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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ADVANCED RADIO TELECOM CORP.
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(Exact name of registrant as specified in its charter)
Delaware 52-1869023
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(State or Other Jurisdiction of Incorporation) (IRS Employer
Identification No.)
500 108th Avenue, NE, Suite 2600, Bellevue, Washington 98004
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(Address of principal executive offices) (Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become effective
filing pursuant to General simultaneously with the effectiveness
Instruction A(c)(1) please check of a concurrent registration
the following box. [_] statement under the Securities Act of
1933 pursuant to General Instruction
A(c)(2) please check the following
box. [_]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class to be so Name of Each Exchange on Which Each
Registered Class is to be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Junior Preferred Stock Purchase Rights
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(Title of class)
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Item 1. Description of Registrant's Securities to be Registered.
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On June 20, 1997, the Board of Directors (the "Board") of Advanced
Radio Telecom Corp. (the "Company") declared a dividend of one purchase right (a
"Right") for every outstanding share of the Company's common stock, $.001 par
value (the "Common Stock"). The Rights were distributed on July 3, 1997 to
stockholders of record as of the close of business on that date (the "Dividend
Record Date"). The terms of the Rights are set forth in a Rights Agreement
dated as of June 20, 1997 (the "Rights Agreement") between the Company and
Continental Stock Transfer & Trust Company (the "Rights Agent"). The Rights
Agreement provides for the issuance of one Right for every share of Common Stock
issued and outstanding on the Dividend Record Date and for each share of Common
Stock which is issued or sold after that date and prior to the "Distribution
Date" (as defined below).
Each Right entitles the holder to purchase from the Company one one-
hundredth of a share of Junior Preferred Stock at a price of $90 per one one-
hundredth of a share, subject to adjustment. The Rights will expire on June 20,
2007 (the "Expiration Date"), or the earlier redemption of the Rights, and are
not exercisable until the Distribution Date.
No separate Rights certificates were issued. Until the Distribution Date
(or earlier redemption or expiration of the Rights), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Dividend Record Date upon transfer or new issuance of the Company's
Common Stock will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any of the Company's Common
Stock certificates will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates
will be issued on the Distribution Date. Unless otherwise determined by a
majority of the Board then in office, the Distribution Date will occur on the
earlier of (i) the fifteenth business day following the later of the date of a
public announcement that a person, including affiliates or associates of such
person, except as described below, has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of Common
Stock together with any outstanding warrants issued pursuant to the warrant
agreement dated as of November 11, 1996 among the Company and the Continental
Stock Transfer & Trust Company as Warrant Agent and the warrant agreement dated
as of February 6, 1997 among the Company and The Bank of New York as Warrant
Agent (collectively, the "Warrants") (such an acquirer being hereinafter
referred to as the "Acquiring Person") or the date on which an executive officer
of the Company has actual knowledge that an Acquiring Person became such (the
"Stock Acquisition Date") or (ii) the fifteenth business day following
commencement of a tender offer or exchange offer that would result in any person
or its affiliates and associates owning 15% or more of the Company's outstanding
Common Stock and any outstanding Warrants. In any event, the Board of Directors
may delay the distribution of the certificates.
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After the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
If, at any time after June 20, 1997, any person or group of affiliated
or associated persons (other than the Company and its affiliates), shall become
an Acquiring Person, each holder of a Right will have the right to receive
shares of the Company's Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a market value of two times
the then current purchase price of the Right. Also, in the event that the
Company were acquired in a merger or other business combination, or more than
25% of its assets or earning power were sold, each holder of a Right would have
the right to exercise such Right and thereby receive common stock of the
acquiring company with a market value of two times the then current purchase
price of the Right. Following the occurrence of any of the events described in
this paragraph, any Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person shall
immediately become null and void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after June 20, 1997 (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). The Board,
however, may not effect an exchange at any time after any person (other than the
Company, any subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all affiliates of such person, becomes
the beneficial owner of 50% or more of the outstanding Common Stock.
Immediately upon the action of the Board ordering the exchange of any Rights and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
will be to receive that number of shares of Common Stock equal to the number of
such Rights held by the holder multiplied by the Exchange Ratio.
The purchase price of the Rights, and the number of one one-hundredth of
a share of Junior Preferred Stock or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination,
reclassification or recapitalization of, the Junior Preferred Stock, (ii) upon
the grant to holders of the Junior Preferred Stock of certain rights or warrants
to subscribe for shares of the Junior Preferred Stock or convertible securities
at less than the current market price of the Junior Preferred Stock or (iii)
upon the distribution to holders of the Junior Preferred Stock of evidences of
indebtedness or assets (excluding cash dividends paid out of the earnings or
retained earnings of the Company and certain other distributions) or of
subscription rights or warrants (other than those referred to above).
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With certain exceptions, no adjustments in the purchase price of the
Rights will be required until cumulative adjustments equal at least 1% in such
price.
At any time prior to the close of business on June 20, 2007 or the
earlier redemption of the Rights (the "Expiration Date"), the Company, by a
majority vote of the Board, may redeem the Rights at a redemption price of $.01
per Right (the "Redemption Price"), as described in the Rights Agreement.
Immediately upon the action of the Board electing to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights Agreement may be amended by the Board at any time prior to
the Distribution Date without the approval of the holders of the Rights. From
and after the Distribution Date, the Rights Agreement may be amended by the
Board without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates,
associates or transferees).
The Board of Directors has reserved 1,000,000 shares of Junior Preferred
Stock for issuance upon exercise of the Rights, which shares have the following
terms. Each share of Junior Preferred Stock will be entitled, subject to the
rights of holders of any other series of preference stock having superior
rights, to receive cumulative quarterly cash dividends payable on the last day
of March, June, September and December in each year equal to the greater of (a)
$1.00, or (b) subject to certain adjustments for stock splits, combinations or
dividends, 100 times the aggregate per share amount of all cash dividends and
100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than dividends payable in shares of
Common Stock, payable since the immediately preceding quarterly dividend payment
date on the Junior Preferred Stock or, with respect to the first such dividend,
since the first issuance of any share or fraction thereof of Junior Preferred
Stock.
Holders of shares of Junior Preferred Stock shall, subject to certain
adjustments for stock splits, combinations or dividends, be entitled to 100
votes per share of Junior Preferred Stock on all matters submitted to a vote of
the Company's stockholders, voting together with the Common Stock as a single
class, except as otherwise required by law or the Certificate of Designation.
In the event that any dividends or distributions payable on the Junior
Preferred Stock are in arrears, the Company is subject to certain limitations in
its ability to (i) pay or declare
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dividends or make any distribution to holders of stock ranking junior to or on
parity with the Junior Preferred Stock, (ii) redeem, purchase or otherwise
acquire shares of any stock ranking junior to the Junior Preferred Stock, and
(iii) redeem, purchase or otherwise acquire shares of any stock ranking on a
parity with the Junior Preferred Stock.
Upon any liquidation (voluntary or otherwise), dissolution or winding up
of the Company, holders of the Junior Preferred Stock shall be entitled to
receive, before any distribution is made with respect to shares of stock ranking
junior to the Junior Preferred Stock, $100 per share plus an amount equal to any
accrued and unpaid dividends and distributions thereon. After such payments are
made, additional distributions shall be made to holders of shares of Junior
Preferred Stock only after certain payments are made to holders of Common Stock
and stock ranking on parity therewith.
In the event of any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or other property, then in any such
case the shares of the Junior Preferred Stock shall be similarly exchanged or
changed in an amount per share, subject to certain adjustments for stock splits,
combinations or dividends, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
The shares of Junior Preferred Stock shall rank pari passu with (or if
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determined by the Board of Directors in any vote establishing any other series
of preferred stock, either senior to and prior in preference to, or junior and
subordinate to) other series of preferred stock of the Company with respect to
dividends and/or liquidation preference.
The shares of Junior Preferred Stock may be issued in fractional shares,
and are not subject to mandatory redemption.
The form of Rights Agreement dated as of June 20, 1997 between the
Company and Continental Stock Transfer & Trust Company, as Rights Agent,
specifying the terms of the Rights (including as exhibits the form of
Certificate of Designation with respect to the Junior Preferred Stock, Rights
Certificate and the Summary of Rights) is attached hereto as an exhibit. The
foregoing summary description of the Rights and the Junior Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement and exhibits thereto, which is incorporated herein by
reference.
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Item 2. Exhibits.
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1. Rights Agreement dated as of June 20, 1997 ("Rights Agreement")
between the Company and Continental Stock Transfer & Trust Company,
as Rights Agent.
2. Form of Certificate of Designation with respect to the Junior
Preferred Stock, par value $.001 per share, of the Company (attached
as Exhibit A to the Rights Agreement).
3. Form of Rights Certificate (attached as Exhibit B to the Rights
Agreement). Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until the Distribution Date (as
defined in the Rights Agreement).
