Exhibit 10.3
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: 542,075
Initial Warrant Price: $4.10
Expiration Date: February 27, 2009
THIS CERTIFIES THAT for value received, CISCO SYSTEMS CAPITAL CORPORATION, a
Nevada corporation, 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, five
hundred forty-two thousand seventy-five (542,075) 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 Master
Agreement to Lease Equipment, dated as of February 27, 2002, between the
CTC Communications Corp., as lessee, and Holder, as lessor. "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,
splitup, 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 ▇▇▇▇ 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 CALIFORNIA 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.
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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 nonexistence 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.