EXECUTION COPY
SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
THIS SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), is made and entered into as of January 15, 1999, by and among: (i)
FlashNet Communications, Inc., a Texas corporation (the "COMPANY"); (ii) Apogee
Fund LP, a Delaware limited partnership ("APOGEE"); (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇"); (iv) ISP Investors, L.P., a Texas limited partnership ("ISP"); (v)
▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ Investment Partnership, Ltd., a Texas limited partnership
("KLEBERG PARTNERS"); (vi) J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ("KING"); (vii) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"); (viii) Fourteen Hill Capital, LP, a Delaware limited partnership
("FHC"); (ix) Applied Telecommunications Technologies, Inc., a Delaware
corporation ("ATTI"); (x) ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"); (xi) UD ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
("▇▇▇▇▇▇▇"); (xii) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"); (xiii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("SQUALI");
(xiv) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"); (xv) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Insurance Trust, U/A
6/28/91, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees
("▇▇▇▇▇▇▇ TRUST"); (xvi) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"); (xvii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("KLEPETKO"); (xviii) Q Ventures, L.P., a Texas limited partnership ("Q
VENTURES"); (xix) The R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Family Limited Partnership, a Texas
limited partnership ("ALEXANDER PARTNERSHIP"); and (xx) ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Partners L.P. ("GSCP").
W I T N E S S E T H:
WHEREAS, the Company, Apogee, ▇▇▇▇▇▇, ISP, ▇▇▇▇▇ ▇. Kleberg, King,
▇▇▇▇▇▇▇▇ and FHC (Apogee, ▇▇▇▇▇▇, ISP, ▇▇▇▇▇ ▇. Kleberg, King, ▇▇▇▇▇▇▇▇ and FHC
being collectively referred to hereinafter as the "FIRST ROUND BUYERS") entered
into that certain Stock Purchase Agreement, dated as of May 7, 1998 (the
"PURCHASE AGREEMENT"), pursuant to which the First Round Buyers purchased an
aggregate of 749,587 shares (the "FIRST ROUND SHARES") of the Series A
Convertible Preferred Stock, $1.00 par value per share, of the Company ("SERIES
A PREFERRED"); and
WHEREAS, the Company and the First Round Buyers entered into that certain
Registration Rights Agreement, dated as of May 7, 1998 (the "REGISTRATION
AGREEMENT"); and
WHEREAS, on August 3, 1998, the Company, the First Round Buyers, ATTI,
Castro, Manning, Griffin, Squali, Wilkes, ▇▇▇▇▇▇▇ Trust, ▇▇▇▇▇▇▇, Klepetko and Q
Ventures (ATTI, Castro, FHC, ISP, Manning, Griffin, Squali, Wilkes, ▇▇▇▇▇▇▇
Trust, Jenkins, Klepetko, ▇▇▇▇▇ ▇. Kleberg, King, ▇▇▇▇▇▇▇▇ and Q Ventures being
collectively referred to herein as the "SECOND ROUND BUYERS") entered into that
certain First Amendment to Stock Purchase Agreement and, pursuant to the
Purchase Agreement, as amended, the Company issued and sold to the Second Round
Buyers, and the Second Round Buyers purchased from the Company, an aggregate of
614,498 shares (the "SECOND ROUND SHARES") of the Series A Preferred; and
WHEREAS, in connection therewith, pursuant to that certain First
Amendment to Registration Rights Agreement dated as of August 3, 1998, the
Second Round Buyers became parties to the Registration Agreement; and
WHEREAS, on September 2, 1998, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ transferred 28,829 shares
of the Series A Preferred to the Kleberg Partnership and 4,119 shares of the
Series A Preferred to the Alexander Partnership, and in connection therewith
assigned his rights and obligations under the Registration Agreement, as
amended, to such entities; and
WHEREAS, simultaneously with the execution of this Agreement, the Company
and GSCP have entered into that certain Term Loan Agreement dated as of the date
hereof by and among the Company, the guarantors named therein, the lenders named
therein and GSCP as administrative agent (the "TERM LOAN AGREEMENT"); and
WHEREAS, in connection with the Term Loan Agreement, the Company and GSCP
have entered into that certain Common Stock Purchase Option dated as of the date
hereof (the "COMMON STOCK PURCHASE OPTION"), pursuant to which the Company has
granted to GSCP the option to purchase shares of the Company's common stock
under certain circumstances (such shares, the "OPTION SHARES"); and
WHEREAS, the parties hereto desire that GSCP become party to the
Registration Agreement and that certain provisions in the Registration Agreement
be amended to provide GSCP with additional rights hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
SECTION 1
AMENDMENTS TO REGISTRATION AGREEMENT
1.01. DEFINITION OF INVESTORS. The Registration Agreement is hereby
amended such that the defined terms "INVESTOR" and "INVESTORS" in the
Registration Agreement shall in all cases include GSCP and each other holder of
Option Shares or the right to acquire Option Shares, and GSCP, by its execution
of this Agreement, shall: (i) be deemed to have executed and delivered the
Registration Agreement; and (ii) have all the rights, benefits and obligations
of the Registration Agreement as if they were original signatories thereof.