4. Summary of Rights (attached as Exhibit C to the Rights Agreement).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
ADVANCED RADIO TELECOM CORP.
Date: July 9, 1997 By:/s/ Thomas A. Grina
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
Page Number
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1. Rights Agreement dated as of June 20, 1997 ("Rights
Agreement") between the Company and Continental
Stock Transfer & Trust Company, as Rights Agent.
2. Form of Certificate of Designation with respect to
the Junior Preferred Stock, par value $.001 per
share, of the Company (attached as Exhibit A to the
Rights Agreement).
3. Form of Rights Certificate (attached as Exhibit B to
the Rights Agreement). Pursuant to the Rights
Agreement, printed Rights Certificates will not be
mailed until the Distribution Date (as defined in the
Rights Agreement).
4. Summary of Rights (attached as Exhibit C to the
Rights Agreement).
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EXHIBIT 1
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ADVANCED RADIO TELECOM CORP.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
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Rights Agreement
Dated as of June 20, 1997
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Table of Contents
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Section Page
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Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................6
Section 3. Issue of Rights Certificates.......................................6
Section 4. Form of Rights Certificates........................................8
Section 5. Countersignature and Registration..................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.......................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.....10
Section 8. Cancellation and Destruction of Rights Certificates...............12
Section 9. Reservation and Availability of Shares of Preferred Stock;
Other Covenants...................................................12
Section 10. Preferred Stock Record Date; Etc. ...............................14
Section 11. Antidilution Adjustments.........................................15
Section 12. Certificate of Adjustments.......................................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................24
Section 14. Fractional Rights and Fractional Shares..........................26
Section 15. Rights of Action.................................................27
Section 16. Agreement of Rights Holders......................................27
Section 17. Rights Certificate Holder Not Deemed a Stockholder...............28
Section 18. Concerning the Rights Agent......................................28
</TABLE>
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Section 19. Merger or Consolidation or Change of Name of Rights Agent........29
Section 20. Duties of Rights Agent...........................................30
Section 21. Change of Rights Agent...........................................32
Section 22. Issuance of New Rights Certificates..............................33
Section 23. Redemption and Termination.......................................33
Section 24. Exchange.........................................................34
Section 25. Notice of Proposed Actions.......................................35
Section 26. Notices..........................................................36
Section 27. Supplements and Amendments.......................................37
Section 28. Successors.......................................................37
Section 29. Determinations and Actions by the Board; etc.....................37
Section 30. Benefits of this Agreement.......................................38
Section 31. Severability.....................................................38
Section 32. Governing Law....................................................38
Section 33. Counterparts.....................................................39
Section 34. Descriptive Headings.............................................39
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RIGHTS AGREEMENT
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This Agreement dated as of June 20, 1997 is between Advanced Radio Telecom
Corp., a Delaware corporation (the "Company") and Continental Stock Transfer &
Trust Company, a New York corporation (the "Rights Agent").
W I T N E S S E T H:
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WHEREAS, on June 20, 1997 the Board of Directors of the Company (the
"Board") authorized the issuance of rights (collectively, the "Rights," and
individually a "Right"), each Right being a right to purchase, on the terms and
subject to the provisions of this Agreement, one one-hundredth of a share of the
Company's Junior Preferred Stock; and
WHEREAS, on June 20 , 1997 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding at the Close of Business on July 3, 1997
(the "Dividend Record Date"), and (b) authorized the issuance of, and agreed to
issue, one Right (as such number may be adjusted in accordance with Section
11(i) or 11(p) hereof) for every share of Common Stock of the Company issued
between the Dividend Record Date and the Distribution Date (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
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For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates of such Person, shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding together with any then outstanding
Warrants, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, (iv) any Person organized, appointed or established by the Company
or a Subsidiary of the Company pursuant to the terms of any plan described in
clause (iii) above or (v) any such Person who has reported to or is required to
report such ownership (but less than 15%) on Schedule 13G under the Exchange Act
(or any comparable or successor report) or on Schedule 13D under the Exchange
Act (or any comparable or successor report) which Schedule 13D does not state
any intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the Common Stock) and, (A) who
within 10 Business Days of being requested by the Company to advise it regarding
the same, certifies to the Company that such Person acquired shares of Common
Stock in excess of 14.9% of the then outstanding shares of Common Stock together
with the
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then outstanding Warrants inadvertently or without knowledge of the terms of the
Rights, (B) who receives express approval of the Board not to be deemed an
Acquiring Person, and (C) who, together with all Affiliates, thereafter does not
acquire additional shares of Common Stock while the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding together with the Warrants
then outstanding, provided, however, that if the Person requested to provide the
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certification described above fails to do so within 10 Business Days, then such
Person shall become an Acquiring Person immediately after such 10 Business Day
Period.
(b) "Act" shall mean the Securities Act of 1933 (or any successor act), as
amended and as may from time to time be in effect.
(c) "Affiliate," with respect to any Person, shall mean any other Person
who is, or who would be deemed to be, an "affiliate" or an "associate" of such
Person within the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own" or have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as such Rule is in effect on
the Declaration Date;
(ii) which such Person or any of such Person's Affiliates has, directly
or indirectly, the right to acquire (whether such right is exercisable
immediately or after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion, exchange or other rights, warrants or options, or
otherwise;
(iii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to vote or dispose of, including pursuant
to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
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of, or to "beneficially own," any security for purposes of this Section
1(d)(iii) as a result of an agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable proxy solicitation rules and regulations promulgated under the
Exchange Act or (B) is made in connection with, or is to otherwise
participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable proxy solicitation
rules and regulations promulgated under the Exchange Act, in either case
described in clause (A) or (B) above, whether or not such agreement,
arrangement
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or understanding is also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by any other
Person or any Affiliate thereof with which such Person or any of such
Person's Affiliates has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or in connection with a proxy or
consent solicitation described in clause (A) or (B) of the proviso to
Section 1(d)(iii) hereof) or disposing of any securities of the Company;
provided, however, that for purposes of this Section 1(d) a Person shall not be
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deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(d) shall cause a
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Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall have the meaning set forth in the preamble to this
Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, NY or the city in which the
principal office of the Rights Agent is located are authorized or obligated by
law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New York,
NY time, on such date; provided, however, that if such date is not a Business
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Day it shall mean 5:00 P.M., New York, NY time, on the next succeeding Business
Day.
(h) "Closing Price" shall have the meaning set forth in Section 11(d)
hereof.
(i) "Common Stock" shall mean the Common Stock, with a par value of $.001
per share, of the Company, except that "Common Stock" when used with respect to
any Person other than the Company shall mean either (i) the common stock (or
other capital stock or shares of beneficial interest) of such Person with the
greatest voting power, or (ii) the equity securities or other equity interests
having power to control or direct the management and affairs of such Person, or
(iii) if such Person is a Subsidiary of another Person, the Person (A) who
ultimately controls such Person who is the Subsidiary and (B) which has
outstanding such common stock (or such other capital stock, equity securities or
interests).
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(j) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Common Stock Event" shall mean the occurrence of any event described
in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the first
sentence of Section 13 hereof.
(l) "Company" shall have the meaning set forth in the preamble to this
Agreement.
(m) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(o) "Declaration Date" shall have the meaning set forth in the preamble to
this Agreement.
(p) "Directors" shall mean the members of the Board.
(q) "Disqualified Transferee" shall mean any Person who is a direct or
indirect transferee of any Right from an Acquiring Person or an Affiliate of an
Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Right pursuant to a transfer (whether or not for
value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Right, or (B) which a majority of the Board reasonably
determines is part of a plan, arrangement, or understanding (whether or not in
writing) which has as a primary purpose or effect, the avoidance of Section 7(e)
hereof.
(r) "Distribution Date" shall mean the date which is the later of (A) the
earlier of (x) the 15th Business Day following the Stock Acquisition Date or (y)
the 15th Business Day following the Offer Commencement Date or (B) such
specified or unspecified date thereafter which is on or after the Dividend
Record Date, as may be determined by a majority of the Board.
(s) "Dividend Record Date" shall have the meaning set forth in the preamble
to this Agreement.
(t) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(u) "Excess Amount" shall have the meaning set forth in Section 11(a)(iii)
hereof.
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(v) "Exchange Act" shall mean the Securities Exchange Act of 1934 (or any
successor act), as in effect on the Declaration Date.
(w) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(x) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(y) "Offer Commencement Date" shall mean the date of the commencement by
any Person, other than the Company, a Subsidiary of the Company, or any employee
benefit plan of the Company or of any Subsidiary of the Company or any Person
organized, appointed or established by the Company or such Subsidiary pursuant
to the terms of any such plan, of a tender or exchange offer (including when
such offer is first published or sent or given within the meaning of Rule 14d-
2(a) of the General Rules and Regulations under the Exchange Act) if upon
consummation thereof the Person and Affiliates thereof would be the Beneficial
Owner of 15% or more of the then outstanding shares of Common Stock together
with the then outstanding Warrants (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights on the Dividend
Record Date or thereafter).
