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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 1999
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ADVANCED RADIO TELECOM CORP.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 000-21091 52-1869023
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
</TABLE>
500 108th Avenue, NE, Suite 2600, Bellevue, Washington 98004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (425) 688-8700
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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General
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On June 1, 1999, Advanced Radio Telecom Corp. ("ART" or the "Company")
entered into a preferred stock purchase agreement (the "Agreement") with the
purchasers listed on Schedule I to the Agreement. Subject to the terms of the
Agreement, the Company has agreed to sell 2,635,908 shares of Series A
convertible preferred stock and 501,592 shares of Series B non-voting
convertible preferred stock, each at $80 per share, in exchange for an aggregate
of $251,000,000.
The Series A shares vote on an as-converted basis with the common stock and
represent approximately 45% of the Company's outstanding common stock. The
Series B shares are nonvoting. Each share of Series A preferred stock and
Series B preferred stock is ultimately convertible into 10 shares of common
stock. Series B shares will be convertible into voting shares only under
certain circumstances described in the Certificate of Designation filed as an
Exhibit to this Form 8-K. The Series A shares will automatically be converted
into common stock, and the Series B shares will automatically be converted into
Series C Non-Voting Preferred Stock, upon (i) a public equity offering with
aggregate net proceeds of at least $75 million with a price per share of at
least $18.00, (ii) if the common stock trades for at least 30 of 40 consecutive
trading days in excess of $18.00 per share after June 1, 2001 and (iii) in other
circumstances as set forth in the Certificate of Designation.
In connection with the transaction, ART has issued five-year warrants to
each of the purchasers to purchase an aggregate of 1,000,000 shares of common
stock at a purchase price of $0.01 per share. The warrants are exercisable only
if the Agreement is terminated under circumstances specified in the form of
warrant filed as an exhibit to this Form 8-K.
The purchasers are providing $50 million in bridge financing through 11%
short-term senior notes, which mature on the earliest of the closing of the
transaction, the date the ART shareholders fail to approve the transaction or
October 29, 1999.
ART has agreed to nominate as a Class II director a designee of U.S.
Telesource, Inc., a wholly owned subsidiary of Qwest Communications
International, Inc. ("Qwest"), for so long as it and its affiliates own at least
one-quarter of the shares it originally purchased under the Agreement. ART has
agreed to nominate as a Class I director a designee of Oak Investment Partners
for so long as it and the other investors (excluding U.S. Telesource, Advent
International and Columbia Capital) own at least one-quarter of the shares
originally purchased under the Agreement. Under the Certificate of Designation,
the preferred stockholders are entitled to elect these two nominees provided
that they own at least two-sevenths of the outstanding voting securities on an
as-converted basis, and are entitled to elect one nominee provided that they own
at least one-seventh of the outstanding voting securities. Any board committee
must include one of these nominees. Prior to the closing of the transaction,
two directors will resign so that the ART Board will continue to have seven
members following the transaction.
2
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For so long as it holds at least 25% of the preferred stock purchased by it
or the common stock into which that preferred stock is ultimately convertible,
each of the purchasers has preemptive rights as provided in the Agreement.
ART has agreed to provide the purchasers with registration rights and the
purchasers have entered into a standstill agreement. ART has amended its rights
plan to accommodate the transaction.
Consummation of the transaction is subject to ART shareholder approval, the
expiration of the Hart-Scott-Rodino waiting period, and other customary closing
conditions. Consummation of the investment is also subject to obtaining the
consent to certain material amendments to the Indenture governing ART's Senior
Notes due 2007 including, among others, (i) increasing ART's ability to incur
debt, (ii) increasing ART's ability to incur liens, (iii) increasing ART's
ability to make investments and engage in joint ventures, (iv) increasing ART's
ability to engage in asset sales, (v) modifying the merger covenant and (vi)
simplifying the covenant limiting transactions with affiliates.
ART believes that the proposed investment will enable it to accelerate the
implementation of its business plan. ART plans to build broadband wireless high-
speed metropolitan area networks in 40 of the top 50 markets in the United
States over the next three years. The Company is continuing to evaluate various
state-of-the-art technologies for use in its networks and has agreed to beta
test both point-to-multipoint and consecutive point-based wireless technologies.
To this end, the Company and Lucent have agreed to amend their equipment
purchase agreement to remove the Company's $240 million purchase commitment.
In light of the proposed investment and ART's strategic relationship with
Qwest, ART is also continuing to evaluate its sales strategy. ART has entered
into a private line agreement, a co-location agreement, a coordinated marketing
agreement and a broadband services agreement with Qwest. In the event that the
investment does not occur, Qwest and ART each have the right to terminate those
agreements, subject to certain conditions. Under those agreements, in addition
to ART's direct service offerings, ART will provide Qwest with broadband local
wireless capacity and Qwest will be ART's exclusive provider of network
backbone. ART also intends to market its services to other high volume users.
The two companies will also co-locate equipment and coordinate joint marketing
initiatives to businesses.
Copies of the Agreement and related agreements as well as the press release
announcing the agreement are filed as exhibits to this Form 8-K and incorporated
herein by reference.
3
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits:
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3.3 Form of Certificate of Designation.
4.9 Form of Amendment to Rights Plan.
10.31 Preferred Stock Purchase Agreement among the Company and the
purchasers listed therein dated as of June 1, 1999.
10.32 Form of Stock Purchase Warrant dated as of June 1, 1999.
10.33 Form of Promissory Note dated as of June 1, 1999.
10.34 Standstill Agreement among the Company and certain of the
purchasers dated as of June 1, 1999.
10.35 Registration Rights Agreement among the Company and the
purchasers dated as of June 1, 1999.
10.36 First Amendment to Amended and Restated Purchase Agreement
between the Company and Lucent Technologies dated May 25, 1999.
10.37 Amendment No. 1, Waiver and Consent between the Company and
Lucent Technologies dated May 26, 1999.
99.1 Joint Press Release issued June 1, 1999 announcing the
transaction.
4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANCED RADIO TELECOM CORP.
Date: June 8, 1999 By: /s/ R.S. McCambridge
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Name: Robert S. McCambridge
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
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Page Number
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Exhibit
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3.3 Form of Certificate of Designation.
4.9 Form of Amendment to Rights Plan.
10.31 Preferred Stock Purchase Agreement among
the Company and the purchasers listed
therein dated as of June 1, 1999.
10.32 Form of Stock Purchase Warrant dated
as of June 1, 1999.
10.33 Form of Promissory Note dated as of
June 1, 1999.
10.34 Standstill Agreement among the Company and
certain of the purchasers dated as of
June 1, 1999.
10.35 Registration Rights Agreement among the
Company and the purchasers dated as of
June 1, 1999.
10.36 First Amendment to Amended and Restated
Purchase Agreement between the Company
and Lucent Technologies dated May 25, 1999.
10.37 Amendment No. 1, Waiver and Consent
between the Company and Lucent
Technologies dated May 26, 1999.
99.1 Joint Press Release issued June 1, 1999
announcing the transaction.
</TABLE>
<PAGE>
EXHIBIT 3.3
Draft of May 31, 1999
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
of the
SERIES A CONVERTIBLE PREFERRED STOCK
the
SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
and the
SERIES C JUNIOR PREFERRED STOCK
OF
ADVANCED RADIO TELECOM CORP.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, Henry C. Hirsch, Chairman, and Thomas M. Walker, Secretary, of Advanced
Radio Telecom Corp. (the "Corporation"), a corporation organized and existing
under the laws of the State of Delaware, in accordance with Section 151 of the
Delaware General Corporation Law, certify:
FIRST: The Certificate of Incorporation of the Corporation authorizes the
issuance of up to 10,000,000 shares of preferred stock, par value $.001 per
share, in one or more series, with such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations, or restrictions thereof, as may be stated and expressed in a
resolution or resolutions providing for the issuance of any such series adopted
by the Board of Directors of the Corporation, pursuant to authority expressly
vested in the Board of Directors by the Certificate of Incorporation of the
Corporation.
