
shall apply, insofar as reasonably possible, to such underwritten offering
mutatis mutandis.
(b) Incidental Registration. If the Company for itself or any of
its security holders (unless pursuant to demand registration rights
granted with respect to Other Securities in compliance with this Agreement
if and to the extent that the managing underwriter determines that the
inclusion of Registrable Securities will interfere with the orderly sale
of the underwritten securities at a price range acceptable to the holders
of such Other Securities) shall at any time or times after the date hereof
determine to register under the Securities Act any shares of its capital
stock or other securities (other than: (i) the registration of an offer,
sale or other disposition of securities solely to employees of, or other
persons providing services to, the Company, or any subsidiary pursuant to
an employee or similar benefit plan; or (ii) relating to a merger,
acquisition or other transaction of the type described in Rule 145 under
the Securities Act or a comparable or successor rule, registered on Form
S-4 or similar or successor forms, including resales of such securities),
on each such occasion the Company will notify each Holder of such
determination at least thirty (30) days prior to the filing of such
registration statement, and upon the request of any Holder given in
writing within twenty (20) days after the receipt of such notice, the
Company will use its best efforts as soon as practicable thereafter to
cause any of the Registrable Securities specified by any such Holder to be
included in such registration statement to the extent such registration is
permissible under the Securities Act and subject to the conditions of the
Securities Act (an "Incidental Registration").
(c) Registration Statement Form. The Company shall, if permitted
by law, effect any registration requested under Section 2 by the filing of
a registration statement on Commission Form S-3 and shall use its best
efforts to take any action necessary to maintain its eligibility to
utilize Commission Form S-3 to permit resales as requested by the Holders
with respect to Transactions Involving Secondary Offerings as described in
General Instruction I.B.3 of Commission Form S-3.
(d) Expenses. The Company shall pay all Registration Expenses
incurred in connection with any Incidental Registration and any Requested
Registrations, and those holders of Registrable Securities participating
in such registrations shall bear a pro rata share of any applicable
underwriting discounts and commissions.
(e) Effective Registration Statement. A Requested Registration or
an Incidental Registration requested pursuant to Section 2(a) or Section
2(b), respectively, shall not be deemed to have been effected unless it
has become effective with the Commission. Notwithstanding the foregoing,
a registration statement will not be deemed to have been effected if: (i)
after it has become effective with the Commission, such registration is
interfered with by any stop order, injunction, or other order or
requirement of the Commission or other governmental agency or any court
proceeding for any reason other than a misrepresentation or omission by
any Holder; or (ii) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than solely by reason of some act or
omission by any Holder.
(f) Priority in Incidental Registration. If an Incidental
Registration is an underwritten registration initiated by the Company, and
the managing underwriters shall give written advice to the Company that,
in their opinion, market conditions dictate that no more than a specified
maximum number of securities (the "Underwriter's Maximum Number") could
successfully be included in such Incidental Registration, then: (i)
first, the Company shall be entitled to include in such registration that
number of securities which the Company proposes to offer and sell for its
own account in such registration and which does not exceed the
Underwriter's Maximum Number; and (ii) second, the Company will be
obligated and required to include in such registration that number of
shares of Registrable Securities which shall have been requested by the
Holders thereof having registration rights hereunder and shares held by
other holders of securities of the Company entitled to participate in such
Incidental Registration. If less than all of the Registrable Securities
or shares held by other holders entitled to participate in such
registration requested to be included in any such registration by the
holders of such securities can be so included due to these priority
requirements, then each requesting holder's request shall be granted on an
pro rata basis with the other requesting Holders and holders of securities
of the Company having rights to participate in such Incidental
Registration on a pro rata basis.