(z) "Officers' Certificate" has the meaning set forth in Section 20(b)
hereof.
(aa) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.
(bb) "Person" shall mean a company, corporation, association, partnership,
joint venture, trust, organization, business, entity or individual.
(cc) "Preferred Stock" shall mean the Junior Preferred Stock, $.001 par
value, of the Company, having the rights and preferences set forth in the form
of Certificate of Designation attached hereto as Exhibit A.
(dd) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(ee) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(ff) "Rights" shall have the meaning set forth in the preamble to this
Agreement.
(gg) "Rights Agent" shall have the meaning set forth in the preamble of
this Agreement subject to the appointment of a successor Rights Agent pursuant
to Section 21 hereof.
(hh) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(ii) "Stock Acquisition Date" shall mean the later of (i) the date of the
first public announcement by an Acquiring Person or the Company that an
Acquiring Person has become
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such (including the first date on which any filing with any governmental
authority disclosing that an Acquiring Person has become such becomes available
to the public), or (ii) the date on which an executive officer of the Company
has actual knowledge that an Acquiring Person has become such.
(jj) "Subsidiary" shall mean, as of any date, any Person of which the
Company (or other specified parent) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally, or holds
directly, or indirectly through a Subsidiary or Subsidiaries, at least a
majority of partnership or similar interests, or is a general partner or of
which the Company (or other specified parent) owns voting securities sufficient
to elect at least a majority of the directors of such Person.
(kk) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ll) "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
(mm) "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day.
(nn) "Warrants" shall mean only those warrants issued pursuant to (i) the
Warrant Agreement between Advanced Radio Telecom Corp. and Continental Stock
Transfer and Trust Company as Warrant Agent, dated as of November 11, 1996 and
(ii) the Warrant Agreement between Advanced Radio Telecom Corp. and The Bank of
New York as Warrant Agent, dated as of February 6, 1997.
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time, upon prior written
notice to the Rights Agent, appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates representing
shares of Common Stock registered in the names of the holders of the Common
Stock (which certificates shall be
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<PAGE>
deemed also to be certificates for the associated Rights) and not by separate
rights certificates, and (ii) the Rights will be transferable only in connection
with the transfer of the associated shares of Common Stock. As soon as
practicable after the Distribution Date, the Rights Agent will send by first-
class, insured, postage prepaid mail, to each record holder of the Common Stock
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the stock transfer records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing in the aggregate that number of Rights to which such
holder is entitled in accordance with the provisions of this Agreement. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates. The Rights are exercisable only in accordance with the
provisions of Section 7 hereof and are redeemable only in accordance with
Section 23 hereof.
(b) As soon as practicable after the Dividend Record Date, the Company will
cause a copy of a Summary of Rights, in substantially the form attached hereto
as Exhibit C (the "Summary of Rights"), to be sent by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Dividend Record Date, at the address of such holder shown on the
stock transfer records of the Company. With respect to certificates for the
Common Stock outstanding as of the Dividend Record Date, until the Distribution
Date, the Rights associated with the shares of Common Stock represented by such
certificates will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock issued
(whether originally issued or delivered from the Company's treasury) after the
Dividend Record Date but prior to the earliest of (i) the Distribution Date,
(ii) the Expiration Date, or (iii) the redemption of the Rights. Certificates
representing such shares of Common Stock and certificates issued on transfer of
such shares of Common Stock, with or without a copy of the Summary of Rights,
prior to the Distribution Date (or earlier expiration or redemption of the
Rights) shall be deemed also to be certificates for the associated Rights, and
commencing as soon as reasonably practicable following the Dividend Record Date
shall bear the following legend (or a legend substantially in the form thereof):
This certificate also evidences and entitles the holder to Rights set forth
in a Rights Agreement between the issuer and Continental Stock Transfer &
Trust Company, as Rights Agent (the "Rights Agent"), dated as of June 20,
1997 (the "Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal offices of
both the issuer and the Rights Agent. The
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<PAGE>
Rights Agent will mail to the registered holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge upon written request. Under certain circumstances set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by any Person who is, was or becomes, or acquires shares from, an Acquiring
Person or any Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement and generally relating to the ownership or
purchase of large shareholdings), whether currently held by or on behalf of
such Person or Affiliate or by certain subsequent holders, may become null
and void.
Until the Distribution Date or the earlier redemption, expiration or termination
of the Rights, the Rights associated with the Common Stock shall be evidenced by
the Common Stock certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Dividend Record Date (or, if the shares
pursuant to which the Rights are attached are issued thereafter, such date of
issuance), shall include the date of countersignature and on their face shall
entitle the holders thereof to purchase such number of one one-hundredths of a
share of Preferred Stock as shall be set forth therein at the Purchase Price (as
hereinafter defined), but the amount and type of securities issuable upon the
exercise of each Right and the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or any
Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee, and any
other Rights Certificate issued pursuant to Sections 6 or 11 hereof upon the
transfer, exchange, replacement, or adjustment of any such Rights Certificate
shall contain (to the extent feasible) the following legend:
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<PAGE>
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate
(which includes both affiliates and associates) of an Acquiring Person (as
each such term is defined in the Rights Agreement between the issuer and
Continental Stock Transfer & Trust Company, as Rights Agent, dated as of
June 20, 1997 (the "Rights Agreement")). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of the Rights Agreement. The
Rights Agent will mail to the registered holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge upon written request.
Section 5. Countersignature and Registration.
---------------------------------
The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President, or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or
facsimile thereof which shall be attested by the Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned, either manually or by facsimile signature,
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, issued, and delivered with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company. Any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at the office of the Rights Agent designated for such purpose, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates, and the date of countersignature thereof by the Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
--------------------------------------------------------------------
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
--------------------------------------------------------
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the earlier of the Close of Business on the Expiration Date or the redemption
of the Rights, any Rights Certificate may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of
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<PAGE>
a share of Preferred Stock (or, following a Common Stock Event, Common Stock
and/or such other securities, cash, or other assets as shall be issuable in
respect of the Rights in accordance with the terms of this Agreement (such other
securities, cash or other assets being referred to herein as "Other
Consideration")) as the Rights Certificate surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate to be transferred, split up, combined, or exchanged at
the office of the Rights Agent designated for such purpose, accompanied by a
signature guarantee and such other documentation as the Rights Agent may
reasonably request. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner from whom the Rights evidenced by such
Rights Certificate are to be transferred (or the Beneficial Owner to whom such
Rights are to be transferred) or Affiliates thereof as the Company shall
reasonably request. Thereupon, subject to Sections 4(b), 7(e) and 14 hereof,
the Company shall execute and the Rights Agent shall countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates which the Company is not required to pay in accordance with
Section 9(d) hereof.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, the receipt of
indemnity or security satisfactory to them, and upon reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate,
if mutilated, accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, the Company will execute and deliver
a new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby in whole or in part
at any time from and after the Distribution Date and at or prior to the Close of
Business on June 20, 2007 (the "Expiration Date") or the earlier redemption of
the Rights. At the Expiration Date (or the earlier redemption of the Rights),
all Rights will be extinguished and all Rights Certificates shall become null
and void. To exercise Rights, the registered holder of the Rights Certificate
evidencing such Rights shall surrender such Rights Certificate, with the form of
election to
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<PAGE>
purchase on the reverse side thereof and the certificate contained therein duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, together with payment in cash, only
if by electronic or wire transfer, or by certified check or bank check, of the
Purchase Price with respect to the total number of one one-hundredths of a share
of Preferred Stock (or, after a Common Stock Event, shares and/or similar units
of Common Stock or Other Consideration) as to which the Rights are exercised
(which payment shall include any additional amount payable by such Person in
accordance with Section 9(d) hereof). The Rights Agent shall promptly deliver
to the Company all payments of the Purchase Price received in respect of Rights
Certificates accepted for exercise.
(b) The purchase price for each one one-hundredth of a share of Preferred
Stock issuable pursuant to the exercise of a Right (the "Purchase Price") shall
initially be $90], shall be subject to adjustment as provided in Section 11
hereof, and shall be payable in lawful money of the United States of America.
(c) Upon receipt of a Rights Certificate representing the Rights, with the
form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e), 11(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Preferred Stock (or Common Stock)
(or from the Company if there shall be no such transfer agent, or make available
if the Rights Agent is such transfer agent) certificates for the total number of
one one-hundredths of a share of Preferred Stock (or Common Stock) to be
purchased and the Company hereby irrevocably authorizes such transfer agent to
comply with any such request, (ii) after receipt of such certificates, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated in
writing by such holder, and (iii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of a fractional share in
accordance with Section 14 hereof and after receipt promptly deliver such cash
to or upon the order of the registered holder of such Rights Certificate. After
the occurrence of a Common Stock Event, the Company will make all necessary
arrangements so that any Other Consideration then deliverable in respect of the
Rights is available for distribution by the Rights Agent. For purposes of this
Section 7, the Rights Agent shall be entitled to rely, and shall be protected in
relying, on an Officers' Certificate from the Company to the effect that the
Distribution Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the registered
holder of any Rights Certificate shall exercise less than all the Rights
evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be executed and delivered by the Company to
the Rights Agent and countersigned and delivered by the Rights Agent to the
registered holder of such Rights Certificate or to his duly authorized assigns.
