Exhibit 10.30
BTI TELECOM CORP.
SERIES B REDEMPTION AGREEMENT
THIS SERIES B REDEMPTION AGREEMENT (this "Agreement") is dated as of
the 12/th/ day of January 2001, by and among BTI Telecom Corp., a North Carolina
corporation (the "Company"), and Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P., a
Delaware limited partnership, BTI Investors LLC, a Delaware limited liability
company, and Xxxxx X. Xxxxxx (collectively, the "Investor"). Capitalized terms
used herein and not otherwise defined in this Agreement shall have the meanings
assigned to them in the Purchase Agreement (as defined below).
WHEREAS, in connection with the purchase by the Investor of shares of
Series B Preferred Stock, par value $.01 per share, of the Company, pursuant to
Series B Preferred Stock Purchase Agreements dated as of January 12, 2001
(together, the "Purchase Agreement"), the Company desires to provide the
Investor certain rights with respect to the redemption of the Series B Preferred
Stock held by it as an inducement to the Investor to purchase shares of the
Series B Preferred Stock;
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions contained herein, the Company and the Investor hereby agree as
follows.
1. Option to Sell Shares to Company. Following the date (such date
--------------------------------
being hereinafter referred to as the "Liquidity Exercise Date") that is the
later of (a) the seventh anniversary of the date hereof or (b) six months after
the date on which all amounts owing under the 10 1/2% Senior Notes due 2007
issued by the Company pursuant to that certain Indenture, dated September 22,
1997, by and among the Company, Business Telecom, Inc. and First Trust of New
York, National Association, are repaid in full, if the Company receives from the
Investor or its transferees (collectively with the Investor, the "Holders")
holding a majority of the Series B Preferred Stock a written demand (the
"Investors' Notice") that the Company redeem all, but not less than all, of the
Series B Preferred Stock held by such Holders, the Company shall redeem all of
the Series B Preferred Stock then held by all the Holders on the terms herein
provided. The Company shall, within thirty (30) days after the Liquidity
Exercise Date, deliver a written notice (a "Redemption Notice") to the Holders
of their right to demand that the Company redeem the Series B Preferred Stock.
The Holders of a majority of the Series B Preferred Stock may, within sixty (60)
days after receipt of such notice, notify the Company that they demand that the
Company redeem all of the Series B Preferred Stock. The Company shall
repurchase all such Series B Preferred Stock under this Agreement as set forth
below. The demand to redeem Series B Preferred Stock pursuant to this Section 1
shall be referred to as the "Option."
2. Price.
-----
(a) The price to be paid by the Company for the Series B Preferred
Stock to be sold under the Option shall be as follows: (i) if the redemption
occurs prior to a Series B Qualified Public Offering (as defined in the
Company's Second Amended and Restated Articles
of Incorporation (the "Articles of Incorporation")), the redemption price shall
be the higher of (A) the Fair Market Value of the Common Stock issuable upon
conversion of such Series B Preferred Stock as of the Liquidity Exercise Date or
(B) the Series B Liquidation Amount (as defined in the Articles of
Incorporation); or (ii) if the redemption occurs after a Series B Qualified
Public Offering, the redemption price shall be the Series B Liquidation Amount.
For purposes of this Agreement, the "Fair Market Value" of the Common Stock
issuable on conversion of the Series B Preferred Stock shall be, as of a
particular date, (i) with respect to one share of Common Stock, if the sum of
the Daily Prices of (x) all of the outstanding shares of Common Stock that have
been registered pursuant to a public offering and (y) all of the outstanding
shares of Common Stock that are not held by affiliates of the Company and that
may be sold on such date in an open market transaction without registration, is
at least $250 million as of such date, the average (weighted by daily trading
volume) of the Daily Prices (defined below) per share of Common Stock for the 20
consecutive trading days immediately prior to such date or (ii) in any other
event, an amount determined in the manner described in clause (5) of the
definition of "Daily Price" below. "Daily Price" means (1) if the shares of such
Common Stock then are listed and traded on the New York Stock Exchange, Inc.