(g) Notwithstanding anything in paragraphs (a) and (b) of this
Section 2, the Company shall have the right to (i) delay any registration
of Registrable Securities requested pursuant to paragraph (a) or (b) of
this Section 2 or (ii) upon written notice to the Holders, prohibit the
Holders from selling Registrable Securities under the Shelf Registration,
in either case for up to sixty (60) days if such registration or sale, as
applicable, would, in the judgment of the Company's Board of Directors,
substantially interfere with any material transaction being considered at
the time of receipt of the request from the Holders or at the time of the
sale prohibition notice, as applicable; provided however, that the
provisions of this paragraph (g) shall not be invoked by the Company on
more than two occasions during any period of 365 days and shall not be
invoked so as to delay any registration or sale of Registrable Securities
for more than sixty (60) days; and provided further, that the Holders
shall not unreasonably withhold their consent to a delay beyond sixty (60)
days if requested by the Company. The time period during which any sale
prohibition is in effect under this Section 2(g) shall be added to the
time period for which a registration statement is otherwise required to
remain effective under Section 2(a) of this Agreement.
3. Registration Procedures.
(a) If and whenever the Company is required to use its best
efforts to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 2, the Company, as expeditiously as
possible and subject to the terms and conditions of Section 2, will:
(i)prepare and file with the Commission the requisite
registration statement to effect such registration and use its best
efforts to cause such registration to become and remain effective;
(ii)permit any Holder which, in the reasonable judgment of the
Holder, might be deemed to be an underwriter or a controlling person of
the Company, to participate in the preparation of such registration
statement and to require the insertion therein of material, furnished to
the Company in writing, which in the reasonable judgment of such Holder
and its counsel should be included and which is not reasonably objected to
by the Company and its Counsel;
(iii)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 securities covered by such
registration statement until the earlier of such time as all of such
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 or the expiration of 180 days after such
registration statement becomes effective;
(iv)furnish to the Holders such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents, as
the purchaser or any Holder of Registrable Securities to be sold under
such registration statement may reasonably request in order to facilitate
the distribution of such Registrable Securities;
(v)use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other United
States state securities or blue sky laws of such jurisdictions as any
Holder of Registrable Securities to be sold under registration statement
shall reasonably request, to keep such registration or qualification in
effect for so long as such registration remains in effect, and take any
other action which may be customary in similar offerings to enable the
Holder of Registrable Securities to be sold under such registration
statement to consummate the disposition in such jurisdictions of the
securities owned by such Holder, except that the Company shall not for any
such purpose be required to (a) qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (v) be obligated to be so qualified, or
(b) subject itself to taxation in any such jurisdiction.
(vi)use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved
by such other United States state governmental agencies or authorities as
may be necessary to enable the Holder of Registrable Securities to be sold
under such registration statement to consummate the intended disposition
of such Registrable Securities;
(vii)in the event of the issuance of any stop order suspending
the effectiveness of the registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending
the qualification of any Registrable Securities included in such
registration statement for sale in any jurisdiction, the Company shall use
its best efforts promptly to obtain the withdrawal of such order;
(viii)use it best efforts to furnish to the Holders of
Registrable Securities to be sold under such registration statement (1) an
opinion, dated the effective date of the registration statement, of the
independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the Holders
making such request, stating that such registration statement has become
effective under the Securities Act and that (i) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act; (ii) the registration
statement, the related prospectus, and each amendment or supplement
thereto, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no opinion as
to financial statements contained therein); (iii) such counsel has no
reason to believe that either the registration statement or the
prospectus, or any amendment or supplement thereto, contains any untrue
statement of a material fact or omits a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading; (iv) the descriptions in the registration
statement or the prospectus, or any amendment or supplement thereto, of
all legal and governmental matters and contracts and other legal documents
or instruments are accurate and fairly present the information required to
be shown; and (v) such counsel does not know of any legal or governmental
proceedings, pending or contemplated, required to be described in the
registration statement or prospectus, or any amendment or supplement
thereto, which are not described as required nor of any contracts or
documents or instruments of a character required to be described in the
registration statement or prospectus, or any amendment or supplement
thereto or to be filed as exhibits to the registration statement which are
not described and filed as required; and (2) a letter, dated the effective
date of the registration statement, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and to
the Holders making such request, stating that they are independent
certified public accountants within the meaning of the Securities Act and
that in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act.
Such opinion of counsel shall additionally cover such legal
matters with respect to the registration in respect of which such opinion
is being given as the Holders may reasonably request. Such letter from
the independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not
more than five business days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given
as the Holders may reasonably request.