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<PAGE>
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company shall
have no liability to any holder of Rights Certificates or other Person and none
of the terms of this Agreement or the Rights shall be deemed to be waived with
respect to such holder or other Person as a result of any failure by the Company
to make any determinations with respect to an Acquiring Person or any Affiliate
of an Acquiring Person or Disqualified Transferees hereunder or any failure to
have a legend placed on any Rights Certificate in accordance with Section 4(b)
hereof or on any Common Stock certificate in accordance with Section 3(c)
hereof.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a holder of any Rights Certificate upon the occurrence of any
purported exercise thereof unless such holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
from whom the Rights evidenced by such Rights Certificate are to be transferred
(or the Beneficial Owner to whom such Rights are to be transferred) or
Affiliates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Rights Certificates
purchased or retired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or may, at the written request of the Company, but shall not be required to,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
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<PAGE>
Section 9. Reservation and Availability of Shares of Preferred Stock; Other
----------------------------------------------------------------
Covenants.
- ---------
(a) The Company covenants and agrees that on and after the Distribution
Date, it will use reasonable efforts to cause to be reserved and kept available
out of its authorized and unissued shares of Preferred Stock (or, following the
occurrence of a Common Stock Event, out of its authorized and unissued shares of
Common Stock and/or other securities, or out of its authorized and issued shares
held in its treasury), the number of shares of Preferred Stock (or, following a
Common Stock Event, shares of Common Stock and/or other securities) that, except
as provided in Section 11(a)(iii) hereof, would then be sufficient to permit the
exercise in full of all outstanding Rights; provided, however, that the
-------- -------
reservation of such shares shall be subject and subordinate to any other
reservation of such shares made by the Company at any time for any lawful
purpose; provided, further, however, that in no event shall such failure to so
-------- ------- -------
reserve shares affect the rights of any holder of Rights hereunder.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Preferred Stock (or, following a Common Stock Event, shares
of Common Stock and/or other securities and/or Other Consideration) issuable
upon the exercise of Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause all shares (or similar units)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that each one one-hundredth of a share of Preferred
Stock (or, following a Common Stock Event, each share and/or similar unit of
Common Stock or Other Consideration) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares (or units), subject to
payment of the Purchase Price, be duly and validly authorized and issued and
fully paid and nonassessable.
(d) The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and similar charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock (or, following the occurrence of a Common Stock
Event, each share and/or similar units of Common Stock or Other Consideration)
upon the exercise of Rights; provided, however, that the Company shall not be
-------- -------
required to pay any transfer tax which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or in the issuance
or delivery of certificates for any shares of Preferred Stock (or, following the
occurrence of a Common Stock Event, each share and/or similar units of Common
Stock or Other Consideration) in a name other than that of the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates for any shares of Preferred Stock (and, following
the occurrence of a Common Stock Event, all shares and/or similar units of
Common Stock or Other Consideration) upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Rights
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<PAGE>
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
issuable upon exercise of the Rights on an appropriate form, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, or (B) the Expiration Date or earlier redemption of the Rights. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such registration
statement or to permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended. The Company shall thereafter issue a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
Section 10. Preferred Stock Record Date; Etc.
--------------------------------
Each person in whose name any certificate for any shares of Preferred Stock
(or, following the occurrence of a Common Stock Event, shares and/or similar
units of Common Stock or Other Consideration) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such fractional shares of Preferred Stock (or such shares and similar units of
Common Stock and/or Other Consideration, as the case may be) represented
thereby, and such certificate shall be dated the date which is the later of (i)
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered, or (ii) the date upon which payment of the Purchase Price (and any
applicable transfer taxes) in respect thereof was made; provided, however, that
-------- -------
if such date is a date upon which the relevant transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares (or Other Consideration) on, and such certificate shall be dated, the
next succeeding Business Day on which such transfer books of the Company are
open; provided, further, that the Company covenants and agrees that it shall not
-------- -------
close such transfer books for a period exceeding ten consecutive days. Prior to
the exercise of the Rights evidenced thereby (which shall be deemed to have
occurred on the date such certificate for shares of Preferred Stock, Common
Stock or other securities shall be dated in accordance with
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<PAGE>
this Section 10), the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a security holder of the Company with respect to the
shares of Preferred Stock or Common Stock (and/or such shares or similar units
of Common Stock or Other Consideration) for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions, or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as expressly provided herein.
Section 11. Antidilution Adjustments.
------------------------
The Purchase Price and the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
Declaration Date (A) declare and pay a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue, change, or alter any of its shares of
capital stock in a reclassification or recapitalization (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving Person), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, then, and in each
such case, the Purchase Price in effect at the time of the record date for
such dividend or the effective time of such subdivision, combination,
reclassification or recapitalization, and the number and kind of shares of
capital stock issuable at such time, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of Preferred Stock or other
capital stock which, if such Right had been exercised immediately prior to
such time at the Purchase Price then in effect and at a time when the
transfer books for the Preferred Stock (or other capital stock) of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination,
reclassification or recapitalization. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event
(A) any Person shall at any time after the Declaration Date
become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the Declaration Date, directly or
indirectly, shall (1) merge
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into the Company or otherwise combine with the Company, and the Company shall be
the continuing or surviving corporation of such merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed or otherwise transformed into stock or other securities of any other
Person or the Company or cash or any other property, (2) in one or more
transactions, transfer any assets to the Company in exchange (in whole or in
part) for shares of any class of its equity securities or for securities
exercisable for or convertible into shares of any such class or otherwise obtain
from the Company, with or without consideration, any additional shares of any
such class or securities exercisable for or convertible into shares of any such
class (other than as part of a pro rata distribution to all holders of such
class), (3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of transactions) to, from or
with the Company or any of the Company's Subsidiaries, assets with an aggregate
fair market value in excess of 25% of the assets of the Company on terms and
conditions less favorable to the Company than the Company would be able to
obtain through arm's-length negotiation with an unaffiliated third party, (4)
receive any compensation from the Company or any of the Company's Subsidiaries
other than compensation as a director of the Company or for full-time employment
as a regular employee at rates in accordance with the Company's (or such
Subsidiary's) past practices, (5) receive the benefit (except proportionately as
a stockholder) of any loans, advances, guarantees, pledges or other financial
assistance provided by the Company or any of its Subsidiaries on terms and
conditions less favorable to the Company than the Company would be able to
obtain through arm's-length negotiation with an unaffiliated third party or (6)
commence a tender or exchange offer for securities of the Company; or
(C) during such time as there is an Acquiring Person at any time after the
Declaration Date, there shall be any reclassification of securities (including
any combination thereof), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries, or any repurchase by
the Company or any of its Subsidiaries of shares of the Common Stock of the
Company, or any other class or series of securities issued by the Company, which
reclassification, recapitalization, merger or consolidation or repurchase is
effected at a time when a majority of the Board of Directors of the Company
consists of persons who are the Acquiring Person or its Affiliates, nominees or
designees thereof (whether or not with or into or otherwise involving an
Acquiring Person or any Affiliate of an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities or securities
exercisable for or convertible into any class of equity securities of the
Company or any of its Subsidiaries which is directly or indirectly owned by an
Acquiring Person or any Affiliate of an Acquiring Person
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<PAGE>
then, in each such case, upon the Close of Business 15 Business Days after the
occurrence of such event, proper provision shall be made so that each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon exercise thereof at the Purchase Price in effect at the
time of exercise in accordance with the terms of this Agreement, in lieu of a
number of one one-hundredths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an amount
equal to the number of one one-hundredths of a share of Preferred Stock for
which a Right was or would have been exercisable immediately prior to the first
occurrence of any such event whether or not such Right was then exercisable, and
(y) dividing that product by 50% of the Current Market Price per share of the
Common Stock of the Company (as defined in Section 11(d) hereof) determined as
of the date of such first occurrence.
