EXHIBIT 10.8
February 19, 1999
The Carlyle Group
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
NorthPoint Communications, Inc.
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Ladies and Gentlemen:
This letter will confirm our agreement that effective upon and subject to
the purchase by Carlyle Partners II, L.P., a Delaware limited partnership,
Carlyle Partners III, L.P., a Delaware limited partnership, State Board of
Administration of Florida, Carlyle Investment Group, L.P., a Delaware limited
partnership, Carlyle International Partners II, L.P., a Cayman Islands limited
partnership, Carlyle International Partners III, L.P., a Cayman Islands limited
partnership, C/S International Partners, a Cayman Islands general partnership,
Carlyle-NorthPoint Partners, L.P., a Delaware limited partnership, Carlyle-
NorthPoint International Partners, L.P., a Cayman Islands limited partnership,
Carlyle Venture Partners, LP, a Cayman Islands limited partnership, Carlyle U.S.
Venture Partners, LP, a Delaware limited partnership, C/S Venture Partners, LP,
a Cayman Islands limited partnership and Carlyle Venture Coinvestment, LLC, a
Delaware limited liability company (collectively, "Carlyle") of an aggregate of
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9,915,014 shares of Series C Preferred Stock of NorthPoint Communications, Inc.
(the "Company"), and in consideration for the transactions contemplated by the
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Purchase Agreement (as defined below), Carlyle will be entitled to the following
contractual rights, in addition to any rights granted pursuant to that certain
Amended and Restated Series C Preferred Stock Purchase Agreement dated as of
January 20, 1999 by and among the Company and the purchasers listed on
Attachment 1 thereto (the "Purchase Agreement") and any of the agreements
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contemplated thereby:
1. Mirror Warrants. In the event that (i) Comdisco, Inc. ("Comdisco")
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purchases in excess of 407,902 shares of Series B Preferred Stock of the Company
by means of exercise of that certain warrant to purchase up to 556,233 shares of
the Company's Series B Preferred Stock currently held by Comdisco (the "Comdisco
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Warrant"), (ii) Xxxxxx Xxxxxxx Bridge Fund L.L.C. or Xxxxxx Xxxxxxx Senior
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Funding, Inc. (collectively, "MSSF") purchases in excess of 250,000 shares of
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Common Stock of the Company by means of exercise of those certain warrants to
purchase Common Stock of the Company issued to MSSF pursuant to that certain
Note Purchase Agreement dated July 15, 1998 between the Company and MSSF (the
"Bridge Warrants") or (iii) Intel Corporation ("Intel") exercises any part of
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that certain warrant to purchase up to 94,475 shares of the Company's Series C
Preferred Stock currently held by Intel (the "Intel Warrant" and collectively
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with the Comdisco Warrant and the Bridge Warrants, the "Warrants"), then,
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simultaneously with the issuance of shares of the Company's Series B Preferred
Stock, Common Stock or Series C Preferred Stock to Comdisco, MSSF or Intel as
the case may be with respect to the Warrant exercised, the Company shall
promptly after the exercise of any of the Warrants,
provide Carlyle with written notice of the exercise thereof and issue to Carlyle
a warrant (the "Mirror Warrant") to purchase a number of shares of the type of
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capital stock of the Company subject to the exercised Warrant such that,
notwithstanding anything to the contrary, Carlyle shall be issued a number and
type of shares upon exercise of such Mirror Warrant that shall result in Carlyle
holding immediately after the exercise of such Mirror Warrant, (A) in the case
of shares being exercised under the Comdisco Warrant, to the extent of the
excess of such shares over 407,902 shares, (B) in the case of the Bridge
Warrants, to the extent of such shares over 250,000 shares, and (C) in all other
cases, to the extent of all shares being exercised under the applicable Warrant,
that number of shares of the type of capital stock of the Company which was
subject to the exercised Warrant outstanding immediately after the exercise of
the Mirror Warrant such that Carlyle's fully diluted ownership percentage in the
Company after the exercise of such Warrant is equal to Carlyle's fully diluted
ownership percentage in the Company immediately prior to the exercise of such
Warrant. In all other respects, each Mirror Warrant shall be on the same terms
and conditions as the Comdisco Warrant, the Bridge Warrants or the Intel
Warrant, as the case may be, including with respect to exercise price; provided,
however, that such Mirror Warrants shall be exercisable, in whole or in part, at
any time on or after the date of issuance of capital stock of the Company giving
rise to the Company's obligation to issue the Mirror Warrants pursuant hereto.
For purposes of this letter, any of the events set forth in clauses (i), (ii) or
(iii) of this Section 1 may hereinafter be referred to as a "Warrant Exercise
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Event."
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2. Definitions. Capitalized terms used herein but not otherwise defined
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shall have the meanings assigned to such terms in the Purchase Agreement.
3. Specific Performance. Each of the parties hereto agrees that in the
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event of any breach or default or threatened breach or threatened default by the
Company of any covenant, agreement, obligation or other provision set forth
herein, that monetary damages are not adequate remedies to compensate Carlyle
and Carlyle shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or other
equitable relief to enforce the observance and performance of such covenant,
agreement, obligation or other provision, and (ii) an injunction restraining
such breach or threatened breach, without in either case, the posting of any
bond and, to the extent permissible by applicable law, each party waives any
objection to the imposition of such relief.
