Exhibit 10.24.2
AMENDMENT NO. 1 TO
INVESTMENT AND STOCKHOLDERS' AGREEMENT
This Amendment No. 1 to Investment and Stockholders' Agreement is entered
into as of the 1st day of April, 1998, by and among PATHNET, INC., a Delaware
corporation (the "Company"), the investors listed on the signature pages hereto
(the "Investors"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"). Unless
the context otherwise requires, all references herein to the Company shall refer
to the Company and its subsidiaries on a consolidated basis.
WITNESSETH
WHEREAS, the Company and the Investors are parties to an Investment and
Stockholders' Agreement, dated October 31, 1997, as amended by that certain
Consent, Waiver and Amendment dated as of March 19, 1998 (the "Investment
Agreement");
WHEREAS, Jalkut entered into an Employment Agreement with the Company,
dated as of August 4, 1997, and in connection therewith the Company and the
Investors agreed to provide Jalkut with certain options to purchase common stock
of the Company (the "Common Stock"), and the Company may from time to time in
the future issue Jalkut further options to purchase Common Stock (collectively,
the "Jalkut Options");
WHEREAS, in connection with the issuance of the Jalkut Options, the
Company and the Investors agreed to provide Jalkut with certain registration
rights; and
WHEREAS, the Company, the Investors, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ now desire to
amend the Investment Agreement to provide Jalkut with such agreed upon
registration rights.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, each of the Investors,
severally, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and the Company do hereby covenant and agree to
amend the Investment Agreement as follows:
1. DEFINITIONS. All capitalized terms used herein but not defined
herein shall have the meanings ascribed to such terms in the Investment
Agreement.
2. ADDITION OF JALKUT AS PARTY TO INVESTMENT AGREEMENT. The
Investment Agreement is hereby amended by adding ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as a party
thereto.
3. AMENDMENT TO SECTION 7.1 OF THE INVESTMENT AGREEMENT. Section 7.1
of the Investment Agreement is hereby amended by deleting the existing Section
7.1 in its entirety and replacing it with the following:
"7.1 OPTIONAL REGISTRATIONS.
If at any time or times after the date hereof, the Company shall seek to
register any shares of its capital stock or securities convertible into capital
stock under the Securities Act (whether in connection with a public offering of
securities by the Company (a "primary offering"), a public offering of
securities by Founders of the Company (a "secondary offering"), or both, but not
a public offering pursuant to any demand registration rights under the Warrant
Registration Rights Agreement dated as of April 8, 1998 by and among the
Company, the Permitted Holders named therein and the Initial Purchasers named
therein (the "Warrant Registration Rights Agreement")), the Company will
promptly give written notice thereof to each Investor holding Registrable
Securities (as hereinafter defined in SECTION 7.4 below) then outstanding and to
Jalkut. If within 30 days after their receipt of such notice one or more
Investors or Jalkut request the inclusion of some or all of the Registrable
Securities held by them in such registration, the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which such Investors or Jalkut may request in a writing delivered to
the Company within 30 days after the notice given by the Company. In the case
of the registration of shares of capital stock by the Company in connection with
any underwritten public offering, if the underwriter(s) determines that
marketing factors require a limitation on the number of Registrable Securities
to be offered, the Company shall not be required to register Registrable
Securities of the Investors or Jalkut in excess of the amount, if any, of shares
of the capital stock which the principal underwriter of such underwritten
offering shall reasonably and in good faith agree to include in such offering in
excess of any amount to be registered for the Company. If any limitation of the
number of shares of capital stock to be registered by the Investors is required
pursuant to this SECTION 7.1, the number of shares that may be included in the
registration on behalf of the Investors shall be allocated among the Investors
or the holders of any other registration rights in proportion, as nearly as
practicable, to their respective holdings of Registrable Securities, after first
excluding from such registration statement all shares of Common Stock sought to
be included therein by (i) any director, officer or employee of the Company,
including Jalkut, unless and until Jalkut has been involuntarily terminated as
an officer of the Company pursuant to Sections 6(d) or 6(f) of the Employment
Agreement, pro rata based on the number of shares of Registrable Securities
requested by each such individual to be included in such registration, (ii) any
holder thereof not having any such contractual incidental registration rights,
and (iii) any holder, thereof having contractual incidental registration rights
subordinate and junior to the rights of the Investors, provided, that in
connection with any registration that includes securities pursuant to the
Warrant Registration Rights Agreement, the terms of the Warrant Registration
Rights Agreement as in effect on the date hereof shall govern the inclusion (and
limitations on inclusion) of Registrable Securities and other securities in such
registration. In any event, if such underwritten public offering is not an
initial public offering, then the Investors holding Registrable Securities (and
Jalkut if he has been involuntarily terminated as an officer of the Company
pursuant to Sections 6(d) or 6(f) of the Employment Agreement) shall be allowed
to include in the aggregate not less than thirty-five percent (35%) of the
shares subject to such
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registration statement, provided, that in connection with any registration that
includes securities pursuant to the Warrant Registration Rights Agreement, the
terms of the Warrant Registration Rights Agreement as in effect on the date
hereof shall govern the inclusion (and limitations on inclusion) of Registrable
Securities and other securities in such registration. The Company will not
grant any rights relating to the piggy-back registration of its capital stock
which are superior to or on a parity with the rights granted to the Investors
and Jalkut in this SECTION 7.1 other than pursuant to the Warrant Registration
Rights Agreement. The provisions of this SECTION 7.1 will not apply to a
registration effected solely to implement (i) an employee benefit plan, or (ii)
a transaction to which Rule 145 or any other similar rule of the Securities and
Exchange Commission (the "SEC") under the Securities Act is applicable."