(iii) In lieu of issuing whole or fractional shares of Common Stock in
accordance with Section 7(c) hereof, the Company shall (i) in the event that the
number of shares of Common Stock which are authorized by the Company's charter
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with Section 7(c) hereof, or (ii) if a majority of the
Board determines that it would be appropriate and not contrary to the interests
of the holders of Rights (other than any Acquiring Person or Disqualified
Transferee or any Affiliate of the Acquiring Person or Disqualified Transferee),
(A) determine an amount, if any, (the "Excess Amount") equal to the excess of
(1) the value (the "Current Value") of the whole or fractional shares of
Preferred Stock (or Common Stock) issuable upon the exercise of a Right in
accordance with Section 7(c) hereof, over (2) the Purchase Price, and (B) with
respect to each Right, (subject to Section 7(e) hereof) make adequate provision
to substitute for such whole or fractional shares of Preferred Stock (or Common
Stock), upon payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares or units of Preferred Stock or
preferred stock which the Board has deemed in good faith to have the same value
as a share of Common Stock (such shares of preferred stock being referred to
herein as "Common Stock Equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing (which would include the
additional consideration provided to any holder by reducing the Purchase Price)
having an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board; provided, however, subject to the provisions
-------- -------
of Section 9(e), that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the Close of
Business 15 Business Days after the first occurrence of a Common Stock Event
described in Section 11(a)(ii) hereof, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, whole or fractional shares of Preferred Stock (or
Common Stock) (to
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<PAGE>
the extent available) and then, if necessary, cash, securities, and/or
assets which in the aggregate are equal to the Excess Amount. If the Board
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock or Common Stock Equivalents could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 90 days
following the Close of Business 15 Business Days after the first occurrence
of such a Common Stock Event (such 30 day period) as it may be extended to
90 days, is referred to herein as the "Substitution Period"). To the extent
that the Company determines that some action is to be taken pursuant to the
preceding provisions of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that (except as to the form of
consideration which shall be determined as appropriate by a majority of the
Board) such action shall apply uniformly to all outstanding Rights which
shall not have become null and void, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such provisions and
to determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended. The Company shall thereafter
issue a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common
Stock issuable upon exercise of a Right in accordance with Section 7(c)
hereof shall be the Current Market Price per share of the Common Stock (as
determined pursuant to Section 11(d) hereof) on the Close of Business 15
Business Days after the date of the first occurrence of such a Common Stock
Event and the value of any Common Stock Equivalent shall be deemed to be
equal to the Current Market Price per share of the Common Stock on such
date.
(b) In the event the Company shall, after the Dividend Record Date, fix a
record date for the issuance of any options, warrants, or other rights to all
holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase (i) Preferred
Stock or (ii) shares having the same rights, privileges and preferences as the
shares of any number of one one-hundredths of a share of Preferred Stock
("Equivalent Preferred Stock") or (iii) securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share of Common
Stock, if a security is convertible into Preferred Stock or Equivalent Preferred
Stock) less than the Current Market Price per share of Preferred Stock
(determined in accordance with Section 11(d) hereof) determined as of such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock and/or Equivalent Preferred Stock which the aggregate minimum
offering price of the total number of shares of one one-hundredths of a share of
Preferred Stock and/or Equivalent Preferred Stock
-18-
<PAGE>
so to be offered (and/or the aggregate minimum conversion price of such
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the maximum number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or the maximum number of shares into which such
convertible securities so to be offered are convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
shall be in a form other than cash, for purposes of this Section 11(b) the value
of such consideration shall be the fair market value thereof as determined in
good faith by the Board (which determination shall be described in an Officers'
Certificate filed with the Rights Agent). Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed (subject, however, to such other adjustments as are provided herein).
(c) In the event that the Company shall, after the Dividend Record Date,
fix a record date for the making of a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the surviving or continuing Person) of
evidences of indebtedness, cash (other than cash dividends paid out of the
earnings or retained earnings of the Company and its Subsidiaries determined on
a consolidated basis in accordance with generally accepted accounting principles
consistently applied), other property (other than a dividend payable in a number
of one one-hundredths of a share of Preferred Stock, but including any dividend
payable in capital stock other than Preferred Stock), or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the Current Market Price per share of
Preferred Stock (as defined in Section 11(d) hereof) determined as of such
record date, less the sum of that portion of cash plus the fair market value, as
----
determined in good faith by the Board (which determination shall be described in
an Officers' Certificate filed with the Rights Agent) of that portion of such
evidences of indebtedness, such other property, and/or such subscription rights
or warrants applicable to one share of Common Stock and of which the denominator
shall be such Current Market Price per share of the Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed (subject, however, to such other adjustments as are
provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii) hereof,
the "Current Market Price" per share (or unit) of any security on any date shall
be deemed to be the average of the daily Closing Price of such security for the
10 consecutive Trading Days immediately after such date and for the purpose of
any other computation hereunder, the
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<PAGE>
"Current Market Price" per share (or unit) of any security on any date shall be
deemed to be the average of the daily Closing Price of such security for the 20
consecutive Trading Days immediately prior to such date; provided, however, that
-------- -------
in the event that the Current Market Price per share of such security is
determined during a period following the announcement by the issuer of such
security of (i) a dividend or distribution on such security payable in shares
(or units) of such security or securities convertible into shares (or units) of
such security, or (ii) any subdivision, combination or reclassification of such
security, and prior to the expiration of such 10 Trading Days or 20 Trading Days
after (A) the ex-dividend date for such dividend or distribution, or (B) the
record date for such subdivision, combination or reclassification, as the case
may be, then, and in each such case, the "Current Market Price" shall be the
Closing Price of such security on the last day of such respective 10 Trading Day
or 20 Trading Day period. For purposes of this Agreement, the "Closing Price"
of any security on any day shall be the last sale price, regular way, with
respect to shares (or units) of such security, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
with respect to such security, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange; or, if such security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such security is
listed or admitted to trading; or, if such security is not so listed or admitted
to trading, the last quoted sale price with respect to shares (or units) of such
security, or, if not so quoted, as the average of the high bid and low asked
prices in the over-the-counter market with respect to shares (or units) of such
security, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other similar system then in use; or, if on
any such date such security is not quoted by any such organization, the average
of the closing bid and asked prices with respect to shares (or units) of such
security, as furnished by a professional market maker making a market in such
security selected by the Board; or, if no such market maker is available, the
fair market value of shares (or units) of such security as of such day as
determined in good faith by the Board (which determination shall be described in
an Officers' Certificate filed with the Rights Agent); provided, however, that
-------- -------
the "Closing Price" of one one-hundredth of a share of Preferred Stock as of any
Trading Day shall be equal to the Closing Price of a whole share of Preferred
Stock on such Trading Day divided by 100; provided, further, that if the Closing
-------- -------
Price of such a share of Preferred Stock as of any Trading Day cannot be
reasonably determined by the foregoing provisions, the "Closing Price" of one
one-hundredth of a share of Preferred Stock on such Trading Date shall be the
Closing Price of a share of Common Stock on such Trading Day.
(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e)
- -------- -------
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest (x) ten-thousandth of a share (or
-20-
<PAGE>
similar unit) of Common Stock or securities other than Preferred Stock or
Equivalent Preferred Stock or (y) one-millionth of a share of Preferred Stock or
Equivalent Preferred Stock. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
the adjustment or (ii) the date of the expiration of the right to exercise the
Rights. Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those required by this Section 11, as it in its discretion shall
determine to be advisable in order that any dividends, subdivision of shares,
distribution of rights to purchase shares of beneficial interest or other stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Company to its stockholders shall not be
taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to such other shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (p)
hereof, and the provisions of Sections 7, 9, 10, 11(d), 13 and 14 hereof with
respect to the shares of Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights represented thereby, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest one-
millionth of a share) obtained by (i) multiplying (x) the number of one one-
hundredths of a share of Preferred Stock covered by a Right immediately prior to
this adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) Assuming that no other adjustment pursuant to this Section 11 has been
made, the Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of one one-hundredths of a share of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights
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<PAGE>
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by the Purchase Price in effect immediately after such adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed, and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of whole or fractional shares of Preferred Stock issuable upon exercise
of such Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of one one-
hundredths of a share of Preferred Stock which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one one-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such number of fully paid and nonassessable one one-hundredths of a share of
Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-hundredths of a share of Preferred Stock or other
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<PAGE>
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
--------
however, that the Company shall deliver to such holder a due bill or other
- -------
appropriate instrument evidencing such holder's right to receive such additional
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith,
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, issuance wholly for cash of any Common Stock at less than
the Current Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or exchangeable for
Common Stock), dividends payable in shares of Common Stock or other capital
stock or shares of beneficial interest, or issuance of rights, options, or
warrants referred to hereinabove in this Section 11, hereafter made or declared
by the Company to the holders of its Common Stock, shall not be taxable to such
holders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, more than 25% of (A) the assets
(taken at net asset value as stated on the books of the Company and determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale, there are any
rights, warrants or other instruments or securities outstanding or agreements
(whether or not in writing) in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of such other Person shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
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<PAGE>
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Dividend Declaration Date
and prior to the Distribution Date (i) declare or pay a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, or (ii)
effect a subdivision, combination or consolidation of the outstanding Common
Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock) into a greater or smaller number of shares, then in any such
case, (i) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event; and (ii) each share of
Common Stock outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjustments.
