Stock Purchase Agreement [Class D Convertible Preferred] [Amendment] - NetStart Inc., Thomson U.S. Inc., 21st Century Internet Fund LP, New Enterprise Associates VI LP and ADP Inc.
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AMENDMENT AGREEMENT
This Agreement is made and entered into as of the 23rd day of January,
1998, by and among NetStart, Inc., a Delaware corporation (the "Company"), and
the persons and entities listed on Schedule I hereto (collectively, the
"Purchasers").
WITNESSETH:
WHEREAS, the Company and the Purchasers entered into a Series D
Convertible Preferred Stock Purchase Agreement dated as of September 11, 1997
(the "Purchase Agreement"); and
WHEREAS, the Company and the Purchasers desire to amend the Purchase
Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Amendment and Restatement of Section 1.3 of the Purchase Agreement.
Section 1.3 of the Purchase Agreement is hereby amended and restated in its
entirety to read as follows:
"1.3 Subsequent Authorizations and Sales. At any time on or before
the 130th day following the Closing, the Company may sell shares of
Class D Convertible Preferred Stock up to the total number of such
shares authorized by the Company's Certification of Incorporation,
as amended (the "Charter"), less any amounts already sold at the
Closing, provided that at least one new investor, which is
unaffiliated with any then-current investor in the Company, shall
participate in such sale by purchasing at least a majority of the
shares of Class D Convertible Preferred Stock offered in such sale.
All such sales shall be made on the terms and conditions set forth
in this Agreement and the purchasers thereof shall be "Purchasers"
under this Agreement and "New Investors" under the Amended
Registration Rights Agreement (as defined below); provided, however,
that the representations and warranties of the Company set forth in
this Agreement, its Exhibits and the disclosure set forth on
Schedules II, III, IV and V to this Agreement shall speak only as of
the Closing and shall not be revised to reflect any changes in the
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representations and warranties occurring after the Closing for any
such future closings. Should any such sales be made, the Company
shall prepare and distribute to the Purchasers a revised Schedule I
to this Agreement and a revised Schedule II to the Amended
Registration Rights Agreement reflecting such sales."
2. Amendment and Restatement of Section 5.2 of the Purchase Agreement.
Section 5.2 of the Purchase Agreement is hereby amended and restated in its
entirety to read as follows:
"5.2 Right of First Offer. So long as any shares of Class A
Preferred Stock, Class B Preferred Stock, Class C Preferred Stock or
Class D Convertible Preferred Stock are outstanding, the Company
shall, prior to any issuance by the Company of any of its securities
(other than debt securities with no equity feature), offer to each
Purchaser and to each then existing holder of such Preferred Stock
(an "Existing Stockholder") by written notice the right, for a
period of thirty (30) days, to purchase all of such securities for
cash at an amount equal to the price or other consideration for
which such securities are to be issued; provided, however, that the
first refusal rights of the Purchasers and Existing Stockholders
pursuant to this Section 5.2 shall not apply to securities issued
(A) upon conversion of any of the Preferred Shares, (B) as a stock
dividend or upon any subdivision of shares of Common Stock, provided
that the securities issued pursuant to such stock dividend or
subdivision are limited to additional shares of Common Stock, (C)
pursuant to subscriptions, warrants, options, convertible
securities, or other rights which are listed in Schedule III as
being outstanding on the date of this Agreement, (D) solely in
consideration for the acquisition (whether by merger or otherwise)
by the Company or any of its subsidiaries of all or substantially
all of the stock or assets of any other entity, (E) pursuant to a
firm commitment underwritten public offering, (F) pursuant to the
exercise of the warrants issued to ADP, Inc. ("ADP") in connection
with its purchase of Class D Convertible Preferred Stock from the
Company, and (G) pursuant to the exercise of options to purchase
Common Stock granted to directors, officers, employees or
consultants of the Company in connection with their service to the
Company, not to exceed in the aggregate 1,950,000 shares
(appropriately adjusted to reflect stock splits, stock dividends,
combinations of shares
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and the like with respect to the Common Stock) less the number of
shares (as so adjusted) issued pursuant to subscriptions,
warrants, options, convertible securities, or other rights
outstanding on the date of this Agreement and listed in Schedule
III pursuant to clause (C) above (the shares exempted by this
clause (G) being hereinafter referred to as the "Reserved Employee
Shares") provided that the number of Reserved Employee Shares may
be increased prior to December 31, 1998, with the approval of a
majority of the Board of Directors including the Class B Director,
the Class C Director, the Class D Director and Gary C. Butler as
the director appointed by ADP on behalf of the holders of Class D
Convertible Preferred Stock (the "Other Class D Director") and at
