EXHIBIT 99.4
AMENDMENT NO. 2
TO PREFERRED STOCK PURCHASE AND
LOAN COMMITMENT AGREEMENT
This Amendment No. 2 to Preferred Stock Purchase and Loan
Commitment Agreement (this "AGREEMENT") is made as of October 11, 2001, by and
among Focal Communications Corporation, a Delaware corporation (the "COMPANY"),
Madison Dearborn Capital Partners IV, L.P. ("MDP"), Frontenac VIII Limited
Partnership ("FRONTENAC VIII"), Frontenac Masters VIII Limited Partnership
("FRONTENAC MASTERS" and, together with Frontenac VIII, the "FRONTENAC
ENTITIES"), Battery Ventures III, L.P. ("BATTERY III"), Battery Ventures VI,
L.P. ("BATTERY VI"), Battery Investment Partners VI, LLC ("BIP" and, together
with Battery III and Battery VI, the "BATTERY ENTITIES"), Great Hill Equity
Partners Limited Partnership ("GHEP"), Great Hill Investors, LLC ("GHI"), Great
Hill Equity Partners II Limited Partnership ("GHEP II) and Great Hill Affiliate
Partners II Limited Partnership ("GHAP II" and, together with GHEP, GHI, and
GHEP II, the "GREAT HILL ENTITIES"). MDP, the Frontenac Entities, the Battery
Entities, and the Great Hill Entities are sometimes referred to herein
collectively as the "PURCHASERS."
The Company and each of the Purchasers is party to that
certain Preferred Stock Purchase and Loan Commitment Agreement, dated as of
August 9, 2001, and amended as of September 21, 2001 (the "PURCHASE AGREEMENT"),
pursuant to which each of the Purchasers has agreed to acquire, and the Company
has agreed to sell, shares of Series A Redeemable Voting Convertible Preferred
Stock (the "PREFERRED STOCK") and has committed to make convertible loans to the
Company ("LOANS"), in each case on the terms and subject to the conditions
contained therein. Each of the Company and the Purchasers desire to amend the
Purchase Agreement in the manner set forth herein. Capitalized terms used, but
not otherwise defined, herein shall have the meanings given to such terms in the
Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDMENT TO SECTION 2C. Section 2C of the Purchase
Agreement is hereby amended and restated in its entirety as follows:
"2C. AMENDMENT TO CERTIFICATE OF INCORPORATION. The
Company's Amended and Restated Certificate of Incorporation (the
"CERTIFICATE OF INCORPORATION") shall be amended in the manner set
forth on EXHIBIT D-1 attached hereto, shall be in full force and effect
under the laws of the State of Delaware as of the Closing and shall not
have been further amended or modified. In addition, the Company shall
have received all necessary Board, stockholder, and other third-party
consents or approvals necessary to consummate the Reverse Stock Split
as described in Section 5O hereof."
2. AMENDMENT TO EXHIBIT D. The EXHIBIT D attached to the
Purchase Agreement is hereby replaced and superseded in its entirety with the
EXHIBIT D-1 and EXHIBIT D-2 attached hereto.
3. AMENDMENT TO ADD NEW SECTION 5O. The Purchase Agreement is
hereby amended by adding the following Section 5O thereto:
"5O. REVERSE STOCK SPLIT.
(i) COMPANY OBLIGATION. Effective as of a date determined by
the Board, but in any event not later than December 31, 2001, the Company will
consummate a reverse stock split (the "REVERSE STOCK SPLIT"), pursuant to which
each of the Company's outstanding shares of Common Stock will be changed into
and reclassified as a fraction of a share of Common Stock, at a ratio determined
by the Board between 1-for-5 and 1-for-35. In furtherance of the foregoing, the
Company accepts, acknowledges, and agrees that it will use its best efforts to
take all such actions as are necessary or reasonably requested by the holders of
a majority of the Purchaser Securities in order that, not later than December
31, 2001: (a) the Company's Certificate of Incorporation will be amended as set
forth on EXHIBIT D-2 attached hereto, and such Certificate of Incorporation as
so amended will be in full force and effect under the laws of the State of
Delaware; (b) the Reverse Stock Split will be fully effected in the manner
contemplated by this Section 5O and the amendment to the Certificate of
Incorporation set forth in EXHIBIT D-2 attached hereto; and (c) upon
consummation of the Reverse Stock Split, the Company will be in full compliance
with and have performed all of its obligations under the Waived Covenants (as
defined below).