4. Reservation and Authorization of Stock. The Company shall at all
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times reserve and keep available for issue upon the exercise of the Mirror
Warrant such number of its authorized but unissued securities deliverable upon
exercise of the Mirror Warrant as will be sufficient to permit the exercise in
full of the Mirror Warrant, and the Company will ensure that all such securities
will, at all times, be duly approved for listing subject to official notice of
issuance on each securities exchange, if any, on which such securities are then
listed.
5. Certain Approvals. If the issuance or sale of any securities issuable
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upon the exercise of the Mirror Warrant requires registration or approval of any
governmental authority, or the taking of any other action under the laws of the
United States of America or any political subdivision thereof, before such
securities may be validly offered or sold in compliance with
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such laws, then the Company covenants that it will, in good faith and as
expeditiously as reasonably practicable, endeavor to secure and maintain such
registration or approval or to take such other action, as the case may be.
6. No Merger, Consolidation or Sale of Assets of the Company. The
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Company will not (a) liquidate, dissolve or wind up, (b) enter into a
transaction or agreement for the acquisition of a majority of the capital stock
or voting power of the Company by another person or entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger, consolidation or purchase of stock, (c) sell,
exchange or otherwise dispose of all or substantially all of its assets,
properties or business, unless, (i) in the case of clause (a) above, the Company
first allows Carlyle to exercise the Mirror Warrants and (ii) in the case of
clause (b), the person or entity resulting from such reorganization, merger or
consolidation or the person or entity purchasing such capital stock or voting
power and, in the case of clause (c), the person or entity to whom the Company
sells or disposes or with which the Company exchanges, its assets, properties or
business, shall in each case expressly assume the due and punctual performance
and observance of each and every covenant and condition of this letter to be
performed and observed by the Company and agree not to treat the Mirror Warrants
and the holders of the Mirror Warrants differently from the Warrants and the
holders of the Warrants, by supplemental agreement satisfactory in form and
substance to Carlyle (as long as it or any of its affiliates shall hold a Mirror
Warrant) and executed and delivered to Carlyle (as long as it or any of its
affiliates shall hold a Mirror Warrant).
7. Rights, Preferences and Privileges. The Company shall not alter or
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change the rights, preferences or privileges of the Warrants, and shall not
alter or change the rights, preferences or privileges of the Common Stock,
Series B Preferred Stock or Series C Preferred Stock so as to affect adversely
the Mirror Warrant.
8. Other Rights. Notwithstanding anything to the contrary contained
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herein, Carlyle shall have all the rights and privileges of, and be treated by
the Company for all purposes as, a holder of Mirror Warrants from and after the
occurrence of a Warrant Exercise Event, whether or not the Company issues the
notice or Mirror Warrants to Carlyle as required by Section 1.
[Signature Pages Follow]
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Very truly yours,
NORTHPOINT COMMUNICATIONS, INC.
By: /S/ NORTHPOINT COMMUNICATIONS, INC.
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Title:
Accepted and agreed:
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CARLYLE PARTNERS II, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE PARTNERS II, L.P.
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Title: Managing Director
CARLYLE PARTNERS III, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE PARTNERS III, L.P.
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Title: Managing Director
STATE BOARD OF ADMINISTRATION OF FLORIDA
By: Carlyle Investment Management LLC
Its Manager
By: /S/ STATE BOARD OF ADMINISTRATION OF FLORIDA
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Title: Managing Director
CARLYLE INVESTMENT GROUP, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE INVESTMENT GROUP, L.P.
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Title: Managing Director
SIGNATURE PAGE TO CARLYLE MIRROR WARRANT SIDE LETTER
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CARLYLE INTERNATIONAL PARTNERS II, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE INTERNATIONAL PARTNERS II, L.P.
______________________________
Title: Managing Director
CARLYLE INTERNATIONAL PARTNERS III, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE INTERNATIONAL PARTNERS III, L.P.
______________________________
Title: Managing Director
C/S INTERNATIONAL PARTNERS
By: TC Group, L.L.C.
Its General Partner
By: /S/ C/S INTERNATIONAL PARTNERS
______________________________
Title: Managing Director
CARLYLE-NORTHPOINT PARTNERS, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE-NORTHPOINT PARTNERS, L.P.
______________________________
Title: Managing Director
CARLYLE-NORTHPOINT INTERNATIONAL PARTNERS, L.P.
By: TC Group, L.L.C.
Its General Partner
By: /S/ CARLYLE-NORTHPOINT INTERNATIONAL PARTNERS, L.P.
______________________________
Title: Managing Director
SIGNATURE PAGE TO CARLYLE MIRROR WARRANT SIDE LETTER
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CARLYLE VENTURE PARTNERS, LP
By: TCG Ventures, Limited
Its General Partner
By: /S/ CARLYLE VENTURE PARTNERS, LP
______________________________
Title: Attorney in Fact
CARLYLE U.S. VENTURE PARTNERS, LP
By: TCG Ventures, LLC
Its General Partner
By: /S/ CARLYLE U.S. VENTURE PARTNERS, LP
______________________________
Title: Managing Director
C/S VENTURE PARTNERS, LP
By: TCG Ventures, Limited
Its General Partner
By: /S/ C/S VENTURE PARTNERS, LP
______________________________
Title: Attorney in Fact
CARLYLE VENTURE COINVESTMENT, LLC
By: TCG Ventures, LLC
Its Manager
By: /S/ CARLYLE VENTURE COINVESTMENT, LLC
______________________________
Title: Managing Director
SIGNATURE PAGE TO CARLYLE MIRROR WARRANT SIDE LETTER
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