("NYSE"), the closing price on such day as reported on the NYSE Composite
Transactions Tape; (2) if the shares of Common Stock then are not listed and
traded on the NYSE, the closing price on such day as reported by the principal
national securities exchange on which the shares are listed and traded; (3) if
the shares of Common Stock then are not listed and traded on any such securities
exchange, the last reported sale price on such day on the National Market of the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"); (4) if the shares of Common Stock then are not traded on the NASDAQ
National Market, the average of the highest reported bid and lowest reported
asked price on such day as reported by NASDAQ; or (5) if there are no bid/asked
prices so reported, an amount agreed upon in good faith by the Company and a
representative designated by the Holders of a majority of the outstanding Series
B Preferred Stock, taking into account, in valuing such shares, all relevant
facts and circumstances; provided that there shall be no discount to reflect the
fact that the shares represent a minority interest in the Company and no premium
to reflect any special voting or approval rights of the Holders with respect to
certain matters. If no such agreement is reached pursuant to clause (5) above or
clause (ii) of the definition of "Fair Market Value" within thirty (30) days
after notice is given to the Company of the Holders' exercise of the Option the
Fair Market Value shall be determined by appraisal as set forth below.
(b) All appraisals shall be undertaken by two appraisers, one selected
by the Board of Directors of the Company and one selected by the Holders of a
majority of the outstanding Series B Preferred Stock. No Director whose Series
B Preferred Stock is being appraised or who is designated by or affiliated with
a person whose Series B Preferred Stock is being appraised shall vote on the
selection of the appraiser chosen by the Company. In the event the Board of
Directors or Holders fail to appoint an appraiser within a reasonable period of
time, the appraisal shall be undertaken by the remaining single appraiser. The
Fair Market Value shall be the fair market value (determined in the manner
described in Section 2(a) above) arrived at by the appraisers (based upon the
number of shares of Common Stock into which the Series B Preferred Stock is
convertible (as determined in the Articles of Incorporation)) within thirty (30)
days following the appointment of the last appraiser to be appointed. In the
event that the two
2
appraisers agree in good faith on such fair market value within such a period of
time, such agreed value shall be used for these purposes. If the appraisers
cannot agree but their valuations are within 10% of each other, the fair market
value shall be the mean of the two valuations. If the appraisers cannot agree
and the differences in the valuations are greater than 10%, the appraisers shall
select a third appraiser who will calculate fair market value independently
(provided that such calculation shall not be more than the value calculated by
the appraiser selected by the Holders or less than the value calculated by the
appraiser selected by the Board of Directors) and, except as provided in the
next sentence, the fair market value of the shares shall be the mean of the two
fair market values arrived at by the appraisers who are closest in amount. If
one appraiser's valuation is the mean of the other two valuations, such mean
valuation shall be the fair market value. In the event that the two original
appraisers cannot agree upon a third appraiser within ten (10) days following
the end of the thirty (30) day period referred to above, then the third
appraiser, which appraiser shall be a nationally recognized investment banking
firm, shall be appointed by the American Arbitration Association in Washington,
D.C. If, following the final determination of the purchase price for the shares,
a Holder previously offering its shares for repurchase shall choose not to sell
any or all of its shares, then such Holder shall so notify the Company within
ten (10) days following receipt of the results of the appraisal; provided that
if a Holder shall choose not to sell any of its shares, such Holder shall
forfeit its Option hereunder. Notwithstanding the foregoing, if a Holder chooses
not to sell any of its shares as a result of the Company's delay in repurchase
pursuant to Section 3(b) below, such Holder shall not be required to forfeit its
Option. The expenses of the appraisers will be borne by the Company.
3. Payment.
-------
(a) Within sixty (60) days following the final determination of
the purchase price for the Series B Preferred Stock (such 60/th/ day (or, if
earlier, the date of the purchase hereinafter referred to) shall be defined
herein as the "Redemption Date"), the Company shall purchase the Series B
Preferred Stock tendered to it at the price established by this Agreement (the
"Redemption Price"). The Company shall pay the Redemption Price for the tendered
Series B Preferred Stock in cash on the Redemption Date.
(b) Notwithstanding the other provisions of this Agreement, the
Company shall not be obligated to repurchase any Series B Preferred Stock to the
extent such repurchase would violate applicable law. If, on account of the
first sentence of this subparagraph (b) the Company cannot fund the entire
purchase price of all of the Series B Preferred Stock offered for redemption on
the Redemption Date, the Company shall pay for such remaining Series B Preferred
Stock when permitted; and any amounts not paid at the Redemption Date shall be
paid as soon as permitted. Upon redemption of any Series B Preferred Stock, all
rights of such Series B Preferred Stock shall terminate.