4. AMENDMENT TO SECTION 7.2 OF THE INVESTMENT AGREEMENT. Section 7.2
of the Investment Agreement is hereby amended by deleting the existing Section
7.2 in its entirety and replacing it with the following:
"7.2 REQUIRED REGISTRATIONS.
If on any three (3) occasions after the date hereof the Investors and
Jalkut (collectively, the "Holders") holding a majority of the Registrable
Securities held by all Holders notify the Company in writing that the Holders
intend to offer or cause to be offered for public sale all or any portion of its
or their Registrable Securities, the Company will notify all of the Holders who
would be entitled to notice of a proposed registration under SECTION 7.1 above
of its receipt of such notification from such Holder or Holders and any other
holder of piggyback registration rights. Upon the written request of any such
Holder or Holders delivered to the Company within 20 days after receipt from the
Company of such notification, the Company will either (i) elect to make a
primary offering in which case the rights of such Holders to participate in such
offering shall be as set forth in SECTION 7.1 above (except that the Company
shall not be permitted to limit the number of shares which may be registered by
any Holder and Holders holding a majority of the Registrable Securities
requested to be included in such required registration will have the right to
select the underwriter), or (ii) use its best efforts to cause such of the
Registrable Securities as may be requested by any Holders to be registered under
the Securities Act in accordance with the terms of this SECTION 7.2. The
Company may postpone the filing of any registration statement required hereunder
for a reasonable period of time, not to exceed 60 days during any twelve-month
period, if the Company has been advised by legal counsel that such filing would
require a special audit or the disclosure of a material impending transaction or
other matter and the Company determines reasonably and in good faith that such
disclosure would have a material adverse effect on the Company. The Company
shall not be required to cause a registration statement requested pursuant to
this SECTION 7.2 to become effective prior to the later of (a) 90 days following
the effective date of a registration statement initiated by the Company, if the
request for registration has been received by the Company subsequent to the
giving of written notice by the Company, made in good faith, to the Holders
holding Registrable Securities that the Company is commencing to prepare a
Company-initiated registration statement (other than registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the SEC under the Securities Act is applicable) and
(b) 30 days
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following the end of any "lock-up" or "black out" period imposed on the Company
pursuant to or in connection with any underwriting or purchase agreement
relating to an underwritten Rule 144A or registered public offering of
securities of the Company; PROVIDED, HOWEVER, that the Company shall use its
best efforts to achieve such effectiveness promptly following the end of the
period set forth in clause (a) or (b) above, as applicable."