SECOND: The Board of Directors of the Corporation duly adopted the
following resolution (i) authorizing the creation of a new series of such
preferred stock, to be known as
<PAGE>
"Series A Convertible Preferred Stock," stating that 3,250,000 shares of the
authorized and unissued preferred stock shall constitute such series, and
setting forth a statement of the voting powers, designation, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof as follows, (ii)
authorizing the creation of a new series of such preferred stock, to be known as
"Series B Non-Voting Convertible Preferred Stock," stating that 510,000 shares
of the authorized and unissued preferred stock shall constitute such series and
(iii) authorizing the creation of a new series of such preferred stock, to be
known as "Series C Junior Preferred Stock," stating that 510,000 shares of the
authorized and unissued preferred stock shall constitute such series, and
setting forth a statement of the voting powers, designation, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof as follows:
BE IT RESOLVED, that the terms of the Series A Convertible Preferred Stock,
of the Series B Non-Voting Convertible Preferred Stock and of the Series C
Junior Preferred Stock shall be as follows:
1. Designation of Preferred Stock. The rights, preferences, privileges and
------------------------------
restrictions granted to and imposed on the Series A Convertible Preferred Stock,
$0.001 par value (the "Series A Preferred Stock"), the rights, preferences,
privileges and restrictions granted to and imposed on the Series B Non-Voting
Convertible Preferred Stock (the "Series B Preferred Stock") and the rights,
preferences, privileges and restrictions granted to and imposed on the Series C
Junior Preferred Stock are set forth below. The number of shares of Series A
Preferred Stock shall initially be 3,250,000, the number of shares of Series B
Preferred Stock shall initially be 510,000, and the number of shares of Series C
Junior Preferred Stock shall initially be 510,000, subject in each case to
decrease (but not below the number of shares thereof (i) required to be issued
under the Stock Purchase Agreement or (ii) in the case of the Series A Preferred
Stock, required to be issued upon conversion of the Series B Preferred Stock as
provided in this Certificate or (iii) in the case of the Series C Junior
Preferred Stock, required to be issued upon conversion of the Series B Preferred
Stock as provided in this Certificate or (iv) then outstanding) from time to
time by action of the Board of Directors. Except as otherwise provided herein,
all shares of Series A Preferred Stock and Series B Preferred Stock will be
identical and will entitle holders thereof to the same rights and privileges.
The Series C Junior Preferred Stock shall rank on a parity with the Common
Stock, but shall be non-voting. The Series A Preferred Stock and Series B
Preferred Stock are collectively referred to as the "Preferred Stock".
2. Dividends and Distributions. No cash dividend or distribution may be paid
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in any calendar year on the Common Stock, the Series C Junior Preferred Stock or
any other class or series of preferred stock ranking junior in rights and
preferences to the Preferred Stock (together with the Common Stock, "Junior
Stock"), unless a dividend shall have been declared and paid to the holders of
record of the Preferred Stock during such calendar year in an amount equal to
10% of the then Preference Amount. In the event any dividend or distribution,
including without limitation any distribution of securities or purchase rights,
but not including a dividend or distribution payable solely in cash or shares of
Junior Stock is declared and paid on any class of
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<PAGE>
Junior Stock (a "Non-Common Distribution"), a dividend or distribution,
respectively, on each outstanding share of Preferred Stock shall be concurrently
declared and paid to holders of record of the Preferred Stock on the record date
for the determination of holders of Junior Stock entitled to receive such Non-
Common Distribution. Such dividend or distribution shall be in an amount equal
to the aggregate amount of any such dividend or distribution payable (on an as-
converted basis in the case of Junior Stock other than Common Stock) with
respect to one share of Common Stock multiplied by the number of shares of
Common Stock into which such share of Preferred Stock may be converted pursuant
to the provisions of Sections 5 and 6 on the record date for the determination
of holders of Common Stock entitled to receive such dividend or distribution.
3. Liquidation, Dissolution or Winding Up.
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3.1. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of the Corporation, either voluntary or involuntary,
distributions to the holders of the Preferred Stock shall be made in the
following manner:
3.1.1. Each holder of Preferred Stock shall first be entitled to receive,
after distribution of any of the assets of the Corporation to the holders of any
other series of preferred stock ranking senior to the Preferred Stock with
respect to the liquidation, and prior and in preference to any distribution of
any of the assets of the Corporation to the holders of any Junior Stock and to
the holders of the Common Stock by reason of their ownership of such stock, an
amount in cash per share of Preferred Stock held by such holder equal to the
Preference Amount (which amount shall be subject in each case to equitable
adjustment whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Preferred Stock) plus all
declared but unpaid dividends on the date of such liquidation, dissolution or
winding up (the "Liquidation Amount"). If after distribution of any of the
assets of the Corporation to the holders of any other series of preferred stock
ranking senior to the Preferred Stock, the assets and funds of the Corporation
shall be insufficient to permit the payment in full to any holders of any class
of stock ranking on parity with the Preferred Stock with respect to the
liquidation ("Parity Stock") of its liquidation preference and to such holders
of Preferred Stock of the full Liquidation Amount, then the entire remaining
assets of the Corporation legally available for distribution shall be
distributed ratably among the holders of Preferred Stock and Parity Stock, to
the exclusion of any junior stock, in accordance with the respective amounts
which would be payable in respect of the shares held by each of them upon such
distribution if all amounts payable on or in respect of such shares were paid in
full.
3.1.2. After payment has been made to the holders of Preferred Stock of the
full amount to which they are entitled pursuant to Section 3.1.1, and after
payment in full of amounts to which holders of preferred stock ranking junior to
the Preferred Stock with respect to liquidation by reason of their ownership of
such stock (but not including for this purpose the Series C Junior Preferred
Stock), the holders of the Preferred Stock shall be entitled to share ratably
with the holders of the Common Stock and the Series C Junior Preferred Stock in
the remaining assets, based on the number of shares of Common Stock held by them
(assuming conversion of all of the
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<PAGE>
shares of Preferred Stock and Series C Junior Preferred Stock into Common Stock
pursuant to Section 5), until the holders of Preferred Stock have received a
cumulative amount under Section 3.1.1 and Section 3.1.2 equal to two times the
Preference Amount.
3.1.3. After payment has been made to the holders of Preferred Stock of the
full amount to which they are entitled pursuant to Sections 3.1.1 and 3.1.2, the
holders of Preferred Stock shall not be entitled to any further distribution of
the assets of the Corporation upon any such liquidation, dissolution or winding
up.
3.2. Merger, Sale, etc. A consolidation, merger, or sale of all or
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substantially all the assets of the Corporation in which the stockholders of the
Corporation immediately prior to such consolidation, merger, or sale do not own,
directly, or indirectly, a majority of the outstanding voting power of the
surviving corporation or acquiring entity, as the case may be, immediately after
such merger, or sale shall be deemed a liquidation, dissolution or winding-up of
the Corporation for purposes of this Section 3 unless the holders of a majority
of the then- outstanding shares of Series A Preferred Stock elect not to treat
any of the foregoing events as a liquidation, dissolution or winding up by
giving written notice thereof to the Corporation,. If such holders do not
exercise their right to treat a consolidation, merger or sale as a non-
liquidating event, the holders of Preferred Stock shall be entitled to receive
out of the consideration paid in such conveyance the amount payable to such
holders pursuant to Sections 3.1.1 and 3.1.2 above, which amount shall satisfy
the Corporation's obligations pursuant to such sections.
3.3. Distribution Other Than Cash. Whenever the distribution provided
----------------------------
for in this Section 3 shall be payable in property other than cash, the value of
such distribution shall be the fair market value of such property as determined
in good faith by the Board of Directors of the Corporation.
