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EXHIBIT 10.4.2
AMENDMENT NO. 2 AND JOINDER TO
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 2 AND JOINDER (the "AMENDMENT AND JOINDER"), dated
December 30, 1998 and effective as of November 23, 1998, by and among Allied
Riser Communications Holdings, Inc., a Delaware corporation (the "COMPANY"),
EGI-ARC Investors, L.L.C., a Delaware limited liability company ("EGI-ARC"),
Telecom Partners II, L.P., a Delaware limited partnership ("TP"), Crescendo
World Fund, LLC, a Delaware limited liability company ("CWF"), Eagle Ventures
WF, LLC, a Minnesota limited liability company ("EVW"), Crescendo III, L.P., a
Delaware limited partnership ("CIII"), Xxxxxxxx Equity Group, L.L.C., a
California limited liability company ("LEG"), Norwest Venture Partners VII,
L.P., a Minnesota limited partnership ("Norwest"), and ANDA Partnership, an
Illinois general partnership ("ANDA" and, collectively with the Company,
EGI-ARC, TP, CWF, EVW, LEG and Norwest, the "PARTIES"), to that certain
Stockholders' Agreement, as amended by Amendment No.1 thereto, (the
"STOCKHOLDERS' AGREEMENT"), dated as of November 5, 1998, by and among the
Company, EGI-ARC, TP and the other persons identified therein. All terms not
otherwise defined herein shall have the meanings given such terms in the
Stockholders' Agreement.
WHEREAS, the Company, EGI-ARC, TP and the other persons identified
therein have entered into the Stockholders' Agreement and desire to amend the
Stockholders' Agreement as provided herein;
WHEREAS, Section 5.3 of the Stockholders' Agreement permits amendment
of the Stockholders' Agreement by a written instrument signed by (i) the
Company, (ii) holders of not less than fifty percent (50%) of the outstanding
Preferred Stock, and (iii) Stockholders holding not less than fifty percent
(50%) of the total number of shares of ARC Holdings Common Stock and ARC
Holdings Common Stock Equivalents then held by all Stockholders;
WHEREAS, EGI-ARC, TP, CWF, EVW, CIII and LEG collectively hold in
excess of fifty percent (50%) of the total number of shares of ARC Holdings
Common Stock and ARC Holdings Common Stock Equivalents held by all Stockholders
as of the date hereof and accordingly can, together with the Company, enter into
this Amendment and Joinder;
WHEREAS, EGI-ARC, TP, CWF, EVW, CIII and LEG desire that each of
Norwest and ANDA become a party to the Stockholders' Agreement as a "Financial
Sponsor" thereunder, and each of Norwest and ANDA desires to become a party to
the Stockholders' Agreement as a "Financial Sponsor" thereunder, as provided
herein;
WHEREAS, Section 4.6 of the Stockholders' Agreement permits holders of
a majority of the outstanding shares of Preferred Stock to designate any
purchaser of newly issued Preferred Stock as a "Financial Sponsor" for all
purposes under the Stockholders Agreement;
WHEREAS, EGI-ARC, TP, CWF, EVW, CIII and LEG, together hold a majority
of the outstanding shares of Preferred Stock outstanding and accordingly can
designate additional Financial Sponsors pursuant to and for all purposes under
the Stockholders' Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein made and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties mutually agree to amend
the Stockholders' Agreement as follows:
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1. Amendment.
a. The date "November 5" appearing in the definition of
"Transfer" in the eighth line of Section 1.1(32) is hereby deleted and replaced
with the date "November 23."
b. Section 3.1 of the Stockholders' Agreement is hereby
amended by replacing the third sentence of such Section with the following new
sentences:
"As long as either of EGI-ARC and TP hold Equity Securities
which, calculated on an "as converted" basis, represent 10% or more of
the ARC Holdings Common Stock, each shall have the right, at its
discretion, to nominate two (2) Board members. As long as any of CWF,
EVW or CIII (collectively, or individually) holds Equity Securities
which, calculated on an "as converted" basis, represent 10% or more of
the ARC Holdings Common Stock, any of CWF, EVW or EIII shall have the
right, at their discretion, to nominate on behalf of CWF, EVW and EIII
collectively, one (1) Board member. As long as Norwest holds Equity
Securities which, calculated on an "as converted" basis, represent 10%
or more of the ARC Holdings Common Stock, Norwest shall have the right,
at its discretion, to nominate one (1) Board member."
c. Section 4 of the Stockholders' Agreement is hereby amended
by adding a new Section 4.9, as follows:
"Section 4.9 SBIC Matters.