5. AMENDMENT TO SECTION 7.3 OF THE INVESTMENT AGREEMENT. Section 7.3
of the Investment Agreement is hereby amended by deleting the existing Section
7.3 in its entirety and replacing it with the following:
"7.3 FORM S-3
If the Company becomes eligible to use Form S-3 under the Securities Act
or a comparable successor form, the Company shall use its best efforts to
continue to qualify at all times for registration on Form S-3 or such successor
form. One or more of the Holders holding Registrable Securities shall have the
right to request and have effected one registration per year of shares of
Registrable Securities on Form S-3 or such successor form for a public offering
of shares of Registrable Securities and having an aggregate proposed offering
price exceeding $500,000 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of such shares by such Holder or Holders). The Company
shall not be required to cause a registration statement requested pursuant to
this SECTION 7.3 to become effective prior to the later of (a) 90 days following
the effective date of a registration statement initiated by the Company, if the
request for registration has been received by the Company subsequent to the
giving of written notice by the Company, made in good faith, to the Holders of
Registrable Securities to the effect that the Company is commencing to prepare a
Company-initiated registration statement (other than a registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the SEC under the Securities Act is applicable) and
(b) 30 days following the end of any "lock-up" or "black out" period imposed on
the Company pursuant to or in connection with any underwriting or purchase
agreement relating to an underwritten Rule 144A or registered public offering of
securities of the Company; PROVIDED, HOWEVER, that the Company shall use its
best efforts to achieve such effectiveness promptly following the end of the
period set forth in clause (a) or (b) above, as applicable, if the request
pursuant to this SECTION 7.3 has been made prior to the expiration of such
period. The Company may postpone the filing of any Registration Statement
required hereunder for a reasonable period of time, not to exceed 60 days during
any twelve-month period, if the Company has been advised by legal counsel that
such filing would require the disclosure of a material transaction or other
factor and the Company determines reasonably and in good faith that such
disclosure would have a material adverse effect on the Company. The Company
shall give notice to all Holders of Registrable Securities of the receipt of a
request for registration pursuant to this SECTION 7.3 and shall provide a
reasonable opportunity for such Holders to participate in the registration.
Subject to the foregoing, the Company will use its best efforts to effect
promptly the registration of all shares of Common Stock on Form S-3 or such
successor form to the extent requested by the Holder or Holders thereof for
purposes of disposition. If so requested by any Holder in connection with a
registration under this SECTION
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7.3, the Company shall take such steps as are required to register such Holder's
Registrable Securities for sale on a delayed or continuous basis under Rule 415,
and to keep such registration effective for the shorter of (a) six months or (b)
until all of such Holder's Registrable Securities registered thereunder are
sold; provided, however, that "Registrable Securities" shall not include any
shares of Common Stock which may be sold by the holder thereof under Rule 144(k)
promulgated under the Securities Act."
6. AMENDMENT TO SECTION 7.4 OF THE INVESTMENT AGREEMENT. Section 7.4
of the Investment Agreement is hereby amended by deleting the existing Section
7.4 in its entirety, and replacing it with the following:
"7.4 REGISTRABLE SECURITIES.
For the purposes this SECTION 7, the term "Registrable Securities" shall
mean (i) any shares of the Common Stock purchased by, or issued to, an Investor,
or issuable upon conversion of the Preferred Shares, including without
limitation any Series A Conversion Shares, Series B Conversion Shares or
Series C Conversion Shares issued or issuable upon conversion of any and all of
the Preferred Shares and including any Common Stock issued by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided,
however, that if an Investor owns Preferred Shares, the Investor shall not be
required to cause such Preferred Shares to be converted to Common Stock until
immediately prior to the effective date of any applicable registration statement
pursuant to which such shares will be sold and (ii) any shares of Common Stock,
including any Common Stock issued by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, issued or issuable to Jalkut upon
exercise of options granted to him by the Company, provided that if Jalkut has
not exercised an option, he shall not be required to exercise such option until
immediately prior to the effective date of any applicable registration statement
pursuant to which such shares will be sold; provided, however, that "Registrable
Securities" shall not include any shares of Common Stock which may be sold by
the holder thereof under Rule 144(k) under the Securities Act."
7. AMENDMENT TO SECTION 7.5(a) OF THE INVESTMENT AGREEMENT. Section
7.5(a) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(a) in its entirety and replacing it with the following:
(a) Pay all expenses of such registrations and offerings
(exclusive of underwriting discounts and commissions) and the reasonable fees
and expenses, not to exceed $60,000 per offering, of not more than on
independent counsel for the Holders satisfactory to a majority in interest of
the Registrable Securities included in such registration, voting as a single
class.