4. Voting Rights.
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4.1. Series A Preferred Stock. Except as otherwise provided herein or
------------------------
required by law, the holders of Series A Preferred Stock shall vote together
with the holders of Common Stock (and any other shares of the Corporation's
stock which, by their terms, are entitled to vote together with the Common Stock
as a single class) as a single class on any matter submitted to the holders of
Common Stock. Each holder of Series A Preferred Stock shall have, on any matter
submitted to the holders of Common Stock, the number of votes in respect of its
shares of Series A Preferred Stock equal to the number of shares of Common Stock
into which shares of Series A Preferred Stock held by such holder may be
converted pursuant to Section 5 hereof on the record date for such vote or, if
no such record date is established, at the date such vote is taken or the date
of any written consent of stockholders. Record holders of Series A Preferred
Stock shall be entitled to notice of any stockholders' meeting or solicitation
of stockholders' consents to the same extent as the holders of Common Stock.
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<PAGE>
4.2. Series B Preferred Stock. Except as set forth herein or as otherwise
------------------------
required by law, each outstanding share of Series B Preferred Stock shall not be
entitled to vote on any matter and shares of Series B Preferred Stock shall not
be included in determining the number of shares voting or entitled to vote on
any matter. On any matter on which the holders of shares of Series B Preferred
Stock are entitled to vote, all classes of Preferred Stock entitled to vote
shall vote together as a single class and each holder of shares of Series B
Preferred Stock entitled to vote shall be entitled to a number of votes in
respect of its shares of Series B Preferred Stock equal to the number of shares
of Common Stock into which the shares of Series A Preferred Stock into which
shares Series B Preferred Stock held by such holder would ultimately be
converted pursuant to Sections 5 and 6 hereof on the record date for such vote
if actually converted (assuming for this purpose that such Series B Preferred
Stock was fully convertible at such time) or, if no such record date is
established, at the date such vote is taken or the date of any written consent
of stockholders; provided that, notwithstanding the foregoing, holders of shares
of Series B Preferred Stock shall be entitled to vote as a separate class on any
amendment to this subparagraph 4.2.
4.3. Series C Junior Preferred Stock. Except as set forth herein or as
-------------------------------
otherwise required by law, each outstanding share of Series C Junior Preferred
Stock shall not be entitled to vote on any matter and shares of Series C Junior
Preferred Stock shall not be included in determining the number of shares voting
or entitled to vote on any matter. On any matter on which the holders of shares
of Series C Junior Preferred Stock are entitled to vote, all Shares of Common
Stock entitled to vote shall vote together as a single class and each holder of
shares of Series C Junior Preferred Stock entitled to vote shall be entitled to
a number of votes in respect of its shares of Series C Junior Preferred Stock
equal to the number of shares of Common Stock into which the shares of Series C
Junior Preferred Stock held by such holder would be converted pursuant to
Section 6 hereof on the record date for such vote if actually converted
(assuming for this purpose that such Series C Junior Preferred Stock was fully
convertible at such time) or, if no such record date is established, at the date
such vote is taken or the date of any written consent of stockholders; provided
that, notwithstanding the foregoing, holders of shares of Series C Junior
Preferred Stock shall be entitled to vote as a separate class on any amendment
to this subparagraph 4.3.
4.4. Election of Directors. Except as otherwise provided by law, the
---------------------
holders of Preferred Stock are entitled as a group, voting together as a
separate class with each share entitled to one vote (i) so long as such holders
hold not less than two-sevenths of the outstanding voting securities of the
Corporation on an as-converted basis, to elect one member of the class of
directors whose term initially terminated in July 1997 ("Class I") and one
member of the class of directors whose term initially terminated in July 1998
("Class II") at each annual election of directors of such classes and (ii) so
long as such holders hold not less than one-seventh of the outstanding voting
securities of the Corporation on an as-converted basis, to elect one Class I
member of the Board of Directors of the Corporation at each annual election of
directors of such Class; provided, that, if not sooner terminated in accordance
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with the foregoing provisions, the class voting right contained in this
subparagraph 4.4 shall terminate (x) as to one director in the event that the
Company is no longer obligated to use its best efforts to nominate and present
to stockholders the proposed election of both the Telesource Nominee and Oak
Nominee (as such
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<PAGE>
terms are defined in the Stock Purchase Agreement) and (y) as to both directors
in the event the Company is no longer obligated to use its best efforts to
nominate and present to stockholders the proposed election of either of the
Telesource Nominee or the Oak Nominee
5. Conversion Rights. The holders of Series A Preferred Stock shall have the
-----------------
following rights with respect to the conversion of the Series A Preferred Stock
into shares of Common Stock:
5.1. General. Subject to and in compliance with the provisions of this
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Section 5, shares of Series A Preferred Stock may, at the option of the holder,
be converted at any time into the number of shares of fully-paid and non-
assessable shares of Common Stock equal to the product obtained by multiplying
the Applicable Conversion Rate (determined as provided in Section 5.2) by the
number of shares of Series A Preferred Stock held by such holder being
converted.
5.2. Applicable Conversion Rate. The conversion rate in effect at any
--------------------------
time for the Series A Preferred Stock (the "Applicable Conversion Rate") shall
be the quotient obtained by dividing the Preference Amount by the Applicable
Conversion Value, calculated as provided in Section 5.3.
5.3. Applicable Conversion Value. The Applicable Conversion Value shall
---------------------------
initially be $8.00 per share and shall be adjusted from time to time in
accordance with Section 5.4 hereof (as so adjusted, the "Applicable Conversion
Value").
5.4. Adjustments to Applicable Conversion Value. In the event of (A) a
------------------------------------------
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, (B) a combination of outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (C) the issuance of shares
of Common Stock for no consideration by way of a stock dividend or other
distribution (any of the foregoing being referred to as an "Extraordinary Common
Stock Event"), the Applicable Conversion Value shall, simultaneously with the
happening of such Extraordinary Common Stock Event, be adjusted by multiplying
the then effective Applicable Common Conversion Value by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Applicable Conversion Value. The Applicable Conversion Value,
as so adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.
5.5. Reclassification. If the Common Stock issuable upon the conversion of
----------------
the Series A Preferred Stock shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification,
consolidation, merger or otherwise (other than any event as to which either
Section 3.2 applies or that is otherwise provided for elsewhere in this Section
5), then and in each such event, the holder of each share of Series A Preferred
Stock shall have the right thereafter to convert the shares of Series A
Preferred Stock into the kind and amount
-6-
<PAGE>
of shares of stock and other securities and property receivable upon such
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series A Preferred Stock might have been
converted immediately prior to such reclassification or change, all subject to
further adjustment as provided herein.
5.6. Good Faith. If any event occurs as to which in the reasonable opinion
----------
of the Board of Directors of the Corporation, in good faith, the other
provisions of this Section 5 are not strictly applicable but the lack of any
adjustment in the Applicable Conversion Rate would not in the opinion of the
Board of Directors of the Corporation fairly protect the conversion rights of
the holders of the Series A Preferred Stock in accordance with the basic intent
and principles of such provisions, or if strictly applicable would not fairly
protect the conversions rights of the holders of the Series A Preferred Stock in
accordance with the basic intent and principles of such provisions, then the
Board of Directors of the Corporation shall effect an appropriate adjustment to
the Applicable Conversion Rate, on a basis consistent with the basic intent and
principles of this Section 5, necessary in their good faith judgment to
preserve, without dilution, the exercise rights of all the registered holders of
the Series A Preferred Stock.