any time after December 31, 1998, with the approval of either (i)
a majority of the Board of Directors including the Class B
Director, the Class C Director the Class D Director and the Other
Class D Director or (ii) all directors other than the Class B
Director, the Class C Director, the Class D Director or the Other
Class D Director. The Company's written notice to the Purchasers
and Existing Stockholders shall describe the securities proposed
to be issued by the Company and specify the number, price and
payment terms. Each Purchaser and Existing Stockholder may accept
the Company's offer as to the full number of securities offered to
it or any lesser number, by written notice thereof given by it to
the Company prior to the expiration of the aforesaid thirty (30)
day period, in which event the Company shall promptly sell and
such Purchaser or Existing Stockholder shall buy, upon the terms
specified, the number of securities agreed to be purchased by such
Purchaser or Existing Stockholder. Notwithstanding the forgoing,
if the Purchasers and Existing Stockholders agree, in the
aggregate, to purchase more than the full number of securities
offered by the Company, then each Purchaser and Existing
Stockholder accepting the Company's offer shall first be allocated
the lesser of (i) the number of securities which such Purchaser or
Existing Stockholder agreed to purchase and (ii) the number of
securities as is equal to the full number of securities offered by
the Company multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock held by such Purchaser or
Existing Stockholder agreed to purchase and (ii) the number of
securities as is equal to the full number of securities offered by
the Company multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock held by such
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Purchaser or Existing Stockholder as of the date of the Company's
notice of offer (treating such Purchaser or Existing Stockholder,
for the purpose of such calculation, as the holder of the number
of shares of Common Stock which would be issuable to such
Purchaser or Existing Stockholder upon conversion, exercise or
exchange of all securities (including but not limited to the
Preferred Shares) held by such Purchaser or Existing Stockholder
on the date such offer is made that are then convertible,
exercisable or exchangeable into or for (whether directly or
indirectly) shares of Common Stock) and the denominator of which
shall be the aggregate number of shares of Common Stock
(calculated as aforesaid) held on such date by all Purchasers and
Existing Stockholders who accepted the Company's offer, and the
balance of the securities (if any) offered by the Company shall be
allocated among the Purchasers and Existing Stockholders accepting
the Company's offer in proportion to their relative equity
ownership interests in the Company (calculated as aforesaid),
provided that no Purchaser or Existing Stockholder shall be
allocated more than the number of securities which such Purchaser
or Existing Stockholder agreed to purchase and provided further
that in cases covered by this sentence all Purchasers and Existing
Stockholders shall be allocated among them the full number of
securities offered by the Company. The Company shall be free at
any time prior to ninety (90) days after the date of its notice of
offer to the Purchasers and Existing Stockholders, to offer and
sell to any third party or parties the number of such securities
not agreed by the Purchasers and Existing Stockholders to be
purchased by them, at a price and on payment terms no less
favorable to the Company than those specified in such notice of
offer to the Purchasers and Existing Stockholders. However, if
such third party sale or sales are not consummated within such
ninety (90) day period, the Company shall not sell such securities
as shall not have been purchased within such period without again
complying with this Section 5.2."
3. Amendment and Restatement of Section 5.10 of the Purchase
Agreement. Section 5.10 of the Purchase Agreement is hereby amended and
restated in its entirety to read as follows:
"5.10 Board of Directors Meetings. The Company shall use its best
efforts to ensure that meetings of its Board of Directors are held
at least four times each year and at least once each
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quarter. The Company shall permit TTC Ventures, 21st Century
Internet Fund L.P. ("21st Century Internet Fund") and ADP, so long
as they, individually, (i) hold of record or beneficially at least
500,000 Preferred Shares and/or Conversion Shares and (ii) are not
represented on the Board of Directors, directly or by one of its
affiliates ("Unrepresented"), to have one representative attend
each meeting of the Board of Directors of the Company and each
meeting of any Committee thereof. While any or all of TTC
Ventures, 21st Century Internet Fund and ADP is Unrepresented, the
Company shall send to such Unrepresented party a notice containing
the time and place of all Board meetings in the same manner and at
the same time as it shall send such notice to its directors or
committee members, as the case may be, and shall provide to such
Unrepresented party copies of all notices, reports, minutes and
consents at the time and in the manner as they are provided to the
Board of Directors or committee, except for information reasonably
designated as proprietary information by the Board of Directors.