(ii) LIMITED WAIVER. Each of the Purchasers accepts,
acknowledges, and agrees that, solely with respect to the period of time from
the date hereof until the earlier of the effectiveness of the Reverse Stock
Split or December 31, 2001, the Purchasers hereby waive (a) the Company's
representation in Section 7I hereof that "the shares of Common Stock initially
issuable upon conversion of the Preferred Stock and the Loans have been duly
authorized and reserved for issuance", (b) the Company's obligations to make the
closing delivery set forth in Section 2U(ii)(E) hereof; (c) the Company's
obligations under Sections 4A, 4B, and 4H hereof, solely to the extent such
covenants require the Company to take any action contrary to the provisions of
this Section 5O, (d) the Company's obligations under the first and last
sentences of Section 1A(viii) of the Conversion Agreement, and (e) the Company's
obligations under the first and last sentences of Section 5A(viii) of the
Certificate of Designation (clauses (a) through (e), collectively, the "WAIVED
COVENANTS"). Nothing in this paragraph shall be deemed to amend or waive any
obligation of the Company or provision of any agreement, certificate, or
instrument, other than the Waived Covenants, nor to waive any of the Waived
Covenants with respect to any period of time after the earlier of the
effectiveness of the Reverse Stock Split or December 31, 2001.
(iii) NECESSARY APPROVALS. The Company hereby represents and
warrants to the Purchasers that as of the Closing the Company has obtained all
necessary Board, stockholder, and other third-party consents and approvals
necessary to consummate the Reverse Stock Split in accordance with this Section
5O."
4. REPRESENTATION AND WARRANTY. Each party represents to each
other party hereto that this Agreement has been duly authorized, executed and
delivered by such party and constitutes the legal, valid and binding obligation
of such party, enforceable in accordance with its terms, and the execution,
delivery and performance of this Agreement by such party does not and shall not
conflict with,
- 2 -
violate or cause a breach of any material agreement, contract or instrument to
which such party is a party or any judgment, order or decree to which such party
is subject.
5. COUNTERPARTS. This Agreement may be executed in any number
of counterparts (including by facsimile), any one of which need not contain the
signatures of more than one party, but all of such counterparts together shall
constitute one amendment.
6. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
7. EFFECT ON PURCHASE AGREEMENT. Except as it is otherwise
expressly amended or modified by this Agreement, the Purchase Agreement remains
in full force and effect.
8. EFFECTIVENESS. This Agreement shall be binding and
effective with respect to each party hereto upon execution hereof by such party,
and pursuant to Section 12E of the Purchase Agreement shall be binding and
effective with respect to all parties upon execution hereof by the Company, MDP,
Frontenac and Frontenac Masters.
- 3 -
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this agreement as of the date first written above.
FOCAL COMMUNICATIONS CORPORATION
By: /s/ Xxxxx Xxxxxxx
Its:
------------------------------------------
GREAT HILL EQUITY PARTNERS LIMITED PARTNERSHIP
By: Great Hill Partners GP, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxx
A Manager
GREAT HILL INVESTORS, LLC
By: /s/ Xxxx X. Xxxxx
A Manager
GREAT HILL EQUITY PARTNERS II
LIMITED PARTNERSHIP
By: Great Hill Partners XX XX, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxx
A Manager
GREAT HILL AFFILIATE PARTNERS II
LIMITED PARTNERSHIP
By: Great Hill Partners XX XX, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxx
A Manager
MADISON DEARBORN CAPITAL PARTNERS IV, L.P.
By: Madison Dearborn Partners IV, L.P.
Its: General Partner
By: Madison Dearborn Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxx Xxxxx
Its:
------------------------------------------
FRONTENAC VIII LIMITED PARTNERSHIP
By: Frontenac VIII Partners, L.P.
Its: General Partner
By: Frontenac Company VIII, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxxx
Its:
------------------------------------------
FRONTENAC MASTERS VIII LIMITED PARTNERSHIP
By: Frontenac VIII Partners, L.P.
Its: General Partner
By: Frontenac Company VIII, L.L.C.
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxxx
Its:
------------------------------------------
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
Its: General Partner
By: /s/ Xxxx Xxxxxxx
Its:
------------------------------------------
BATTERY VENTURES VI, L.P.
By: Battery Partners VI, L.P.
Its: General Partner
By: /s/ Xxxx Xxxxxxx
Its:
------------------------------------------
BATTERY INVESTMENT PARTNERS VI, LLC
By: /s/ Xxxx Xxxxxxx
Its:
------------------------------------------
XXXXXX X-0
EXHIBIT D-2