5.7. Exercise of Conversion Privilege. To exercise its conversion
--------------------------------
privilege, a holder of Series A Preferred Stock shall surrender the certificate
or certificates representing the shares being converted to the Corporation at
its principal office or, if the Corporation has appointed an agent and provided
the holders of Series A Preferred Stock notice thereof, at any agent designated
by the Corporation for such purpose, and shall give written notice to the
Corporation at that office that such holder elects to convert such shares, or if
fewer than all the shares represented by a single share certificate are to be
converted, the number of shares represented thereby to be converted. The
certificate or certificates for shares of Series A Preferred Stock surrendered
for conversion shall be accompanied by proper assignment thereof to the
Corporation or in blank. Each conversion of Series A Preferred Stock shall be
deemed to have been effected as of the close of business on the effective date
of such conversion specified in the written notice (the "Conversion Date");
provided, however, that the Conversion Date shall not be a date earlier than the
date such notice is received by the Corporation (or its designated agent), and
if such notice does not specify a conversion date, the Conversion Date shall be
deemed to be the date such notice is received by the Corporation (or its
designated agent). On the Conversion Date, the rights of the holder of such
Series A Preferred Stock as such holder (including the right to receive
dividends in cash) shall cease and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Common Stock represented thereby.
As promptly as practicable after the later of (x) the Conversion Date and
(y) the date the holder has delivered its notice and the certificates evidencing
the shares of Series A Preferred Stock converted into shares of Common Stock in
accordance herewith, the Corporation shall deliver to the converting holder at
the address set forth in the conversion notice:
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<PAGE>
(a) a certificate or certificates representing, in the aggregate, the
number of shares of Common Stock issued upon such conversion, in the same name
or names as the certificates representing the converted shares and in such
denomination or denominations as the converting holder shall specify and a check
for cash with respect to any fractional interest in a share of Common Stock as
provided in Section 5.8; and
(b) a certificate representing any shares of Series A Preferred Stock that
were represented by the certificate or certificates delivered to the Corporation
in connection with such conversion but that were not converted.
The issuance of certificates for shares of Common Stock upon the conversion
of Series A Preferred Stock shall be made without charge to the holders of such
Series A Preferred Stock for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Common Stock.
5.8. Cash in Lieu of Fractional Shares. No fractional shares of Common
---------------------------------
Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series A Preferred Stock. Instead of any fractional
share of Common Stock which would otherwise be issuable upon conversion of
Series A Preferred Stock, the Corporation shall pay to the holder of the
converted shares of Series A Preferred Stock cash in respect to such fractional
shares in an amount equal to the same fraction of the market price per share of
Common Stock (as determined in a reasonable manner prescribed by the Board of
Directors).
5.9. Automatic Conversion. Each share of Series A Preferred Stock shall be
--------------------
automatically converted into fully-paid and non-assessable shares of Common
Stock in accordance with the terms of this Section 5: (i) upon the closing of a
firm commitment underwritten public equity offering of the Corporation yielding
aggregate net proceeds to the Corporation of at least $75,000,000 at a price per
share of Common Stock of at least $18.00 (as appropriately adjusted for stock
dividends, stock combinations, stock splits and recapitalization and the like),
(ii) at the close of business on the first day after June __, 2001, on which
the Closing Price (as defined in Section 10) of the Common Stock has exceeded
$18.00 per share (as appropriately adjusted for stock dividends, stock
combinations, stock splits, recapitalizations and the like) for at least 30 of
40 consecutive Trading Days (as defined in Section 10), (iii) upon the approval
of the holders of two-thirds of the then-outstanding Series A Preferred Stock,
voting together as a single class or (iv) upon the conversion into either Common
Stock or Series C Junior Preferred Stock of seventy-five percent of the
Preferred Stock issued pursuant to the Stock Purchase Agreement.
Upon the occurrence of the conversion specified in this Section 5.9, the
holders of the Series A Preferred Stock shall, upon notice from the Corporation,
surrender the certificates representing such shares at the office of the
Corporation or of its transfer agent for the Common Stock. The number of shares
of Common Stock to which each holder of Series A Preferred Stock shall be
entitled upon conversion shall be the product obtained by multiplying the
Applicable Conversion Rate (determined as provided in Section 5.2) by the number
of shares of Series A
-8-
<PAGE>
Preferred Stock held by such holder being converted. As promptly as practicable
after such conversion, upon surrender by such holder of certificates
representing its shares of Series A Preferred Stock, the Corporation shall issue
and deliver to such holder a certificate or certificates for the number of whole
shares of Common Stock to which such holder is entitled, together with any cash
payment in lieu of fractional shares to which such holder may be entitled
pursuant to this Section 5. The Corporation shall not be obligated to issue such
certificates unless certificates evidencing such shares of the Series A
Preferred Stock being converted are either delivered to the Corporation or any
such transfer agent, or the holder notifies the Corporation or any such transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection therewith.
5.10. Record Dates and Dividends. Holders of shares of Series A Preferred
--------------------------
Stock at the close of business on a record date for any Non-Common Distribution
will be entitled to receive the dividend or distribution, respectively, payable
on such shares of Series A Preferred Stock pursuant to Section 2 on the
corresponding payment date for such Non-Common Distribution notwithstanding the
conversion of such shares of Series A Preferred Stock following such record date
and prior to such payment date.
6. Special Conversion of Non-Voting Stock.
--------------------------------------
6.1. Automatic Conversion of Series B Preferred Stock and Series C Junior
--------------------------------------------------------------------
Preferred Stock Upon Transfer to Stockholder other than a Restricted
- --------------------------------------------------------------------
Stockholder. Notwithstanding any other provision of this Section 6, if any
- -----------
shares of Series B Preferred Stock or Series C Junior Preferred Stock shall at
any time be properly transferred to a record holder which is not, and would not
immediately after such transfer be, a Restricted Stockholder, each such share
shall be immediately and automatically converted into either (i) the number of
shares of Series A Preferred Stock determined by multiplying the Applicable
Series B Conversion Rate (defined below) by the number of shares of Series B
Preferred Stock being converted or (ii) a number of shares of Common Stock
determined by multiplying the Applicable Series C Conversion Rate (defined
below) by the number of shares of Series C Junior Preferred Stock being
converted, as applicable.
6.2. Automatic Conversion of Series B Preferred Stock or Series C Junior
-------------------------------------------------------------------
Preferred Stock Upon Additional Equity Issuance. In the event that at any time,
- -----------------------------------------------
from time to time after the effective date of this Certificate of Designation,
the Corporation issues additional shares of Common Stock or other voting equity
securities to any person other than a Restricted Stockholder or any Restricted
Stockholder transfers in accordance with the transfer provisions contained
herein or in the Standstill Agreement, shares of Series A Preferred Stock to an
entity that would not, after giving effect to such transfer constitute a
Restricted Stockholder, such that the quotient, expressed as a percentage,
obtained by dividing (x) the aggregate number of votes which the Restricted
--------
Stockholders are entitled to vote generally with the holders of Common Stock as
a result of all shares of Series A Preferred Stock and all shares of Common
Stock issuable upon conversion of Series A Preferred Stock or other voting
securities held by the Restricted Stockholders, minus the
-9-
<PAGE>
number of votes which the Restricted Stockholders are entitled to vote as a
result of all Unrestricted Shares held by Restricted Stockholders by (y) the
number of votes which all holders of the Corporation's equity securities
(including the Restricted Stockholders) are entitled to vote generally with the
holders of Common Stock with regard to the election of directors is less than
forty-five percent (45%), an aggregate number of shares of Series B Preferred
Stock required to cause the solution to the foregoing equation to equal forty-
five percent (45%) shall be automatically converted to a number of shares of
Series A Preferred Stock determined by multiplying the Applicable Series B
Conversion Rate (defined below) by the number of shares of Series B Preferred
Stock being converted. To the extent that no shares of Series B Preferred Stock
remain outstanding, then a number of shares of Series C Junior Preferred Stock
held by the Restricted Holders equal to the number of shares required to cause
the equation in the foregoing sentence to yield a result equal to forty-five
percent (45%) shall be converted, pro rata among the Holders thereof, into a
number of shares of Common Stock determined by multiplying the Applicable Series
C Conversion Rate (defined below) by the number of shares of Series C Junior
Preferred Stock being converted.