(ix)immediately notify the Holders of Registrable Securities
included in 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 result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of 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 under which they were made,
and at the request of the Holders promptly prepare and furnish to the
Holders 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 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 under which they were
made;
(x)otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder, and not file any amendment or supplement to such
registration statement or prospectus to which any Holder shall have
reasonably objected in writing on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Securities Act or of the rules or regulations thereunder, having
been furnished with a copy thereof at least two business days prior to the
filing thereof to the extent reasonably possible;
(xi)provide a transfer agent for all Registrable Securities
covered by such registration statement not later than the effective date
of such registration statement;
(xii)use its best efforts to cause to be quoted or listed all
Registrable Securities covered by such registration statement on NASDAQ
and any securities exchange on which any of the Registrable Securities are
then quoted or listed; and
(xiii)otherwise use its best efforts to achieve the objectives
of the Holders including, without limitation, participation by senior
management in presentations to prospective purchasers and other marketing
activities consistent with those customarily conducted by issuers in
connection with primary offerings of securities.
(b) As a condition to the Company's obligation under this Section
with respect to any Holder, the Company may require such Holder of
Registrable Securities to be sold under such registration statement, at
the Company's expense, to furnish the Company with such information and
undertakings as it may reasonably request regarding such Holder and the
distribution of such securities as the Company may from time to time
reasonably request in writing.
(c) Each Holder, by execution of this Agreement, agrees (A) that
upon receipt of any notice of the Company of the happening of any event of
the kind described in subdivision (a)(ix) of this Section 3, such Holder
will forthwith discontinue its disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until the receipt by such Holder of the copies of the
supplemented or amended prospectus contemplated by subdivision (a)(ix) of
this Section 3 and, if so directed by the Company, will deliver to the
Company all copies other than permanent file copies, then in possession of
the Holders of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice and (B) that it will
immediately notify the Company, at any time when a prospectus relating to
the registration of such Registrable Securities is required to be
delivered under the Securities Act, of the happening of any event as a
result of which information previously furnished by such Holder to the
Company for inclusion in such prospectus contains 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 under which they were made. In the event the
Company or any such Holder shall give any such notice, the period referred
to in subdivision (a)(iii) of this Section 3 shall be extended by a number
of days equal to the number of days during the period from and including
the giving of notice pursuant to subdivision (a)(ix) of this Section 3 to
and including the date when such Holder shall have received the copies of
the supplemented or amended prospectus contemplated by subdivision (a)(ix)
of this Section 3.
4. Underwritten Offerings.
(a) Underwritten Offering. In connection with any underwritten
offering pursuant to a registration requested under Section 2(a), the
Company will enter into an underwriting agreement with the underwriters
for such offering, such agreement to be in form and substance reasonably
satisfactory to all Holders requesting such registration and such Holders'
underwriters in their reasonable judgment and to contain such
representations and warranties by the Company and such other terms as are
customarily contained in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in
Section 6. Each such Holder shall be a party to such underwriting
agreement and may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of each such Holder and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of each
such Holder. No Holder requesting such registration shall be required to
make any representations or warranties to or agreements with the Company
or the underwriters other than representations, warranties or agreements
regarding such Holder and its intended method of distribution and any
other representation required by law.
(b) Selection of Underwriters. If a Requested Registration
pursuant to Section 2(a) involves an underwritten offering, then the
Company shall select the underwriter from underwriting firms of national
reputation, with expertise in comparable offerings by companies engaged in
businesses similar to that of the Company, subject to the approval of the
Holders of a majority of the Registrable Securities to be included in such
registration, which approval shall not be unreasonably withheld.
(c) Holdback Agreements. Each Holder agrees, if so reasonably
required by the managing underwriter in a registration pursuant to Section
2, not to effect any public sale or distribution of Registrable Securities
or sales of such Registrable Securities pursuant to Rule 144 or Rule 144A
under the Securities Act, during the seven (7) days prior to and the 180
days after any firm commitment underwritten registration pursuant to
Section 2 has become effective (except as part of such underwritten
registration) or, if the managing underwriter advises the Company that, in
its opinion, no such public sale or distribution should be effected for a
period of not more than 180 days after such underwritten registration in
order to complete the sale and distribution of securities included in such
registration and the Company gives notice to such effect to such Holders
of such advice, each Holder shall not effect any public sale or
distribution of Registrable Securities or sales of such Registrable
Securities pursuant to Rule 144 or Rule 144A under the Securities Act
during such period after such underwritten registration, except as part of
such underwritten registration, whether or not such Holder participates in
such registration.