4. Amendment and Restatement of Section 5.12 of the Purchase
Agreement. Section 5.12 of the Purchase Agreement is hereby amended and
restated to read as follows:
"5.12 By-laws. The Company shall at all times cause its By-laws to
provide that, (a) unless otherwise required by the laws of the State
of Delaware, any two directors, TTC Ventures, New Enterprise
Associates VI, Limited Partnership, 21st Century Internet Fund or
ADP shall have the right to call a meeting of the Board of Directors
or stockholders and (b) the number of directors fixed in accordance
therewith shall in no event conflict with any of the terms or
provisions of the Class D Convertible Preferred Stock as set forth
in the Charter. The Company shall at all times maintain provisions
in its By-laws and/or Charter indemnifying all directors against
liability and absolving all directors from liability to the Company
and its stockholders to the maximum extent permitted under the laws
of the State of Delaware.
5. Amendment and Restatement of Schedule I to the Purchase Agreement.
Schedule I to the Purchase Agreement is hereby amended and restated as provided
on Schedule I hereto.
6. Effect of Modification. In the event of any inconsistency between
the provisions of the Purchase Agreement and the applicable provisions of this
Agreement, the
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provisions of this Agreement shall control in all respects. Otherwise, the
Purchase Agreement shall remain in full force and effect. Pursuant to Section
6.9 of the Purchase Agreement, the agreements contained herein shall become
effective and binding upon the Company and each of the Purchasers when the
Company has obtained the signatures of Purchasers holding at least two-thirds of
the outstanding shares of Common Stock issued or issuable upon conversion of the
Preferred Shares (as such term is defined in this Purchase Agreement).
7. Successors and Assigns; Governing Law. Subject to the restrictions in
the Purchase Agreement as amended hereby, this Agreement shall inure to the
benefit of and bind the respective heirs, personal representatives, successors
and assigns of the parties hereto and shall be governed by and construed in
accordance with the laws of the State of Delaware.
8. Severability; Modifications. Should one or more of the provisions of
this Agreement be determined by a court of law to be illegal or unenforceable,
the other provisions shall nevertheless remain effective and shall be
enforceable. This Agreement shall not be modified without the prior consent of
the Company and Purchasers holding at least two-thirds of the outstanding shares
of Common Stock issued or issuable upon conversion of the Preferred Shares.
9. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original and such counterparts together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth below.
Effective date of this Agreement: January 23, 1998.
THE COMPANY:
NETSTART, INC.
By: /s/ ROBERT J. MCGOVERN
---------------------------------
Robert J. McGovern, President
THE PURCHASERS:
THOMSON U.S. INC.
By: /s/ JAMES R. SCHURR
---------------------------------
Name: James R. Schurr
Title: Vice President
21st CENTURY INTERNET
MANAGEMENT PARTNERS LLC
By: 21st CENTURY INTERNET
MANAGEMENT PARTNERS LLC
By: /s/ J. NEIL WEINTRAUT
---------------------------------
Name: J. Neil Weintraut
Title:
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NEW ENTERPRISE ASSOCIATES VI,
LIMITED PARTNERSHIP
By: NEA PARTNERS VI, LIMITED
PARTNERSHIP
By: /s/ PETER BARRIS
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Name: Peter Barris
Title: Vice President
ADP, INC.
By: /s/ RICHARD HAVILAND
------------------------------
Name: Richard Haviland
Title:
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SCHEDULE I
Purchasers
FIRST CLOSING
<TABLE>
<CAPTION>
Number of
Aggregate
Preferred Purchase Price
Name and Shares to be for Preferred
Address of Purchaser Purchased Shares
-------------------- --------- ------
<S> <C> <C>
Thomson U.S. Inc. 560,224 $1,999,999.68
c/o TTC Ventures
One Main Street
Cambridge, MA 02142
21st Century Internet 242,557 865,928.49
Management Partners LLC
Two South Park
Second Floor
San Francisco, CA 94107
New Enterprise 317,667 1,134,071.19
Associates VI, Limited
Partnership
1119 St. Paul Street
Baltimore, MD 21202
SUBTOTAL: 1,120,448 $3,999,999.36
</TABLE>
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Purchasers
SECOND CLOSING
<TABLE>
<CAPTION>
Number of
Aggregate
Preferred Purchase Price
Name and Shares to be for Preferred
Address of Purchaser Purchased Shares
-------------------- --------- -------
<S> <C> <C>
21st Century Internet 85,000 $ 303,450
Management Partners LLC
Two South Park
Second Floor
San Francisco, CA 94107
ADP, Inc. 840,337 3,000,003
1 ADP Boulevard
Roseland, NJ 07068
SUBTOTAL: 925,337 $3,303,453
TOTAL: 2,045,785 7,303.452.36
</TABLE>
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