6.3. Applicable Series B Conversion Rate. The conversion rate in effect at
-----------------------------------
any time for the Series B Preferred Stock (the "Applicable Series B Conversion
Rate") shall be the quotient obtained by dividing the Preference Amount by the
Applicable Series B Conversion Value, calculated as provided in Section 6.4.
6.4. Applicable Series B Conversion Value. The Applicable Series B
------------------------------------
Conversion Value shall initially be $80.00 per share and shall be adjusted from
time to time in accordance with Section 6.5 hereof (as so adjusted, the
"Applicable Series B Conversion Value").
6.5. Adjustments to Applicable Series B Conversion Value. In the event of
---------------------------------------------------
(A) a subdivision of outstanding shares of Series A Preferred Stock into a
greater number of shares of Series A Preferred Stock, (B) a combination of
outstanding shares of Series A Preferred Stock into a smaller number of shares
of Series A Preferred Stock, or (C) the issuance of shares of Series A Preferred
Stock for no consideration by way of a stock dividend or other distribution (any
of the foregoing being referred to as an "Extraordinary Series A Preferred Stock
Event"), the Applicable Series B Conversion Value shall, simultaneously with the
happening of such Extraordinary Series A Preferred Stock Event, be adjusted by
multiplying the then effective Applicable Series B Conversion Value by a
fraction, the numerator of which shall be the number of shares of Series A
Preferred Stock outstanding immediately prior to such Extraordinary Series A
Preferred Stock Event and the denominator of which shall be the number of shares
of Series A Preferred Stock outstanding immediately after such Extraordinary
Series A Preferred Stock Event, and the product so obtained shall thereafter be
the Applicable Series B Conversion Value. The Applicable Series B Conversion
Value, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive Extraordinary Series A Preferred Stock Event or Events.
6.6. Mechanics of Automatic Conversion of Series B Preferred Stock. Upon
-------------------------------------------------------------
the occurrence of an event specified in Sections 6.1 or 6.2, the Series B
Preferred Stock shall be
-10-
<PAGE>
converted automatically without any further action by the holder of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Series A
Preferred Stock issuable upon such conversion unless certificates evidencing
such shares of the Series B Preferred Stock being converted are either delivered
to the Corporation or its transfer agent. Upon the automatic conversion of the
Series B Preferred Stock, the holder of such Series B Preferred Stock shall
surrender the certificates representing such shares at the office of the
Corporation or of its transfer agent. Thereupon, there shall be issued and
delivered to such holder, promptly at such office and in such holder's name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Series A Preferred Stock into which the
shares of Series B Preferred Stock surrendered were convertible on the date on
which such automatic conversion occurred. From and after the date of the event
that causes the automatic conversion pursuant to Sections 6.1 and 6.2, all
rights of the holder with respect to the Series B Preferred Stock so converted
shall terminate, except only the right of such holder, upon the surrender of
such holder's certificate or certificates therefor, to receive certificates for
the number of shares of Series A Preferred Stock issuable upon conversion
thereof.
6.7. Automatic Conversion into Series C Junior Preferred Stock. Each share
---------------------------------------------------------
of Series B Preferred Stock shall be automatically converted into fully-paid and
non-assessable shares of Series C Junior Preferred Stock in accordance with the
terms of this Section 6.7: (i) upon the closing of a firm commitment
underwritten public equity offering of the Corporation yielding aggregate net
proceeds to the Corporation of at least $75,000,000 at a price per share of
Common Stock of at least $18.00 (as appropriately adjusted for stock dividends,
stock combinations, stock splits and recapitalization and the like), (ii) at
the close of business on the first day after June __, 2001, on which the Closing
Price (as defined in Section 10) of the Common Stock has exceeded $18.00 per
share (as appropriately adjusted for stock dividends, stock combinations, stock
splits, recapitalizations and the like) for at least 30 of 40 consecutive
Trading Days (as defined in Section 10), (iii) upon the approval of the holders
of two-thirds of the then-outstanding Series B Preferred Stock, voting together
as a single class or (iv) upon the conversion into either Common Stock or Series
C Junior Preferred Stock of seventy-five percent of the Preferred Stock issued
pursuant to the Stock Purchase Agreement.
Upon the occurrence of the conversion specified in this Section 6.7, the
holders of the Series B Preferred Stock shall, upon notice from the Corporation,
surrender the certificates representing such shares at the office of the
Corporation or of its transfer agent for the Series C Junior Preferred Stock.
The number of shares of Series C Junior Preferred Stock to which each holder of
Series B Preferred Stock shall be entitled upon conversion shall be the product
obtained by multiplying the Applicable Series B Conversion Rate (determined as
provided in Section 6.3) by the number of shares of Series B Preferred Stock
held by such holder being converted. As promptly as practicable after such
conversion, upon surrender by such holder of certificates representing its
shares of Series B Preferred Stock, the Corporation shall issue and deliver to
such holder a certificate or certificates for the number of whole shares of
Series C Junior Preferred Stock to which such holder is entitled, together with
any cash payment in lieu of fractional shares
-11-
<PAGE>
to which such holder may be entitled pursuant to this Section 6. The Corporation
shall not be obligated to issue such certificates unless certificates evidencing
such shares of the Series B Preferred Stock being converted are either delivered
to the Corporation or any such transfer agent, or the holder notifies the
Corporation or any such transfer agent that such certificates have been lost,
stolen or destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection therewith.
6.8. Applicable Series C Conversion Rate. The Applicable Series C
-----------------------------------
Conversion Rate shall at all times equal the Applicable Conversion Rate,
calculated in accordance with Section 5 hereof.
7. Capital Stock.
-------------
7.1. No Reissuance of Preferred Stock. No share or shares of Preferred
--------------------------------
Stock acquired by the Corporation by reason of purchase, conversion or otherwise
shall be reissued, and all such shares shall be canceled, retired and eliminated
from the shares which the Corporation shall be authorized to issue. The
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce the authorized number of shares of the Preferred Stock
accordingly.
7.2. Reservation of Stock.
--------------------
(a) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock (or out of its
authorized shares of Common Stock held in the treasury of the Corporation), for
the purpose of effecting the conversion of the Series A Preferred Stock and the
Series C Junior Preferred Stock, the full number of shares of Common Stock then
issuable upon the conversion pursuant to Section 5 of all outstanding shares of
Series A Preferred Stock (including for this purpose shares of Series B
Preferred Stock convertible into Series A Preferred Stock) and the conversion
pursuant to Section 6 of all outstanding shares of Series C Junior Preferred
Stock.
(b) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Series A Preferred Stock (or out of its
authorized shares of Series A Preferred Stock held in the treasury of the
Corporation), for the purpose of effecting the conversion of the Series B
Preferred Stock, the full number of shares of Series A Preferred Stock then
issuable upon the conversion pursuant to Section 6 of all outstanding shares of
Series B Preferred Stock.
(c) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Series C Junior Preferred Stock (or out
of its authorized shares of Series C Junior Preferred Stock held in the treasury
of the Corporation), for the purpose of effecting the conversion of the Series B
Preferred Stock, the full number of shares of Series C
-12-
<PAGE>
Junior Preferred Stock then issuable upon the conversion pursuant to Section 6
of all outstanding shares of Series B Preferred Stock.
8. Notices of Record Date. In the event of the proposed sale of all or
----------------------
substantially all of the assets of the Corporation or merger or any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall use reasonable efforts to mail or cause to be mailed to each
holder of record of Preferred Stock a notice (at least twenty (20) days in
advance of the following) specifying (i) the date on which any such sole,
merger, dissolution, liquidation or winding up is expected to become effective
and (ii) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their share
of Common Stock (or other securities) for securities or other property
deliverable upon such dissolution, liquidation or winding up. Except as set
forth above in this Section 8, in the event the Corporation provides any notice
or mailing to the holders of Common Stock, such notice shall be provided, at
substantially the same time and in substantially the same manner, to the holders
of Preferred Stock.