8. AMENDMENT TO SECTION 7.5(c) OF THE INVESTMENT AGREEMENT. Section
7.5(c) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(c) in its entirety and replacing it with the following:
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(c) Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such Holder may
reasonably request to facilitate the public offering of its Registrable
Securities;
9. AMENDMENT TO SECTION 7.5(d) OF THE INVESTMENT AGREEMENT. Section
7.5(d) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(d) in its entirety and replacing it with the following:
(d) Enter into any reasonable underwriting agreement required by
the proposed underwriter for the selling Holders, if any, in such form and
containing such terms as are customary; PROVIDED, HOWEVER, that no Holder shall
be required to make any representations or warranties other than with respect to
its title to the Registrable Securities and any written information provided by
the Holders to the Company, and if the underwriter requires that representations
or warranties by made, the Company shall make all such representations and
warranties relating to the Company;
10. AMENDMENT TO SECTION 7.5(e) OF THE INVESTMENT AGREEMENT. Section
7.5(e) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(e) in its entirety and replacing it with the following:
(e) Use its best efforts to register or qualify the securities
covered by said registration statement under the securities or blue-sky laws of
such jurisdictions as any selling Holder may reasonably request, provided that
the Company shall not be required to register or qualify the securities in any
jurisdictions which require it to qualify to do business therein;
11. AMENDMENT TO SECTION 7.5(f) OF THE INVESTMENT AGREEMENT. Section
7.5(f) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(f) in its entirety and replacing it with the following:
(f) Immediately notify each selling Holder, at any time when a
prospectus relating to his Registrable Securities is required to be delivered
under the Securities Act, of the happening of any event as a result of which
such prospectus contains an untrue statement of a material fact or omits any
material fact necessary to make the statements therein not misleading, and, at
the request of any such selling Holder, prepare a supplement or amendment to
such prospect so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading.
12. AMENDMENT TO SECTION 7.5(i) OF THE INVESTMENT AGREEMENT. Section
7.5(i) of the Investment Agreement is hereby amended by deleting the existing
Section 7.5(i) in its entirety and replacing it with the following:
(i) Obtain and furnish to each selling Holder, immediately prior
to the effectiveness of the registration statement (and, in the case of an
underwritten offering, at the time
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of delivery of any Registrable Securities sold pursuant thereto), a cold comfort
letter from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by cold comfort letters as
the holders of a majority of the Registrable Securities being sold may
reasonably request; and
13. AMENDMENT TO SECTION 7.6 OF THE INVESTMENT AGREEMENT. Section 7.6
of the Investment Agreement is hereby amended by replacing the word "Investor"
wherever it occurs with the word "Holder" and replacing the word "Investors"
wherever it occurs with the word "Holders."
14. AMENDMENT TO SECTION 7.7 OF THE INVESTMENT AGREEMENT. Section 7.7
of the Investment Agreement is hereby amended by replacing the word "Investor"
with the word "Holder" and by replacing the word "Investors" with the word
"Holders."
15. DOCUMENTS OTHERWISE UNCHANGED. Except as provided herein, the
Investment Agreement shall remain unchanged and in full force and effect.
16. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
17. BINDING EFFECT. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and any respective successors and assigns.
18. GOVERNING LAW. This Amendment shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the
Commonwealth of Massachusetts, without giving effect to conflict of laws
principles thereof.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
PATHNET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
INVESTORS:
SPECTRUM EQUITY INVESTORS, L.P.
By: Spectrum Equity Associates, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Attorney-In-Fact
SPECTRUM EQUITY INVESTORS II, L.P.
By: Spectrum Equity Associates II, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
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NEW ENTERPRISE ASSOCIATES VI, LIMITED PARTNERSHIP
By: NEA Partners VI, Limited Partnership
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner
ONSET ENTERPRISE ASSOCIATES II, L.P.
By: OEA II Management, LLC
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
ONSET ENTERPRISE ASSOCIATES III, L.P.
By: OEA III Management, LLC
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ FOUNDATION, INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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IAI INVESTMENT FUNDS VIII, INC. (IAI VALUE FUND)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
IAI INVESTMENT FUNDS VI, INC. (IAI BALANCED FUND)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Individual
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
GROTECH PARTNERS IV, L.P.
By: Grotech Capital Group IV, LLC, General
Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
TORONTO DOMINION CAPITAL (U.S.A.), INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary/Treasurer
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UTECH CLIMATE CHALLENGE FUND, L.P.
By: ARETE CLIMATE CHALLENGE PARTNERS, L.L.C.
General Partner
By: ARETE VENTURES, INC.
Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
UTILITY COMPETITIVE ADVANTAGE FUND, L.L.C.
By: ARETE COMPETITIVE ADVANTAGE PARTNERS, L.L.C.
General Partner
By: ARETE VENTURES, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
FBR TECHNOLOGY VENTURE PARTNERS L.P.
By: FBR Venture Capital Managers, Inc., its
General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
/s/ ▇▇▇▇▇ ▇. Colo
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▇▇▇▇▇ ▇. Colo, Individually
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/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇, Individually
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