5. Preparation, Reasonable Investigation.
In connection with the preparation and filing of each registration
statement under the Securities Act other than pursuant to an underwritten
offering, the Company will give the Holders of Registrable Securities to
be sold under such registration statement, the underwriters, if any, and
their respective counsel and accountants, drafts and final copies of such
registration statement, each prospectus included therein or filed with the
Commission and each amendment thereof or supplement thereto, at least 5
business days prior to the filing thereof with the Commission, and will
give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such Holders and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
6. Indemnification and Contribution.
(a) Indemnification by the Company. In the event of any
registration under the Securities Act pursuant to Section 2 of any
Registrable Securities covered by such registration, the Company will, and
hereby does, indemnify and hold harmless each Holder of Registrable
Securities to be sold under such registration statement, each such
Holder's legal counsel, each other person who participates as an
underwriter in the offering or sale of such securities (if so required by
such underwriter as a condition to including the Registrable Securities of
the Holders in such registration) and each other person, if any, who
controls any such Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Indemnified Parties"), against any
losses, claims, damages or liabilities, joint or several, to which the
Holders or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein or any document incorporated therein
by reference, or any amendment or supplement thereto, 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, or
arise out of any violation by the Company of any rule or regulation
promulgated under the Securities Act or state securities law applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, and the Company will reimburse the
Indemnified Parties for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable to any Indemnified Party in any such case to
the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon
any 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
in reliance upon and in conformity with written information furnished to
the Company by such Indemnified Party.
(b) Indemnification by the Holders. The Company may require, as a
condition to including any Registrable Securities of any person or entity
in any registration statement filed pursuant to Section 2, that the
Company shall have received an undertaking reasonably satisfactory to it
from such person or entity to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this
Section 6) the Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if,
and only if, such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with information
furnished in writing to the Company directly by such person or entity
specifically for use therein; provided, however, that the obligation of
any Holder hereunder shall be limited to an amount equal to the proceeds
received by such Holder upon the sale of Registrable Securities sold in
the offering covered by such registration.
(c) Notices of Claims, etc. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of
this Section 6, such Indemnified Party will, if a claim in respect thereof
is to be made against a party required to provide indemnification (an
"Indemnifying Party"), give written notice to the latter of the
commencement of such action, provided, however, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligation under the preceding subdivisions of
this Section 6, except to the extent that the Indemnifying Party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an Indemnified Party, unless in such Indemnified
Party's reasonable judgment a conflict of interest between such
Indemnified and indemnifying parties may exist in respect of such claim,
the Indemnifying Party shall 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, and after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume
the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation. No Indemnifying Party shall consent to entry of
any judgment or enter into any settlement without the consent of the
Indemnified Party 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.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 6 (with
appropriate modifications) shall be given by the Company and each Holder
of Registrable Securities included in any registration statement with
respect to any required registration or other qualification of securities
under any Federal or state law or regulation of any governmental
authority, other than the Securities Act.
(e) Indemnification Payment. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
(f) Survival of Obligations. The obligations of the Company and
of the Holders under this Section 6 shall survive the completion of any
offering of Registrable Securities under this Agreement.
(g) Contribution. If the indemnification provided for in this
Section 6 is unavailable or insufficient to hold harmless an Indemnified
Party, then each Indemnifying Party shall contribute to the amount paid or
payable to such Indemnified Party as a result of the losses, claims,
damages or liabilities referred to in this Section 6 an amount or
additional amount, as the case may be, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party or
parties on the one hand and the Indemnified Party on the other in
connection with the statements or omissions which resulted in such losses,
claims, demands or liabilities as well as any other relevant equitable
considerations. 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 the Indemnifying Party or parties on
the one hand or the Indemnified Party on the other and the parties'
relative, intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid to
an Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this Section 6(g) shall
be deemed to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any
action or claim which is the subject of this Section 6. 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.