9. Amendments. The provisions of the terms of the Preferred Stock may not be
----------
amended, modified or waived without the written consent or affirmative vote of
the holders of a majority of the then outstanding shares of Preferred Stock.
10. Definitions.
-----------
10.1. "Closing Price" for any date shall mean, so long as the Common Stock
is quoted on The Nasdaq Stock Market (or its successor), the last bid price of
the Common Stock on that date, or if the Common Stock is no longer quoted on The
Nasdaq Stock Market and is then listed on any national securities exchange, the
last sale price of the Corporation's Common Stock on such exchange on that date.
10.2. "Preference Amount" shall mean $80.00.
10.3. "Restricted Stockholder" shall mean (i) any party (other than the
Corporation) to the Stock Purchase Agreement and their respective "affiliates"
or "associates" (as each such term is defined in Rule 12b-2 under the Securities
Exchange Act of 1934); and (ii) any person or entity that acquires shares of
Preferred Stock or any securities, including Common Stock, that were issued upon
conversion of the Preferred Stock, from a party to or an affiliate or associate
of any party (other than the Corporation) to the Stock Purchase Agreement unless
such shares were acquired either (x) in a sale to the public pursuant to Rule
144 under the Securities Act of 1933, or an offering registered under such Act
or (y) in a transfer not prohibited by that certain Standstill Agreement dated
June __, 1999 among the Corporation and certain of the Corporation's
stockholders, (the "Standstill Agreement"), if following such transfer the
transferee is not (i) bound by the terms of such agreement, nor (ii) an
affiliate or associate of any entity so bound (other than solely an affiliate or
associate of the Corporation) nor (iii) an affiliate or associate of a
Restricted Stockholder.
-13-
<PAGE>
10.4. "Stock Purchase Agreement" shall mean that certain Preferred Stock
Purchase Agreement among the Corporation and the initial purchasers of the
Preferred Stock, dated June __, 1999, as amended and in effect from time to
time.
10.5. "Trading Days" shall mean any date on which The Nasdaq Stock Market
is open for the quotation of securities or, if the Common Stock is no longer
quoted on The Nasdaq Stock Market and is then listed on any national securities
exchange, any date such exchange is open for the trading of securities.
10.6. "Unrestricted Shares" means (i) any shares of voting capital stock of
the Corporation owned by Columbia Capital, L.L.C. and Advent International
Corporation and their respective affiliates (the "Existing Holders") other than
shares of Preferred Stock acquired by Existing Holders pursuant to the Purchase
Agreement (or the conversion or further conversion of such shares pursuant to
the terms hereof), or (ii) any shares of voting capital stock of the Corporation
acquired by Existing Holders upon exercise of the Existing Holders' rights in
Section 4.16 of the Purchase Agreement (or the exercise, conversion or exchange
of securities acquired on exercise of such rights), in each case, so long as
such shares are not held by any Restricted Stockholder other than an Existing
Holder.
ADVANCED RADIO TELECOM CORP. has caused this Certificate of Designation to
be signed by Henry C. Hirsch, its Chairman, and attested by Thomas M. Walker,
its Secretary, this _____ day of _____, 1999.
__________________________
Chairman
ATTEST:
___________________________
Secretary
-14-
<PAGE>
EXHIBIT 4.9
Amendment No. 1
---------------
to the
------
Rights Agreement of
-------------------
Advanced Radio Telecom Corp.
----------------------------
This Amendment No. 1, dated as of June __, 1999, between Advanced Radio
Telecom Corp., a Delaware corporation (the "Company") and BankBoston, N.A., a
national banking association, as successor rights agent (the "Rights Agent"),
amends the Rights Agreement dated as of June 20, 1997 between the Company and
Continental Stock Transfer & Trust Company (the "Rights Agreement"). Terms
defined in the Rights Agreement and not otherwise defined herein are used herein
as so defined.
WITNESSETH:
-----------
WHEREAS, on June 20, 1997, the Board of Directors of the Company authorized
the issuance of Rights to purchase, on the terms and subject to the provisions
of the Rights Agreement, shares of the Company's Junior Preferred Stock or, in
certain circumstances, the Company's Common Stock;
WHEREAS, on June 20, 1997, the Board of Directors of the Company authorized
and declared a dividend distribution of one Right for every share of Common
Stock of the Company outstanding on the Dividend Record Date and authorized the
issuance of one Right (subject to certain adjustments) for each share of the
Common Stock of the Company issued between the Dividend Record Date and the
Distribution Date;
WHEREAS, the Distribution Date has not occurred; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board of
Directors has approved an amendment of certain provisions of the Rights
Agreement as set forth below;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. The preamble shall be amended by deleting the words "Continental Stock
Transfer & Trust Company, a New York corporation" and inserting in their place
the words "BankBoston, N.A., a national banking association, as successor rights
agent."
2. Each instance in the Agreement of "Continental Stock Transfer & Trust
Company" shall be replaced with "BankBoston, N.A."
<PAGE>
3. Section 1(a) shall be amended by deleting the phrase "or (v)" after clause
(iv) and adding the following language:
", (v) an Exempt Person, or (vi)"
4. A new definition is added after Section 1(w) and before Section 1(x) as
follows:
"(w-2) "Exempt Person" shall mean (i) each of Oak Investment Partners VIII,
L.P., Oak VIII Affiliates Fund, L.P. or U.S. Telesource, Inc. (each, a "Large
Holder") and its respective Affiliates so long as such Large Holder, together
with its Affiliates, is not the Beneficial Owner of any Common Stock, other than
as a result of the ownership of equity securities of the Company either (1)
acquired by any Purchaser (as defined in the Stock Purchase Agreement), or an
Affiliate of any Purchaser, directly from the Company (x) pursuant to the Stock
Purchase Agreement (including pursuant to the exercise of such Person's rights
under Section 4.16 of the Stock Purchase Agreement) or (y) on the conversion of
convertible securities acquired by such Person directly from the Company
pursuant to the Stock Purchase Agreement and, in each case, Beneficially Owned
by such Large Holder solely as a result of the Stockholders Agreement (as
defined in the Standstill Agreement (as defined in the Stock Purchase
Agreement)), (2) acquired by such Large Holder, or an Affiliate of such Large
Holder as a result of an assignment to such Affiliate of rights of such Large
Holder to acquire, directly from the Company pursuant to the Stock Purchase
Agreement (including pursuant to the exercise of rights under Section 4.16 of
the Stock Purchase Agreement) or acquired by such Large Holder or an Affiliate
of such Large Holder on the conversion of convertible securities so acquired
directly from the Company pursuant to the Stock Purchase Agreement, (3) that are
(x) Beneficially Owned by any Purchaser, other than a Large Holder, that is a
party to the Stockholders Agreement, (y) not subject to the provisions of the
Stockholders Agreement, and (z) Beneficially Owned by such Large Holder solely
as a result of the Stockholders Agreement or (4) that are Beneficially Owned by
U.S. Telesource, Inc. or its Affiliates after the termination of the Standstill
Agreement pursuant to its terms so long as U.S. Telesource, Inc. and its
Affiliates do not Beneficially Own in the aggregate more than 19.9% of the
Common Stock then outstanding other than the Common Stock Beneficially Owned by
U.S. Telesource, Inc. or its Affiliates solely as a result of the Stockholders
Agreement and (ii) each Purchaser, other than a Large Holder, that is a party to
the Stockholders Agreement that would not be an Acquiring Person if such
Purchaser were not a party to the Stockholders Agreement. Notwithstanding
anything to the contrary contained herein, for purposes of this definition of
"Exempt Person," any amendment to the Stockholders Agreement that (x) modifies
the rights of, or procedures to be followed by, the Large Holders (as such
rights or procedures are provided in the Stockholders Agreement) without (y)
increasing, or extending the time period of, the control of either Large Holder
(or any other Purchaser or party thereto) over the acquisition, holding, voting
or disposition of any equity securities of the Company Beneficially Owned by
another Purchaser or any other holder of equity securities of the Company, will
not constitute a new agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of any
equity securities of the Company.