(1) Cooperation of Financial Sponsors. Each Financial
Sponsor agrees to cooperate with the Company in all reasonable respects
in complying with the terms and provisions of that certain letter
agreement between the Company and Norwest dated as of the date hereof,
regarding small business matters (the "Small Business Sideletter"),
including without limitation, voting to approve amending the
Certificate of Incorporation, the Company's by-laws or this Agreement
in a manner reasonably acceptable to the Financial Sponsors and Norwest
or any Regulated Holder (as defined in the Small Business Sideletter)
entitled to make such request pursuant to the Small Business Sideletter
in order to remedy a Regulatory Problem (as defined in the Small
Business Sideletter). Anything contained in this Section 4.9 to the
contrary notwithstanding, no Financial Sponsor shall be required under
this Section 4.9 to take any action that would adversely affect in any
material respect such Financial Sponsor's rights under this Agreement
or as a Stockholder of the Company.
(2) Covenant Not to Amend. The Company and each
Financial Sponsor agree not to amend or waive the voting or other
provisions of the Certificate of Incorporation, the Company's by-laws
or this Agreement if such amendment or waiver would cause any Regulated
Holder to have a Regulatory Problem (as defined in the Small Business
Sideletter). Norwest agrees to notify the Company as to whether or not
it would have a Regulatory Problem promptly after Norwest has notice of
such amendment or waiver. "
d. Each address for notice as set forth in Section 5.2 of the
Stockholders' Agreement is hereby amended and restated in its entirety to read
as follows:
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"(1) Notice Address for the Company:
Allied Riser Communications Holdings, Inc.
00 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xx 00000
Fax: (000) 000-0000
Attention: President
and:
Allied Riser Communications Holdings, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxx & Xxxxxx, LLP
000 X. Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
(2) Notice Address for EGI-ARC:
EGI-ARC Investors, L.L.C.
c/o EGI Corporate Investments
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(000) 000-0000
Attention
to each of: Xxxxxx Xxxxxxxxxxx, and
Xxxxxxx X. Xxxxx III
With a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxxxxxx
(3) Notice Address for TP:
Telecom Partners II, L.P.
0000 Xxxxx Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
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Attention: Xxxxx Xxxxxxx
With a copy to:
Holland & Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
(4) Notice Address for CWF, EVW or CIII:
x/x Xxxxxxxxx Xxxxxxx
Management L.L.C.
000 XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
With a copy to:
Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx Tower
000 X. Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx
(5) Notice Address for LEG:
Xxxxxxxx Equity Group, LLC
C/o Xxxxxx Xxxxxxx
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
(6) Notice Address for Norwest:
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Norwest Venture Partners VI, L.P.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxxxx
With a copy to:
Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Slap
(7) Notice Address for ANDA:
ANDA Partnership
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xx 00000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxx
With a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx Xxxxxxxxx
d. Section 5.6 of the Stockholders' Agreement is hereby amended by
deleting clause (ii) thereof and replacing it with the following:
"(ii) each Financial Sponsor shall be entitled to assign or
delegate, as the case may be, any of its rights and obligations
hereunder to a permitted transferee of any Equity Securities by such
Financial Sponsor and no transferee other than a permitted transferee
shall succeed to any of the rights or benefits provided for in this
Agreement."
2. Designation and Joinder. (a) EGI-ARC, TP, CWF, EVW, CIII and LEG
hereby designate each of Norwest and ANDA as a "Financial Sponsor" for all
purposes under the Stockholders' Agreement, entitled to all of the rights and
subject to all of the obligations attendant thereunder to that status. Each of
Norwest and ANDA hereby consents and agrees to such designation, and further
agrees that upon execution of this Amendment and Joinder, it shall become a
party to the Stockholders' Agreement as a "Financial Sponsor" thereunder and
shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Stockholders Agreement as a "Financial Sponsor" thereunder as
though originally a party as a "Financial Sponsor" thereunder.