--------------------------
Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall (a) promptly prepare an Officers' Certificate setting forth
such adjustment, including any adjustment in Purchase Price, the number of
shares or Other Consideration payable, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock and Common Stock a copy of such
Officers' Certificate, and (c) mail a brief summary thereof to each registered
holder of a Rights Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such Officers' Certificate and
on any adjustment therein contained, and shall not be deemed to have knowledge
of any such adjustment unless and until it shall have received such an Officers'
Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power.
-----
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving Person of such consolidation or merger, (b) any Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into, the Company, the Company
shall be the continuing or surviving Person of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the Common Stock
of the Company shall be changed or otherwise transformed into other stock or
other securities of any other Person or the Company or cash or any other
property, or (c) the Company shall sell or
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<PAGE>
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, more than 25%
of (A) the assets (taken at net asset value as stated on the books of the
Company and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (B) the earning power of
the Company and its Subsidiaries (determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied)
to any Person (other than the Company or any Subsidiary of the Company in one or
more transactions each of which complies with Section 11(o) hereof) then, from
and after such event, proper provision shall be made so that (i) each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price in effect at
the time of such exercise in accordance with the terms of this Agreement, such
number of whole or fractional shares of validly authorized and issued, fully
paid, non-assessable, and freely tradeable Common Stock of such other Person (or
--
in the case of a transaction or series of transactions described in clause (c)
above, the Person receiving the greatest amount of the assets or earning power
of the Company, or if the Common Stock of such other Person is not and has not
--
been continuously registered under Section 12 of the Exchange Act for the
preceding 12-month period and such Person is a direct or indirect Subsidiary of
another Person, that other Person, or if such other Person is a direct or
--
indirect Subsidiary of more than one other Person, the Common Stock of two or
more of which are and have been so registered, such other Person whose issued
Common Stock has the greatest aggregate value), free and clear of any liens,
encumbrances, rights of first refusal, or other adverse claims, as shall be
equal to the result obtained by (x) multiplying the Purchase Price in effect
immediately prior to the first occurrence of any Common Stock Event under this
Section 13 by the number of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to such first occurrence (and
without taking into account any prior adjustment made pursuant to 11(a)(ii)) and
(y) dividing that product by 50% of the Current Market Price per share (as
defined in Section 11(d) hereof) of the Common Stock of such other Person
determined as of the date of consummation of such consolidation, merger, sale,
or transfer; (ii) the issuer of such Common Stock shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale, or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed, for all purposes
of this Agreement, to refer to such issuer, it being specifically intended that
the provisions of Section 11 hereof (other than Section 11(a)(ii) hereof) shall
apply only to such issuer following the first occurrence of a Common Stock Event
under this Section 13; (iv) such issuer shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the whole or fractional shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Common Stock Event described in clauses (a), (b) or (c) of this Section
13. The Company shall not consummate any such consolidation, merger, sale or
transfer unless (i) such issuer shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or
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<PAGE>
reserved for issuance as will permit the exercise in full of the Rights in
accordance with this Section 13, and (ii) prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing and further providing that as soon as practicable after
the date of any Common Stock Event described above in this Section 13 such
issuer will (A) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (I) become effective as soon as practicable after such filing and
(II) remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Expiration Date, and (B) will deliver to holders of the
Rights historical financial statements of such issuer and each of its Affiliates
which comply in all respects with the requirements for registration on Form 10
under the Exchange Act. Furthermore, in case the Person which is to be party to
a transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a Common Stock Event described in clauses (a), (b), or (c) of
this Section 13, whole or fractional shares of Common Stock of such Person at
less than the then Current Market Price per share thereof (as defined in Section
11(d) hereof), or to issue securities exercisable for, or convertible into,
Common Stock of such Person at less than such then Current Market Price, then,
in such event, the Company hereby agrees with each holder of the Rights that it
shall not consummate any such transaction unless prior thereto the Company and
such Person shall have executed and delivered to the Rights Agent a supplemental
agreement providing that such provision in question shall have been canceled,
waived, or amended so that it will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Common Stock Event described in
this Section 13 shall occur at any time after the occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, the Rights which have not therefore
been exercised shall thereafter become exercisable, except as provided in
Section 7(e) hereof, in the manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute fractions of Rights, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of issuing such fractional Rights, at the
election of the Company, there shall be paid to the registered holders of the
Rights with regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current market value
of a whole Right shall be the Closing Price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.
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(b) The Company shall not be required to issue fractions of shares of
its capital stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares (other than, in each case with respect to
Preferred Stock or Equivalent Preferred Stock, fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock or Equivalent
Preferred Stock, as the case may be). Fractions of shares of Preferred Stock or
Equivalent Preferred Stock, as the case may be, in integral multiples of one
one-hundredth of a share of Preferred Stock or Equivalent Preferred Stock may,
at the election of the Company, be evidenced by depositary receipts, pursuant to
an appropriate agreement between the Company and a depository selected by it,
provided that such agreement shall provide the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock or the Equivalent Preferred
Stock represented by such depositary receipts. In lieu of fractional shares, at
the election of the Company, there shall be paid to the registered holders of
Rights at the time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of a share of such
capital stock. For purposes of this Section 14(b), the current market value of
a share of such capital stock shall be the Closing Price of such capital stock
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives his right to receive any fractional Rights or (except as provided in
Section 14(b) hereof) any fractional share upon exercise of a Right.
Section 15. Rights of Action.
----------------
Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(1) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the rights evidenced by such Right in the manner provided in such
Rights Certificate and in this Agreement, and the Company hereby agrees to
reimburse such registered holder for all expenses (including reasonable
attorneys' fees) incurred by such registered holder in connection therewith.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of the obligations hereunder, and
shall be entitled to injunctive relief against actual or threatened violations
of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
---------------------------
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
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(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer with a form of assignment and certificate set
forth on the reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may reasonably
request;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or, prior to the Distribution Date, the associated Common Stock certificate,
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company agrees to use its
-------- -------
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
--------------------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends, or otherwise be deemed for any purpose the holder of
any securities of the Company which may be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote in
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any action by the Company, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.
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Section 18. Concerning the Rights Agent.
---------------------------
The Company agrees to pay to the Rights Agent such reasonable
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any and all loss, liability, damages, claims or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses (including reasonable attorneys' fees and
expenses) of defending against any claim of liability for any of the foregoing.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for any number of one one-hundredths of a share of Preferred Stock,
or for shares of Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed and executed by the
proper Person or Persons, and verified or acknowledged as required by this
Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
Any corporation into which the Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
- -------- -------
successor Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by this
Agreement and any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent
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may adopt the countersignature under its prior name and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel to the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such Officers' Certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such Officers' Certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be
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<PAGE>
responsible for any adjustment required under the provisions of Sections 11 or
13 hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12 hereof, describing any such
adjustment or procedures); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Stock, Common Stock or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock,
or any shares or similar units of other securities, will, when issued, be
validly authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three Business Days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions
from the Company in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default,
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<PAGE>
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct; provided,
--------
however, that reasonable care was exercised in the selection and continued
- -------
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of
the Rights Agent or the Company and any failure or omission under this Section
20 shall not affect the rights of the Company under this Agreement and the
Rights Agent or the Company shall have no liability to any holder of Rights or
other Person on account of such failure or omission.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent, to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States, or the State of New York (or of any other
State of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York or is an institution
with a nationally recognized capacity as a transfer agent), in good standing,
having an office designated for such
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<PAGE>
purpose in the State of New York and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement.
Not later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the Company
of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights evidenced
-------- -------
by a Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Rights would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
The Board, by majority vote, may, at its option, at any time prior to
the Expiration Date, redeem all (but not less than all) of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend, combination of shares, or similar
transaction occurring after the date hereof (such redemption price being
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hereinafter referred to as the "Redemption Price"). Immediately upon the taking
of such action ordering the redemption of all of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights so redeemed will terminate
and the only right thereafter of the holders of such Rights so redeemed shall be
to receive the Redemption Price (without the payment of any interest thereon).
Within 10 days after such action ordering the redemption of all of the Rights,
the Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
--------
(a) The Board, by majority vote, may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
-------- -------
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
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(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or shares of Equivalent
Preferred Stock) for shares of Common Stock exchangeable for Rights, at the
initial rate of one one-hundredth of a share of Preferred Stock (or share of
Equivalent Preferred Stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of shares of Preferred
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Right Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
--------------------------
In case the Company shall after the Distribution Date propose (a) to
pay any dividend payable in stock of any class to the holders of its Preferred
Stock or to make any other distribution to the holders of its Preferred Stock
(other than a cash dividend out of earnings or the retained earnings of the
Company), or (b) to offer to the holders of its Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock, Common Stock or shares of stock of any class or any other securities,
rights, or options, or (c) to effect any reclassification of the Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 25% of (i) the assets of the
Company and its Subsidiaries (taken at net asset value as stated on the books of
the Company and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (ii) the earning power
of the Company and its Subsidiaries (determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied)
to any other Person or Persons, or (e) to effect the liquidation, dissolution or
winding up of the Company,
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<PAGE>
then, in each such case, the Company shall give to the Rights Agent and each
holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least twenty days prior to the record date for determining holders
of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Common
Stock whichever shall be the earlier. The failure to give notice required by
this Section 25 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
Section 26. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to the Company shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Advanced Radio Telecom Corp
500 108th Avenue, NE, Suite 2600
Bellevue, Washington 98004
Attention: Thomas M. Walker, Esq.