-2-
<PAGE>
5. A new definition is added after Section 1 (ii) and before Section 1 (jj) as
follows:
"(ii-2) "Stock Purchase Agreement" shall mean the Preferred Stock Purchase
Agreement dated as of June __, 1999 among the Company and the Purchasers listed
on Schedule I thereto.
6. Section 2 shall be amended by adding the words "ten (10) days" before the
words "prior written notice" and inserting the following new sentence at the end
of the section: "The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omissions of any such Co-Rights Agent."
7. Section 26 shall be amended by deleting the address of Continental Stock
Transfer & Trust Company and replacing it with:
BankBoston, N.A.
c/o Equiserve Limited Partnership
140 Royall Street
Canton, MA 02021
Attn: Client Administration
[Remainder of Page Intentionally Blank]
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
the Rights Agreement to be duly executed as of the day and year first above
written.
ADVANCED RADIO TELECOM CORP.
By:
--------------------------
Title:
Attest:
By:
----------------------
Secretary
BANKBOSTON, N.A.
By:
--------------------------
Title:
-4-
<PAGE>
EXHIBIT 10.31
Execution Copy
================================================================================
PREFERRED STOCK PURCHASE AGREEMENT
by and among
ADVANCED RADIO TELECOM CORP.
and
THE PURCHASERS LISTED ON SCHEDULE I HERETO
Dated as of June 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE PURCHASE................................................................................... 1
Section 1.1. Definitions.................................................................... 1
Section 1.2. Sale and Purchase of Preferred Stock........................................... 1
Section 1.3. Bridge Loan and Warrants....................................................... 2
Section 1.4. The Closing.................................................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................. 3
Section 2.1. Organization and Qualification; Subsidiaries................................... 3
Section 2.2. Certificate of Incorporation and By-Laws....................................... 4
Section 2.3. Capitalization................................................................. 4
Section 2.4. Authority Relative to this Agreement and DGCL Section 203...................... 6
Section 2.5. No Conflict; Required Filings and Consents..................................... 7
Section 2.6. Compliance..................................................................... 8
Section 2.7. SEC Filings; Financial Statements.............................................. 9
Section 2.8. Absence of Certain Changes or Events........................................... 10
Section 2.9. No Undisclosed Liabilities..................................................... 10
Section 2.10. Absence of Litigation......................................................... 11
Section 2.11. Employee Benefit Plans........................................................ 11
Section 2.12. Proxy Statement............................................................... 12
Section 2.13. Title to Property............................................................. 12
Section 2.14. Restrictions on Business Activities........................................... 12
Section 2.15. Taxes......................................................................... 13
Section 2.16. Environmental Matters......................................................... 13
Section 2.17. Intellectual Property......................................................... 14
Section 2.18. Certain Agreements of Officers and Employees.................................. 15
Section 2.19. Regulatory Matters............................................................ 15
Section 2.20. Rank of Notes................................................................. 16
Section 2.21. Interested Party Transactions................................................. 16
Section 2.22. Insurance..................................................................... 16
Section 2.23. Brokers....................................................................... 17
Section 2.24. Disclosure.................................................................... 17
Section 2.25. Securities Laws............................................................... 17
Section 2.26. Acquiring Person.............................................................. 17
Section 2.27. Acceleration.................................................................. 17
Section 2.28. Board of Directors............................................................ 18
</TABLE>
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<TABLE>
<S> <C>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS............................................... 18
Section 3.1. Organization................................................................... 18
Section 3.2. Due Authorization.............................................................. 18
Section 3.3. Acquisition for Investment..................................................... 18
Section 3.4. Brokers or Finders............................................................. 18
Section 3.5. Accredited Investor............................................................ 19
Section 3.6. Financial Condition............................................................ 19
Section 3.7. Experience..................................................................... 19
Section 3.8. Non-U.S. Ownership............................................................. 19
Section 3.9. Beneficial Ownership........................................................... 19
Section 3.10. Affiliates.................................................................... 19
Section 3.11. Proxy Statement............................................................... 19
ARTICLE IV
ADDITIONAL AGREEMENTS.......................................................................... 20
Section 4.1. HSR Act........................................................................ 20
Section 4.2. Proxy Statement................................................................ 20
Section 4.3. Stockholders Meeting........................................................... 20
Section 4.4. Alternative Transactions....................................................... 20
Section 4.5. Access to Information.......................................................... 22
Section 4.6. Confidentiality................................................................ 22
Section 4.7. Consents; Approvals............................................................ 23
Section 4.8. Public Announcements........................................................... 24
Section 4.9. Listing........................................................................ 24
Section 4.10. Board of Directors............................................................. 24
Section 4.11. Certificate of Designation..................................................... 26
Section 4.12. Increase of Option Pool........................................................ 26
Section 4.13. Use of Proceeds................................................................ 27
Section 4.14. Interim Operations............................................................. 27
Section 4.15. Restricted Securities.......................................................... 28
Section 4.16. Preemptive Rights.............................................................. 28
Section 4.17. Amendment of Rights Agreement.................................................. 31
ARTICLE V
CONDITIONS TO THE STOCK PURCHASE............................................................... 31
Section 5.1. Conditions to Obligation of Each Party to Effect the Stock Purchase............ 31
Section 5.2. Additional Conditions to Obligations of the Purchasers......................... 31
Section 5.3. Additional Conditions to Obligation of the Company............................. 33
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
TERMINATION.................................................................................... 34
Section 6.1. Termination.................................................................... 34
Section 6.2. Effect of Termination.......................................................... 36
Section 6.3. Fees and Expenses.............................................................. 36
ARTICLE VII
GENERAL PROVISIONS............................................................................. 37
Section 7.1. Effectiveness of Representations, Warranties and Agreements; Knowledge, Etc.... 37
Section 7.2. Restrictive Legends............................................................ 37
Section 7.3. Notices........................................................................ 38
Section 7.4. Certain Definitions............................................................ 39
Section 7.5. Notification................................................................... 41
Section 7.6. Amendment...................................................................... 41
Section 7.7. Waiver......................................................................... 41
Section 7.8. Cooperation.................................................................... 41
Section 7.9. Headings....................................................................... 41
Section 7.10. Severability................................................................... 41
Section 7.11. Entire Agreement............................................................... 42
Section 7.12. Assignment..................................................................... 42
Section 7.13. Parties in Interest............................................................ 42
Section 7.14. Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 42
Section 7.15. Governing Law.................................................................. 42
Section 7.16. Counterparts................................................................... 42
</TABLE>
Schedules and Exhibits
- ----------------------
Schedule I List of Purchasers
Schedule II Wire Transfer Instructions
Schedule III Schedule of Beneficial Ownership
Schedule IV Terms of Lucent Amendments
Exhibit A Form of Bridge Note
Exhibit B Form of Warrant
Exhibit C Certificate of Designation
Exhibit D Form of Opinion of Ropes & Gray
Exhibit E Form of Opinion of FCC Counsel
Exhibit F Registration Rights Agreement
Exhibit G Qwest Private Line Agreement
Exhibit H Co-Location License Agreement
Exhibit I Coordinated Marketing Agreement
Exhibit J Form of Standstill Agreement
Company's Disclosure Schedule
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PREFERRED STOCK PURCHASE AGREEMENT
This Preferred Stock Purchase Agreement is dated as of June 1, 1999 (this
"AGREEMENT"), among Advanced Radio Telecom Corp., a Delaware corporation (the
"COMPANY"), and the purchasers listed on Schedule I hereto (the "PURCHASERS").
