SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report May 15, 1998
(Date of earliest event reported) (April 10, 1998)
CTC COMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)
Massachusetts 0-13627 04-2731202
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
360 Second Ave., Waltham, Massachusetts 02154
(Address of principal executive offices) (Zip Code)
(781) 466-8080
(Registrant's telephone number including area code)
(Former name or former address if changed since last report)
Item 5.
The summary information contained herein is qualified in its
entirety by reference to the texts of the relevant documents
referred to herein and attached as exhibits hereto.
A. Spectrum Equity Investors II, L.P. Private Placement
On April 10, 1998, the Registrant issued for investment to Spectrum
Equity Investors II, L.P. ("Spectrum") and certain other private
investors (together with Spectrum, the "Investors") an aggregate of
666,666 shares of Series A Convertible Preferred Stock (the
"Preferred Shares") for $12 million, pursuant to the terms and
conditions of a Securities Purchase Agreement of even date among
the Registrant and the Investors (the "Spectrum Private
Placement"). The Registrant also issued for investment to the
Investors five-year warrants to purchase an aggregate of 133,333
shares of its Common Stock at an exercise price of $9.00 per share.
Spectrum purchased 98.63% of the Preferred Shares and warrants in
the private placement.
The Registrant intends to use the proceeds of the private placement
for working capital.
The Registrant entered into a registration rights agreement with
the Investors with respect to the shares of Common Stock issuable
upon conversion of the Preferred Shares and upon exercise of the
warrants ("Registrable Securities") providing for "piggyback"
registration rights and demand registration rights as follows. At
any time after October 9, 1998, upon demand of a majority of the
holders of the Registrable Securities on a fully diluted basis
after giving effect to the conversion of all of the Preferred
Shares and the exercise of all warrants, the Registrant has agreed
to file a Registration Statement covering the Registrable
Securities on no more than three occasions; provided, however that
the Registrant shall be permitted to delay the filing for the 180
day period immediately following the commencement of the
Registrant's public offering of equity securities. In addition, in
the event of a mandatory conversion of the Preferred Shares (see
"Certificate of Designation" discussed below), the Company has
agreed to file a Registration Statement covering the Registrable
Securities. The Registrant has agreed to pay all expenses of
filing the registration statement, except that the holders of the
Registrable Securities shall bear the costs of their own legal
counsel and any underwriting commissions applicable to the
securities sold by them.
Robert J. Fabbricatore, Chairman and Chief Executive Officer of the
Registrant, individually and as trustee and general partner of
certain affiliated entities, which together held 27.23% of the
Registrant's outstanding shares of Common Stock as of such date,
entered into a Voting Agreement with Spectrum under the terms of
which Mr. Fabbricatore individually and on behalf of his affiliated
entities agreed to vote their shares in favor of the election to
the Registrant's Board of Directors of up to two persons designated
by a majority of the Preferred Shareholders.
Kevin J. Maroni and William P. Collatos, general partners of
Spectrum and designees of the Preferred Shareholders, were elected
Class III directors of the Registrant effective April 10, 1998.
Spectrum is an unaffiliated private equity fund with offices in
Boston and Palo Alto which manages $360 million in private capital
for investments in growing telecommunications companies.
B. Restatement of the Bylaws
On March 24, 1998, the Board of Directors of the Registrant
approved Amended and Restated Bylaws and increased the number of
Board members from five to eight effective April 10, 1998. The
Amended and Restated Bylaws provide that the Board of Directors is
classified into three classes, so that each director (after a
transitional period) serves for three years, with one class of
directors being elected each year. The Board of Directors is
currently comprised of two Class I Directors (Henry Hermann and
Ralph Sillari), two Class II Directors (J. Richard Murphy and
Richard Santagati) and three Class III Directors (Robert J.
Fabbricatore, Kevin J. Maroni and William P. Collatos). The terms
of the Class I, Class II and Class III Directors expire upon the
election and qualification of successor directors at annual
meetings of stockholders held following the end of fiscal years
1998, 1999 and 2000, respectively.
Prior to joining Spectrum as a General Partner in 1994, Mr. Maroni
served as Manager, Finance and Development at Time Warner
Telecommunications, where he was involved in corporate development
projects. From 1990 to 1992, Mr. Maroni served as a consultant in
the private equity group of Harvard Management Company. Mr. Maroni
is currently a director of Pathnet, Inc., Formus Communications,
Inc., WNP Communications, Inc. and American Cellular Corp.
Prior to co-founding Spectrum as a General Partner in 1993, Mr.
Collatos was a founding General Partner of Media/Communications
Partners and a General Partner of TA Associates. Mr. Collatos
currently serves as a director of Galaxy Telecom, Inc., TSR Paging
Inc., Golden Sky Systems Inc., and Internet Network Services
Holdings Ltd.
C. Certificate of Designation for Preferred Shares
On April 10, 1998, the Registrant filed a Certificate of
Designation with the Secretary of the Commonwealth of Massachusetts
setting forth the designations, preferences and relative and other
special rights, qualifications, limitations and restrictions of the
666,666 Preferred Shares issued in connection with the Spectrum
Private Placement. Each Preferred Share accrues a dividend in an
amount equal to 9% per annum of the $18.00 purchase price for each
Preferred Share compounding semiannually in arrears from the date
of issuance and prorated on a daily basis payable upon liquidation
or conversion of the Preferred Shares. Upon liquidation,
dissolution or winding up of the Registrant, the Preferred Shares
rank senior to any other junior class of the Registrant's capital
stock. The Preferred Shares are convertible at any time at the
holder's election into shares of the Registrant's Common Stock. In
addition, the Preferred Shares will automatically be converted into
shares of the Registrant's Common Stock (i) if the market price of
the Common Stock reaches certain levels or (ii) at such time as at
least 500,000 Preferred Shares have been converted. The Preferred
Shareholders are entitled to vote such number of Preferred Shares
which they hold equal to the lesser of (i) the whole number of
shares into which such Preferred Shares are convertible and the
number of shares issuable upon exercise of the warrants held by
them and (ii) the number of Preferred Shares held by them
multiplied by 2.476. Except as otherwise provided by law, the
Preferred Shareholders vote with the holders of the Common Stock as
a single class.
Item 7c. Exhibits.
Exhibit 3.1 Articles of Incorporation including the
Certificate of Designation for the
Series A Convertible Preferred Stock.
Exhibit 3.2 Amended and Restated Bylaws.
Exhibit 10.1 Securities Purchase Agreement dated
April 10, 1998
Exhibit 10.2 Registration Rights Agreement dated
April 10, 1998
Exhibit 10.3 Form of Warrant dated April 10, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CTC COMMUNICATIONS CORP.
(Registrant)
By: /s/ John D. Pittenger
John D. Pittenger
Executive Vice President
May 15, 1998