Vice President and
General Counsel
Copy to: Mary E. Weber
Ropes & Gray
One International Place
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<PAGE>
Boston, MA 02110-2624
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
(Advanced Radio Telecom Corp. Rights Agreement)
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
Prior to the Distribution Date, the Board, upon the vote of a majority
of the Board, may from time to time supplement or amend this Agreement without
the approval of any holders of the Rights. From and after the Distribution
Date, the Board may, upon the vote of a majority of the Board, from time to time
amend this Agreement without the approval of any holders of the Rights in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to change any time period governing redemption of the Rights or any other
time period or (iv) to make any other provisions in regard to matters or
questions arising hereunder which the Board, upon the vote of a majority of the
Board, may deem necessary or desirable and which shall not adversely affect the
interests of the holders of the Rights (other than any Acquiring Person or
Disqualified Transferee or any Affiliate of an Acquiring Person or Disqualified
Transferee). Any amendment made pursuant to this Section 27 after a Stock
Acquisition Date shall require the approval of a majority of the Board. The
Rights Agent shall join with the Company in the execution and delivery of any
such supplement or amendment, unless such supplement or amendment affects any of
the rights, duties, or obligations of the Rights Agent hereunder, in which case
the Rights Agent may, but shall not be required to, join in such execution and
delivery.
-37-
<PAGE>
Section 28. Successors.
----------
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board; etc.
--------------------------------------------
The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board, or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the concurrence of a majority of the Board then in office shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject any Director to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent, and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the associated shares
of Common Stock) any legal or equitable right, remedy, or claim under this
Agreement or the Rights; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered holders of the
Rights (and, prior to the Distribution Date, the associated Common Stock).
Section 31. Severability.
------------
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board.
-38-
<PAGE>
Section 32. Governing Law.
-------------
This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State.
Section 33. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
--------------------
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
-39-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and set their respective hands and seals, all as of the day and
year first above written.
ADVANCED RADIO TELECOM CORP.
By: /s/ Thomas A. Grina
-------------------
Title: Executive Vice President
Attest:
By: /s/ Thomas M. Walker
--------------------
Title: Secretary
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, AS RIGHTS
AGENT
Attest: By: /s/ Roger T. Bernhammer
-----------------------
Title: Vice President
By: /s/ Thomas Jennings
--------------------
Title:
-40-
<PAGE>
EXHIBIT A
---------
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF JUNIOR
PREFERRED STOCK
of
ADVANCED RADIO TELECOM CORP.
Pursuant to Section 151 of the
Delaware General Corporation
ADVANCED RADIO TELECOM CORP., a corporation organized and existing
under and by virtue of The General Corporation Law of the State of Delaware (the
"Corporation") DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
(the "Board of Directors") by the Restated Certificate of Incorporation of the
Corporation, as amended, and in accordance with the provisions of Section 151 of
the General Corporation Law of the State of Delaware, the Board of Directors on
June 20, 1997 adopted a resolution providing for the authorization of a series
of Preferred Stock, as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Amended and Restated Certificate of Incorporation, as amended, a
series of preferred stock of the Corporation be and it hereby is
created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Junior Preferred Stock" (the "Junior Stock") and the number of
shares constituting such series shall be 1,000,000. The number of shares of
Junior Stock may be increased or decreased by a resolution duly adopted by the
Board of Directors, but may not be decreased below the number of shares of
Junior Stock then outstanding plus the number of shares reserved for issuance
upon the exercise of outstanding options, rights or warrants or upon conversion
of any outstanding securities convertible into Junior Stock.
Section 2. Dividends and Distributions.
---------------------------
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to
the shares of Junior Stock with respect to dividends, the holders of
shares of Junior Stock shall be entitled to receive,
A-1
<PAGE>
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment set forth in Section 8 hereof, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $.001 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Junior Stock.
(b) The Corporation shall declare a dividend or distribution on the
Junior Stock as provided in paragraph (a) of this Section 2 immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of or subdivision with respect to Common Stock); provided,
--------
however, that, in the event no dividend or distribution shall have been declared
- -------
on the Common Stock during the period between any Quarterly Dividend Payment
Date, a dividend of $1.00 per share on the Junior Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Stock from the quarterly Dividend Payment Date next preceding
the date of issue of such shares of Junior Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Junior Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Junior Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Junior Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
A-2
<PAGE>
Section 3. Voting Rights. The holders of shares of Junior Stock
-------------
shall have the following voting rights:
(a) Subject to the provision for adjustment set forth in
Section 8 hereof, each share of Junior Stock shall entitle the
holder thereof to one hundred votes on all matters submitted to a
vote of the stockholders of the Corporation.
(b) Except as otherwise provided herein or by law, the
holders of shares of Junior Stock and the holders of shares of
Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, holders of Junior Stock
shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions
--------------------
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Junior Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Stock, except dividends paid
ratably on the Junior Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Junior Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior Stock;
or
A-3
<PAGE>
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Stock, or any shares of
stock ranking on a parity with the Junior Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Stock purchased
-----------------
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall
be made to the holders of shares of Common Stock or any other stock
of the Corporation ranking junior (upon liquidation, dissolution or
winding up) to the Junior Stock unless, prior thereto, the holders
of shares of Junior Stock shall have received $100.00 per share plus
an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the
"Junior Liquidation Preference"). Following the payment of the full
amount of the Junior Liquidation Preference, no additional
distributions shall be made to the holders of shares of Junior Stock
unless, prior thereto, the holders of shares of Common Stock (which
term shall include, for the purposes only of this Section 6, any
series of the Corporation's Preferred Stock ranking on a parity with
the Common Stock upon liquidation, dissolution or winding up) shall
have received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Junior Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
Section 8 hereof to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock;
such number in clause (ii), the "Adjustment Number"). In the event,
however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.
Following the payment of the full amount of the Junior Liquidation
Preference and the Common
A-4
<PAGE>
Adjustment in respect of all outstanding shares of Junior Stock and
Common Stock, respectively, holders of Junior Stock and holders of
shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the
Adjustment Number to one (1) with respect to such Junior Stock and
Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Junior Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Junior
Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective
liquidation preferences.
(c) None of the merger or consolidation of the Corporation
into or with any other company, the sale of all or substantially all
of the property and assets of the Corporation or the distribution to
the stockholders of the Corporation of all or substantially all of
the consideration for such sale, unless such consideration (apart
from the assumption of liabilities) or the net proceeds thereof
consists substantially entirely of cash, shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this
Section 6.
(d) Each share of Junior Stock shall stand on a parity with
each other share of Junior Stock or any other series of the same
class of preferred stock upon voluntary or involuntary liquidation,
dissolution or distribution of assets or winding up of the
Corporation.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock
securities, cash and/or any other property, then in any such case the shares of
Junior Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment set forth in Section 8
hereof) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, int which or
for which each share of Common Stock is changed or exchanged.
Section 8. Certain Adjustments. In the event the Corporation shall
-------------------
at any time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the amounts set forth in
Sections 2(a), 3(a), 6(a) and 7 hereof with respect to the multiple of (i) cash
and non-cash dividends, (ii) votes, (iii) the Junior Liquidation Preference and
(iv) an aggregate amount of stock, securities, cash and/or other property
referred to in Section 7 hereof, shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of
A-5
<PAGE>
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 9. Ranking. The Junior Stock shall rank pari passu with (or
------- ---- -----
if determined by the Board of Directors in any vote establishing any other
series of Preferred Stock, either senior and prior in preference to, or junior
and subordinate to, as the case may be) other series of Preferred Stock of the
Corporation with respect to dividends and/or preference upon liquidation,
dissolution or winding up.
Section 10. Redemption. The shares of Junior Stock may be purchased
----------
by the Corporation at such times and on such terms as may be agreed to between
the Corporation and the selling stockholder, subject to any limitations which
may be imposed by law or the Restated Certificate of Incorporation, as amended.
Section 11. Amendment. The Restated Certificate of Incorporation of
---------
the Corporation, as amended, shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Junior Stock, voting
together as a single class.
Section 12. Fractional Shares. Junior Stock may be issued in
-----------------
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Junior Stock.
A-6
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation was executed on
behalf of the Corporation by its President and attested by its Secretary on
July __, 1997.