1.02. SECTION 2.1(a). Section 2.1(a) of the Registration Agreement is
hereby amended and restated to read in full as follows:
2.1. REGISTRATION ON REQUEST.
(a) From time to time after the
Initial Registration Date, upon the written request of the Class A
Requisite Holders or the Class B Requisite Holders that the
Company effect the registration under the Securities Act of all or
a portion (but not less than $1,000,000 in aggregate offering
price) of such holders' Registrable Securities and specifying the
intended method of disposition thereof and whether or not such
requested registration is to be an underwritten offering, the
parties hereto agree as follows:
(i) The Company will
promptly give written notice of such requested registration
to all other holders of Registrable Securities, if any;
(ii) Promptly after the
performance of any obligations imposed under clause (i) of this
Section 2.1(a), and subject to the limitations set forth in
subsection (e) of this Section 2.1, the Company will use its best
efforts to effect the registration under the Securities Act of the
Registrable Securities that the Company has been requested to
register by the Class A Requisite Holders or Class B Requisite
Holders, as applicable, and the other holders of Registrable
Securities by written request given to the Company within thirty
(30) days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of
such Registrable Securities), all to the extent requisite to
permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be
registered;
Notwithstanding anything to the contrary set forth in this Section
2.1(a), the Company shall not be obligated to take any action to
notify holders or to effect any registration or qualification
pursuant to this Section 2.1(a) if the Company shall have
furnished to the holders requesting registration a certificate
signed by both the President and the Chief Financial Officer of
the Company stating that, in the good faith judgment of the Board
of Directors of the Company, it would be seriously detrimental to
the Company (with a brief explanation for the basis for such
conclusion) for a registration statement to be filed within the
ninety (90) day period following receipt of the request for
registration and that it is therefore essential and in the best
interests of the Company and its shareholders to defer the filing
of such registration statement, provided that such filing shall
not be deferred beyond the earlier to occur of ninety (90) days
after receipt of the request notice or the discontinuance of the
perceived detriment to the Company.
1.03. SECTIONS 2.1(c), 2.1(f), 2.1(g) AND 2.3(xi). Sections 2.1(c),
2.1(f), 2.1(g) and 2.3(xi) of the Registration Agreement are hereby amended by
deleting the term "Requisite Holders" and by replacing it with the phrase
"Applicable Requisite Holders" each time such term appears in such Section.
1.04. SECTION 2.1(e). Section 2.1(e) of the Registration Agreement is
hereby amended and restated to read in full as follows:
(e) LIMITATIONS ON REQUESTED REGISTRATIONS. The Company's
obligation to take or continue any action to effect a requested
registration under this Section 2.1 shall be subject to the
proviso that the Company
shall not be required to effect: (i) more than two (2)
registrations requested pursuant to this Section 2.1 by the Class
A Requisite Holders or more than one (1) registration pursuant to
this Clause (i) within any six (6) month period; (ii) more than
two (2) registrations requested pursuant to this Section 2.1 by
the Class B Requisite Holders or more than one (1) registration
pursuant to this Clause (ii) within any six (6) month period;
PROVIDED that, a registration requested pursuant to this Section
2.1 shall not be deemed to have been effected (A) unless a
registration statement with respect thereto has been declared
effective for a period of at least ninety (90) days, (B) if after
a registration statement has become effective, such registration
is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or
court for any reason, or (C) if the conditions to closing
specified in the purchase agreement or underwriting agreement
entered into in connection with such registration are not
satisfied, other than as a result of the voluntary termination of
such offering by the class of Requisite Holders that initiated the
registration request (which shall include the failure of the class
of Requisite Holders that initiated the registration request to
take action or to refrain from taking action necessary for the
conditions to closing to be satisfied) and; PROVIDED FURTHER, that
if the Class B Requisite Holders shall have been given the
opportunity to sell at least fifty percent (50%) of the Class B
Registrable Securities in any registration effected by the
Company, then one (1) of the two (2) registrations that may be
requested under this Section 2.1 by the Class B Requisite Holders
shall be deemed to have been satisfied. The Class B Requisite
Holders further agree that the Company shall not be required to
file any registration statement under this Section 2.1 in their
favor while in the process of effecting a registration requested
by the Class A Requisite Holders or within the ninety (90) day
period immediately succeeding the date that a registration
statement has been declared effective pursuant to a registration
request made by the Class A Requisite Holders.
1.05. SECTION 3. Section 3 of the Registration Agreement is hereby
amended by effecting the following changes to the Definitions:
(a) By amending and restating the definition of "Registrable
Securities" to read as follows:
REGISTRABLE SECURITIES: All of the Class A Registrable
Securities and the Class B Registrable Securities taken
together as a whole.
(b) By amending and restating the definition of "Requisite
Holders" to read as follows:
REQUISITE HOLDERS: All of the Class A Requisite Holders
and the Class B Requisite Holders taken together as a
group.