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(b) The execution and delivery of this Amendment and Joinder shall be
deemed to constitute "written notice to the Company" of the designation set
forth in Section 2(a) above, in satisfaction of such requirement of Section 4.6
of the Stockholders' Agreement.
3. Certain Other Agreements. To the extent not otherwise prohibited by
the Stockholders' Agreement, EGI-ARC, TP, CWF, EVW, LEG and Norwest hereby agree
that as among each other the following shall be deemed added to the
Stockholders' Agreement:
(a) at the end of the last sentence of Section 2.4, "that are
identical in all material respects as those to which the Selling
Stockholders are party in connection with such Transfer."
(b) at the end of the first sentence of Section 5.3, ",
provided, further however, that no such amendment shall treat any
holder of Preferred Stock, or such holder's rights with respect to the
Company, differently in any material respect than the other holders of
Preferred Stock approving such amendment, without the written consent
of such holder of Preferred Stock and provided further, however, that
notwithstanding the foregoing, (i) any holder of Preferred Stock may
transfer its rights to appoint a member of the Board of Directors to
any other party hereto without the consent of any other party hereto
and (ii) no amendment may be made to Article III hereof so as to reduce
the number of members to the Board that a party hereto may nominate or
remove without the consent of such party."
To the extent not otherwise inconsistent with the Stockholders' Agreement,
EGI-ARC, TP, CWF, EVW, LEG and Norwest hereby further agree to vote their shares
of ARC Common Stock to give effect to the intent of the foregoing paragraphs.
4. Miscellaneous.
(a) Reaffirmation. Except as expressly modified hereby, the Parties
hereby reaffirm each and every provision set forth in the Stockholders'
Agreement and, except as modified hereby, the Parties acknowledge and agree that
each provision and obligation therein continues in full force and effect.
References to the "Agreement" in the Stockholders' Agreement shall hereinafter
be deemed to mean such agreement as amended by this Amendment and Joinder.
(b) Additional Provisions. Sections 5.1, 5.9, 5.10, 5.11 and 5.12 of
the Stockholders' Agreement are hereby incorporated by reference into this
Amendment and Joinder, mutatis mutandis.
(c) Counterparts. This Amendment and Joinder may be executed in one or
more counterparts, each of which shall be deemed an original but both of which
together will constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment and
Joinder to the Stockholders' Agreement as of the date first above written.
ALLIED RISER COMMUNICATIONS HOLDINGS, INC.
By: /s/ XXXXX X. XXXXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
EGI-ARC INVESTORS, L.L.C.
By: GAMI Investments, Inc., its Managing
Member
By: /s/ XXX XXXXXXXXXXX
---------------------------------
Name: Xxx Xxxxxxxxxxx
Title: Vice President
TELECOM PARTNERS II, L.P.
By: Telecom Management II, L.L.C., its
General Partner
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
CRESCENDO WORLD FUND, LLC
By: Crescendo Ventures World Fund, LLC,
its General Partner
By: /s/ R. XXXXX XXXXXX
---------------------------------
Name: R. Xxxxx Xxxxxx
Title: Managing Partner
EAGLE VENTURES WF, LLC
By: /s/ R. XXXXX XXXXXX
------------------------------------------
Name: R. Xxxxx Xxxxxx
Title: Managing Partner
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CRESCENDO III, L.P.
By: Crescendo Ventures III, LLC, its
General Partner
By: /s/ R. Xxxxx Xxxxxx
---------------------------------
Name: R. Xxxxx Xxxxxx
Title: Managing Partner
XXXXXXXX EQUITY GROUP, L.L.C.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Managing Member
NORWEST VENTURE PARTNERS VII, L.P.
By: Itasca VC Partners VII, LLP, its
General Partner
By: /s/ XXXXX XXXXXXXX
------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Partner
ANDA PARTNERSHIP, an Illinois general
partnership
By: Xxx Only Trust, an Illinois trust
By: /s/ XXXX XXXXXX
------------------------------------------
Name: Xxxx Xxxxxx
Title: Co-Trustee
By: Xxx and Descendants Trust, an
Illinois trust
By: /s/ XXXX XXXXXX
------------------------------------------
Name: Xxxx Xxxxxx
Title: Co-Trustee