By
---------------------------
President
Attest:
By
--------------------
Secretary
[SEAL]
<PAGE>
EXHIBIT B
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JUNE 20, 2007 OR EARLIER IF ORDER OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN ACQUIRING
PERSON (AS EACH SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS SHALL
NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY
JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH
HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION
SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND
ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
ADVANCED RADIO TELECOM CORP.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions, and
conditions of the Rights Agreement dated as of June 20, 1997 (the "Rights
Agreement") between Advanced Radio Telecom Corp. (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in
- ---------------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
<PAGE>
the Rights Agreement) and prior to 5:00 P.M. (New York, NY time) on June 20,
2007 (the "Expiration Date") at the office of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-hundredth of a share of
the Junior Preferred Stock, with a par value of $.001 per share ("Preferred
Stock"), of the Company per each Right represented hereby, at a purchase price
of $90 per share (the "Purchase Price") upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase set forth on the
reverse side hereof and the certificate contained therein duly executed,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of July 3, 1997, based on the shares of Common
Stock of the Company as constituted at such date.
As more fully set forth in the Rights Agreement, upon the occurrence of a
Common Stock Event (as such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (ii) a Disqualified Transferee (as defined
in the Rights Agreement), such Rights shall automatically become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Common Stock Event.
The Rights evidenced by this Rights Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
whole or fractional shares of Preferred Stock which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
In the circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby shall be
the common stock or similar equity securities or equity interests of an entity
other than the Company.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities hereunder of the
Rights Agent, the Company, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights
B-2
<PAGE>
Agreement are on file at the office of the Rights Agent designated for such
purpose and may be obtained by the holder of any Rights upon written request to
the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent, accompanied by a signature
guarantee and such other documentation as the Rights Agent designated for such
purpose may reasonably request, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of whole or fractional shares of
Common Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company by a majority vote of the Board
(as defined in the Rights Agreement) then in office at any time prior to the
Expiration Date, at a redemption price of $.01 per Right (which amount is
subject to adjustment as provided in the Rights Agreement).
The Company is not obligated to issue whole or fractional shares of
Preferred Stock (or other securities) upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof a cash payment may be made at the election
of the Company, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any action by the Company, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-3
<PAGE>
WITNESS the facsimile signature and seal of the proper officers of the
Company. Dated as of July __, 1997
ADVANCED RADIO TELECOM CORP.
By
----------------------------
Title:
ATTEST:
- -------------------
Title:
Countersigned:
- -------------------
By
---------------------
Authorized Signatory
Date of Countersignature:
B-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers
unto _________________
_________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________ whose
social security or tax identification number, is: ______________ the Rights
evidenced by this Rights Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _________________________, ____.
____________________
Signature
Signature Guaranteed:*
* Signature must be guaranteed be a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office or
correspondent in New York City.
B-5
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate of an Acquiring Person (as each such term is defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate of
an Acquiring Person.
Dated:
------------------------ -------------------------------
Signature
Signature Guaranteed:*
- ----------------------------
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
B-6
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Right
Certificate)
To Advanced Radio Telecom Corp.
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Rights Certificate to purchase the number of one one-
hundredths of a share of Preferred Stock (or other securities) issuable upon the
exercise of such Rights and requests that certificates for such shares be issued
in the name of:
Please insert social security
or other identifying number ________________________________________
(Please print name and address)
- --------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ________________________________________
(Please print name and address)
- --------------------------------------------------------------------
Dated:
-----------------------, ----
----------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Rights Certificate)
Signature Guaranteed:**
- --------------------------
** Signature must be guaranteed by a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office of
correspondent in New York City.
B-7
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate after
the occurrence of a Common Stock Event (as such term is defined in the Rights
Agreement) from any Person who is, was, or became an Acquiring Person or an
Affiliate of an Acquiring Person.
Dated:
------------------, ---- -------------------------
Signature
Signature Guaranteed:***
- --------------------------
- --------------------------
*** Signature must be guaranteed by a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office of
correspondent in New York City.
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EXHIBIT C
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ADVANCED RADIO TELECOM CORP.
SUMMARY OF PURCHASE RIGHTS
On June 20, 1997, the Board of Directors (the "Board") of Advanced Radio
Telecom Corp. (the "Company") declared a dividend of one purchase right (a
"Right") for every outstanding share of the Company's common stock, $.001 par
value (the "Common Stock"). The Rights will be distributed on July 3, 1997 to
stockholders of record as of the close of business on that date (the "Dividend
Record Date"). The terms of the Rights are set forth in a Rights Agreement dated
as of June 20, 1997 (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company (the "Rights Agent"). The Rights Agreement
provides for the issuance of one Right for every share of Common Stock issued
and outstanding on the Dividend Record Date and for each share of Common Stock
which is issued or sold after that date and prior to the "Distribution Date" (as
defined below).
Each Right entitles the holder to purchase from the Company one one-
hundredth of a share of Junior Preferred Stock at a price of $90 per one one-
hundredth of a share, subject to adjustment. The Rights will expire on June 20,
2007 (the "Expiration Date"), or the earlier redemption of the Rights, and are
not exercisable until the Distribution Date.
No separate Rights certificates will be issued at the present time. Until
the Distribution Date (or earlier redemption or expiration of the Rights), (i)
the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Company's Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates will
be issued on the Distribution Date. Unless otherwise determined by a majority of
the Board then in office, the Distribution Date will occur on the earlier of (i)
the fifteenth business day following the later of the date of a public
announcement that a person, including affiliates or associates of such person
(an "Acquiring Person"), except as described below, has acquired or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding shares
of Common Stock together with any then outstanding warrants issued pursuant to
warrant agreements dated as of February 6, 1997 and November 11, 1996 (the
"Warrants") or the date on which an executive officer of the Company has actual
knowledge that an Acquiring Person
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became such (the "Stock Acquisition Date") or (ii) the fifteenth business day
following commencement of a tender offer or exchange offer that would result in
any person or its affiliates and associates owning 15% or more of the Company's
outstanding Common Stock together with any then outstanding Warrants. In any
event, the Board of Directors may delay the distribution of the certificates.
After the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
If, at any time after the Declaration Date, any person or group of
affiliated or associated persons (other than the Company and its affiliates)
shall become an Acquiring Person, each holder of a Right will have the right to
receive shares of the Company's Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value of two
times the exercise price of the Right. If the exercise price is $90, the holder
of each Right would be entitled to receive $180 in market value of the Company's
Common Stock for $90. Also, in the event that the Company were acquired in a
merger or other business combination, or more than 25% of its assets or earning
power were sold, each holder of a Right would have the right to exercise such
Right and thereby receive common stock of the acquiring company with a market
value of two times the exercise price of the Right. For example, if the exercise
price is $90, the holder of each Right would be entitled to receive $180 in
market value of the acquiring company's common shares (e.g., two shares if the
per share market value is $90, for a total of $90). Following the occurrence of
any of the events described in this paragraph, any Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person shall immediately become null and void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). The Board, however, may not effect an exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding. Immediately upon the action of the Board
ordering the exchange of any Rights and without any further action and without
any notice, the right to exercise such Rights will terminate and the only right
thereafter of a holder of such Rights will be to receive that number of shares
of Common Stock equal to the number of such Rights held by the holder multiplied
by the Exchange Ratio.
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The exercise price of the Rights, and the number of one one-hundredth of a
share of Junior Preferred Stock or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for shares of the
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding cash dividends
paid out of the earnings or retained earnings of the Company and certain other
distributions) or of subscription rights or warrants (other than those referred
to above).
With certain exceptions, no adjustments in the exercise price of the Rights
will be required until cumulative adjustments equal at least 1% in such price.
At any time prior to the Expiration Date, the Company, by a majority vote
of the Board, may redeem the Rights at a redemption price of $.01 per Right (the
"Redemption Price"), as described in the Rights Agreement. Immediately upon the
action of the Board electing to redeem the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Neither the distribution of the Rights nor the subsequent separation of the
Rights on the Distribution Date will be a taxable event for the Company or its
stockholders. Holders of Rights may, depending upon the circumstances, recognize
taxable income upon the occurrence of a Common Stock Event. In addition, holders
of Rights may have taxable income as a result of (i) an exchange by the Company
of shares of Common Stock for Rights as described above or (ii) certain anti-
dilution adjustments made to the terms of the Rights after the Distribution
Date. A redemption of the Rights would be a taxable event to holders.
The Rights Agreement may be amended by the Board at any time prior to the
Distribution Date without the approval of the holders of the Rights. From and
after the Distribution Date, the Rights Agreement may be amended by the Board
without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates,
associates or transferees).
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A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to the Company's Form 8-A. A copy of the
Rights Agreement is available free of charge from the Rights Agent, at the
following address:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attention: Compliance Department
(Advanced Radio Telecom Corp.)
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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