7. Covenants Relating to Rule 144.
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration after such
time as a public market exists for the Common Stock of the Company, the
Company agrees:
(a) to make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities
to the general public;
(b) to use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act, as amended (at any time
after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said
Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company for an offering of
its securities to the general public), 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 the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
8. Other Registration Rights.
The Company represents and warrants that it has not granted any
registration rights to any Person other than as described in the Purchase
Agreement. The Company shall not grant to any Person any registration
rights more favorable than or inconsistent with any of those contained
herein, so long as any of the registration rights under this Agreement
remain in effect.
9. Miscellaneous.
(a) Specific Performance. The parties hereto acknowledge that
there may be no adequate remedy at law if any party fails to perform any
of its obligations hereunder and that each party may be irreparably harmed
by any such failure, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other
party under this Agreement in accordance with the terms and conditions of
this Agreement.
(b) Notices. All demands, requests, notices and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by United States first class mail, postage
prepaid, and to the parties hereto at the following address or at such
other address as any party hereto shall hereafter specify by notice to the
other party hereto:
(i) if to the Company, addressed to:
CTC Communications Corp.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx and Xxxx Xxxxxxxxx
Facsimile No.: 000-000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxx Xxxxx, Esq.
Facsimile No.: 000-000-0000
Xxxxxxx X. Xxxxx, Esq.
Law Offices of Xxxxxxx X. Xxxxx, P.A.
00 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
(ii) if to the Holders, addressed to them at:
Spectrum Equity Investors
Xxx Xxxxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
with a copy to:
Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: 000-000-0000
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date
of personal delivery thereof or on the third business day after the
mailing thereof.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of Massachusetts, without
regard to conflicts of law principles thereof.
(d) Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for convenience only, and do
not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement.
(e) Entire Agreement; Amendments. This Agreement and the other
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a written instrument duly
executed by the Company and the Requisite Holders. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be
bound by an amendment or waiver authorized by this Section 9(e), whether
or not any such Registrable Securities shall have been marked to indicate
such consent.
(f) Assignability. This Agreement and all of the provisions
hereof will be assigned, without the consent of the Company, by any Holder
to, and shall inure to the benefit of, any purchaser, transferee or
assignee of any Series A Preferred Stock, Warrants, or Registrable
Security to the extent of the securities so transferred or assigned,
provided that (i) such purchaser, transferee or assignee is an Affiliate
or beneficial owner of the seller, transferor or assignor, (ii) after
giving effect to such sale, transfer or assignment, the purchaser,
transferee or assignee holds Series A Preferred Stock, Warrants or
Registrable Securities representing, upon conversion and exercise thereof,
at least 50,000 shares of Common Stock (as adjusted to give effect to any
stock dividends or stock splits), or (iii) the seller, transferor or
assignor does not affirmatively restrict in writing the transfer or
assignment of rights hereunder with respect to such securities. However,
the Company shall not be required to recognize any such purchaser,
transferee or assignee as a Holder under this Agreement unless and until
either (i) such person becomes the holder of record of Series A Preferred
Stock, Warrants, or Registrable Securities or (ii) the Company receives
written notice of such purchase, transfer or assignment and a written
agreement by the purchaser, assignee or transferee to be bound by the
provisions of this Agreement.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Stock Splits, Etc. If the Company at any time subdivides (by
any stock split, stock dividend, recapitalization or otherwise) its
outstanding shares of Common Stock into a greater number of shares or if
the outstanding shares of Common Stock shall be combined (by reverse stock
split or otherwise) into a smaller number of shares, all numbers,
percentages, computations and the like in this Agreement shall be deemed
modified as necessary to give appropriate effect to such subdivision or
combination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CTC COMMUNICATIONS CORP.
By:
Name:
Title:
SPECTRUM EQUITY INVESTORS II, L.P.
By Spectrum Equity Associates II,
L.P., its general partner
By _________________________________
Xxxxx X. Xxxxxx, a General Partner
DOEG HILL I, LLC
By: _________________________________
Xxxxxx Xxxxxxx, Member
______________________________________
Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxxxxx
______________________________________
Xxxxxxxx Xxxxxxxx
______________________________________
Xxxx Xxxx
______________________________________
Xxxxxxx X. Xxxxxxxx
______________________________________
Xxxxx Xxxx
______________________________________
Xxxxxxx Xxxxxx