(c) By adding the following definitions:
APPLICABLE REQUISITE HOLDERS: Either the Class A Requisite
Holders or the Class B Requisite Holders, as applicable,
that have made a request to effect a registration under
Section 2.1(a)
CLASS A REGISTRABLE SECURITIES: All common stock of the Company
that is either: (i) issued by the Company (or a successor thereto)
in redemption or conversion of, or otherwise on account of or in
exchange for, the Preferred Stock issued pursuant to the Proposed
Transaction, or (ii) purchased from time to time by any Investor
other than GSCP prior to the time the common stock is registered
under the Exchange Act, together with any securities issued or
issuable with respect to the foregoing by way of distribution or
in connection with any reorganization or other recapitalization,
merger, consolidation or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to
be Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b)
they shall have been distributed to the public pursuant to Rule
144 or Rule 144A or so long as they are distributable pursuant to
Rule 144k (or any successor provisions) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under
the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
CLASS B REGISTRABLE SECURITIES: All common stock of the Company
that is either: (i) issued by the Company (or a successor thereto)
pursuant to the Common Stock Purchase Option, or (ii) purchased
from time to time by GSCP or its assignee prior to the time the
common stock is registered under the Exchange Act, together with
any securities issued or issuable with respect to the foregoing by
way of distribution or in connection with any reorganization or
other recapitalization, merger, consolidation or otherwise. As to
any particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have
become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement,
(b) they shall have been distributed to the public pursuant to
Rule 144 or so long as they are distributable pursuant to Rule
144k (or any successor provisions) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (d) they
shall have ceased to be outstanding.
CLASS A REQUISITE HOLDERS: Any holder or holders of more
than thirty (30%) of the Class A Registrable Securities.
CLASS B REQUISITE HOLDERS: Any holder or holders of more
than thirty (30%) of the Class B Registrable Securities.
COMMON STOCK PURCHASE OPTION: That certain Common Stock Purchase
Option dated as of January 15, 1999, by and between the Company,
GSCP and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., as amended, modified or
supplemented from time to time.
1.06. SECTION 5. Section 5 of the Registration Statement is hereby
amended by adding the following phrase to the end of the first sentence thereof:
; PROVIDED, HOWEVER, no such amendment shall adversely affect the
right of the holders of the Class B Registrable Securities
hereunder without the prior written consent of the holders of at
least a majority of the Class B Registrable Securities.
1.07. NOTICES. The Registration Agreement is hereby amended by deleting
the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ address therefrom and adding the following addresses to the
list of Investor addresses under Section 7 thereof:
▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ INVESTMENT PARTNERSHIP, LTD.
C/O SMK INVESTMENT TRUST
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TELEFAX: ▇▇▇-▇▇▇-▇▇▇▇
THE R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
C/O RDA FAMILY PARTNERSHIP TRUST
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TELEFAX: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇
TELEPHONE: ▇▇▇-▇▇▇-▇▇▇▇
TELEFAX: 212-357-4451
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TELEPHONE: ▇▇▇-▇▇▇-▇▇▇▇
TELEFAX: 212-357-4451
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: LOLA SMALL
TELEPHONE: ▇▇▇-▇▇▇-▇▇▇▇
TELEFAX: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
TELEPHONE: ▇▇▇-▇▇▇-▇▇▇▇
TELEFAX: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 2
MISCELLANEOUS
2.01. SUCCESSORS AND ASSIGNS. All covenants and agreements contained in
this Agreement by or on behalf of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties hereto whether
so expressed or not.
2.02. LAW GOVERNING. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
2.03. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and may not be modified
or amended except in accordance with Section 5 of the Registration Agreement.
2.04. NO OTHER AMENDMENTS. Except as expressly amended hereby, the
Registration Agreement shall continue in full force and effect in accordance
with the terms and provisions thereof.
SIGNATURE PAGE FOLLOWS
2.05. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FLASHNET COMMUNICATIONS, INC.
By: /s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: M. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President & Secretary
APOGEE FUND LP
By: ,
---------------------------------
its General Partner
By:
---------------------------------
Name:
Title:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ISP INVESTORS, L.P.
By: ▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: ▇.▇.
▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP, LTD
By: SMK Development Trust,
its General Partner
By:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
FOURTEEN HILL CAPITAL, LP
By: Fourteen Hill Management, LLC,
its General Partner
By: Point West Capital Corporation,
its General Partner
By:
-----------------------------
Name:
Title:
APPLIED TELECOMMUNICATIONS
TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
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▇▇▇▇ ▇▇▇▇▇▇
UD ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
By:
------------------------------------
▇▇▇▇▇ (▇▇▇▇▇▇▇) ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ INSURANCE TRUST,
U/A 6/28/91
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Q VENTURES, L.P.
By: Acme Widget, L.P.,
its General Partner
By: Scepter Holdings, Inc.,
its General Partner
By:
-----------------------------------
Name:
Title:
THE R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ FAMILY
LIMITED PARTNERSHIP
By: RDA Family Partnership Trust,
its General Partner
By:
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R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS
L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇
(Authorized Signatory)