(c) Payment shall be made by check or wire transfer of funds to
such bank account as the Holders shall direct.
4. Termination of Option. Except as provided in Section 2(b) above,
---------------------
the obligation of the Company to purchase the Series B Preferred Stock as
provided in this Agreement shall
3
terminate if the Company does not receive the Investors' Notice within sixty
(60) days after receipt by the Holders of the Redemption Notice. In addition,
the obligations of the Company to purchase the Series B Preferred Stock shall
terminate at such time as the Series B Preferred Stock is converted into Common
Stock or at such time as the Company elects to terminate certain rights of the
Series B Preferred Stock pursuant to Article IV, Section 4(m)(ii) of the
Articles of Incorporation.
5. Amendments; Waivers and Consents. Any provision in this Agreement
--------------------------------
to the contrary notwithstanding, changes in or additions to this Agreement may
be made if the Company shall obtain consent thereto in writing from the Holders
holding at least a majority of the Series B Preferred Stock; and compliance with
any covenant or provision herein set forth may be omitted or waived (in a
particular instance and either retroactively or prospectively) if the Company
shall obtain consent thereto in writing from the Holders holding at least a
majority of the Series B Preferred Stock. No failure or delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
6. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns, heirs, executors and administrators of the
parties hereto; provided that the Company may not assign its obligations under
this Agreement.
7. Entire Agreement. This Agreement, along with the Articles of
----------------
Incorporation, the Purchase Agreement, the Series A Warrant, the Series B
Warrants, the Shareholders Agreement and the Investor Rights Agreement,
constitutes the full and entire understanding and agreement among the parties
with regard to the subjects hereof and thereof and supersedes all prior
agreements and understanding among them as to such subject matter. This
Agreement shall not confer any rights or remedies upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns.
8. Severability. Any invalidity, illegality or limitation of the
------------
enforceability with respect to any party of any one or more of the provisions of
this Agreement, or any part thereof, whether arising by reason of the law of any
such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of the remainder of this Agreement with
respect to such party or the validity, legality or enforceability of this
Agreement with respect to any other party. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
9. Notices. All notices and other communications between the Company
-------
and the Holders shall be delivered in the manner set forth in the Investor
Rights Agreement.
4
10. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Agreement may be delivered via facsimile, with the intention that they shall
have the same effect as an original counterpart hereof.
11. Effect of Headings. The article and section headings herein are for
------------------
convenience only and shall not affect the construction hereof.
12. Recapitalization, etc. In the event that any capital stock or other
----------------------
securities are issued in respect of, in exchange for, or in substitution of, any
shares of Series B Preferred Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Series B Preferred Stock or any
other change in capital structure of the Company, appropriate adjustments shall
be made with respect to the relevant provisions of this Agreement so as to
fairly and equitably preserve, as far as practicable, the original rights and
obligations of the parties hereto under this Agreement.
13. Governing Law. This Agreement shall be deemed a contract made under
-------------
the laws of the State of North Carolina and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State without regard to the conflicts of laws provisions
thereof.
14. Specific Performance. Each of the parties hereto expressly agrees
--------------------
that the other parties hereto may be irreparably damaged if this Agreement is
not specifically enforced. Upon a breach or threatened breach of the terms or
covenants of this Agreement by any party hereto, the other parties shall, in
addition to all other remedies, each be entitled to apply for a temporary or
permanent injunction and/or a decree for specific performance in accordance with
the provisions hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
5
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY: BTI TELECOM CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
INVESTOR: WELSH, CARSON, XXXXXXXX & XXXXX VIII, L.P.
By: WCAS VIII Associates LLC, General Partner
By: /s/ Xxxxxxxx X. Rather
---------------------------------------
Name: Xxxxxxxx X. Rather
Title: Member
BTI INVESTORS LLC
By: /s/ Xxxxxxxx X. Rather
---------------------------------------
Name: Xxxxxxxx X. Rather
Title: Authorized Person
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
6