WITNESSETH:
WHEREAS, the Purchasers wish to purchase from the Company, and the Company
wishes to sell and issue to the Purchasers (the "STOCK PURCHASE"), an aggregate
of 2,635,908 shares of the Company's Series A Convertible Preferred Stock,
$0.001 par value per share (the "SERIES A PREFERRED STOCK") and 501,592 shares
of the Company's Series B Non-Voting Convertible Preferred Stock, $0.001 par
value per share (the "SERIES B PREFERRED STOCK", and together with the Series A
Preferred Stock and the Series C Non-Voting Convertible Preferred Stock, $0.001
par value per share (the "SERIES C PREFERRED STOCK"), the "PREFERRED STOCK");
and
WHEREAS, contemporaneously with the execution of this Agreement, the
Purchasers and the Company are executing and delivering the Standstill Agreement
(hereinafter defined) and the Company is executing and delivering the Warrants
(hereinafter defined) and the Notes (hereinafter defined) and the Purchasers are
advancing the Company $45,019,920; and
WHEREAS, the Purchasers and the Company are entering into this Agreement to
provide for the purchase and sale of the Preferred Stock and to establish
various rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties agree as follows:
ARTICLE I
THE PURCHASE
Section 1.1. Definitions. Certain terms are used in this Agreement as
specifically defined herein. These definitions are set forth herein or referred
to in Section 7.4 hereof.
Section 1.2. Sale and Purchase of Preferred Stock.
Section 1.2.1. Purchase. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties set forth in
this Agreement, the Company hereby agrees to sell to each of the Purchasers, and
each of the Purchasers
<PAGE>
hereby agrees severally to purchase from the Company, at the Closing (as
hereinafter defined) and at a purchase price of $80.00 per share (the "PURCHASE
PRICE"), the number of shares of Series A Preferred Stock and the number of
shares of Series B Preferred Stock as are set forth on Schedule I as being
purchased by such Purchaser (such shares of Series A Preferred Stock and Series
B Preferred Stock purchased hereunder, the "SHARES"). The aggregate Purchase
Price of the Shares purchased and sold hereunder is $251,000,000 (the
"INVESTMENT"). The terms of the Series A Preferred Stock, the Series B Preferred
Stock and the Series C Preferred Stock shall be those set forth in the
Certificate of Designation (as hereinafter defined).
Section 1.2.2. Alternative Commitment. In the event that MeriTech
Capital Partners ("MeriTech") has not made the advance provided in Section 1.3
prior to June 15, 1999, Oak Investment Partners ("Oak"), Worldview Technology
("Worldview"), Accel Partners ("Accel") and Brentwood Venture Capital
("Brentwood") severally agree to purchase from the Company at the Closing at a
purchase price of $80.00 per share the additional number of shares of Series A
Preferred Stock and the additional number of shares of Series B Preferred Stock
as are set forth on Schedule I, and MeriTech on June 15, 1999 shall cease to be
a party to this Agreement for all purposes.
Section 1.3. Bridge Loan and Warrants. The Purchasers severally agree to
advance to the Company an aggregate of $50,000,000 (the "LOAN") on the terms set
forth below. On the date of this Agreement, each of the Purchasers other than
MeriTech agrees to advance to the Company the amount set forth opposite its
respective name on Schedule I, and prior to June 15, 1999, MeriTech agrees to
advance to the Company the amount set forth opposite its name on Schedule I.
MeriTech shall provide the Company two business days notice of the date on which
it shall make the advance. If MeriTech has not made the advance by June 15,
1999, on that date Oak, Worldview, Accel and Brentwood severally agree to
advance to the Company the additional amount set forth opposite its respective
name on Schedule I. Each advance of the Loan shall be made by wire transfer of
immediately available funds to the account of the Company specified in Schedule
II hereto. The Company's obligations to pay the Loan shall be evidenced by the
Company's notes in substantially the form of Exhibit A (each a "NOTE", and
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collectively the "NOTES"). The Notes shall bear interest at a rate of 11% per
annum, which interest shall accrue daily but not compound. Principal under
each Note will be due and payable on the earlier to occur of (i) the Closing
hereunder and (ii) the date which is 150 days from the date of this Agreement,
or such later date mutually agreed to by the Company and Two-Thirds in Interest
(as hereinafter defined) of the Purchasers (the "FINAL MATURITY DATE"). Such
Final Maturity Date may be accelerated as provided in the Notes.
Section 1.3.1. Prepayment. Interest shall be due and payable on any
prepayment of the Note, either in cash or, if at Closing at the Company's
option, in shares of the Company's Series A Preferred Stock (valued at $80.00
per share).
Section 1.3.2. Application of Note Proceeds to Purchase Price. At
the Closing, each Purchaser shall return its outstanding Note to the Company,
and the Company
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shall cancel each Note and shall apply all amounts outstanding under each Note,
together with all accrued and unpaid interest thereon, to the Purchase Price
payable by the respective Purchaser. If either the Company or a Purchaser so
elects, at the Closing the Company shall pay the accrued and unpaid interest
payable on such Purchaser's Note in cash.
Section 1.3.3. Warrants. On the date of this Agreement, upon its
receipt of the Loan, the Company will issue to each of the Purchasers that has
advanced its portion of the Loan a warrant (each a "WARRANT", and collectively,
the "WARRANTS") to purchase the number of shares of Common Stock set forth
opposite such Purchaser's name on Schedule I, in substantially the form of
Exhibit G. On the date on which MeriTech advances to the Company its portion of
- ---------
the Loan, the Company will issue to MeriTech a Warrant to purchase the number of
shares of Common Stock set forth opposite its name on Schedule I or on June 15,
1999, if Oak, Worldview, Accel and Brentwood shall make the additional advances
on the Loan in lieu of MeriTech pursuant to Section 1.3, upon receipt of those
advances the Company will issue to each of Oak, Worldview, Accel and Brentwood
Warrants to purchase the additional number of shares of Common Stock set forth
opposite its respective name on Schedule I under the designation "MeriTech
Warrants."
Section 1.4. The Closing. Unless this Agreement shall have been terminated
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the consummation of the transactions
contemplated hereby (the "CLOSING") will take place as promptly as practicable
(and in any event within two business days) after satisfaction or waiver of the
conditions set forth in Article V (the "CLOSING DATE"), at the offices of Ropes
& Gray, 885 Third Avenue, New York, New York, unless another date, time or place
is agreed to in writing by the Company and Two-Thirds in Interest of the
Purchasers. At the Closing and subject to the conditions provided herein, the
Company will deliver to each Purchaser a certificate, registered in such
Purchaser's name, representing the number of Shares to be purchased by such
Purchaser hereunder against payment of the aggregate purchase price therefor by
cancellation of the Notes as described in Section 1.3 and by wire transfer of
the remaining amount in immediately available funds to the Company's account as
set forth on Schedule II hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Section 7.1 hereof, the Company hereby represents and warrants
to the Purchasers that, except as set forth in the written disclosure schedule
delivered simultaneously with the execution and delivery of this Agreement (the
"COMPANY DISCLOSURE SCHEDULE"):
Section 2.1. Organization and Qualification; Subsidiaries. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of
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<PAGE>
Delaware. Except as set forth in Schedule 2.1, each of the Company's
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Except as set
forth in Schedule 2.1, each of the Company and each of its subsidiaries has the
requisite corporate power and authority to own, lease, license, use or operate
the properties it purports to own, operate, license, use or lease and to carry
on its business as it is now being conducted and proposed to be conducted. Each
of the Company and each of its subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that do not constitute a Material Adverse Effect.
Section 2.2. Certificate of Incorporation and By-Laws. The Company has
heretofore made available to the Purchasers a complete and correct copy of its
Certificate of Incorporation and By-Laws as most recently restated and
subsequently amended to date. Except as set forth in Schedule 2.2, such
Certificate of Incorporation and By-Laws, and the certificate of incorporation
and by-laws (or equivalent organizational documents) of each of the Company's
subsidiaries (the "COMPANY SUBSIDIARY DOCUMENTS"), are in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or Company Subsidiary
Documents, except for such violations as do not constitute a Material Adverse
Effect.
Section 2.3. Capitalization.
(a) The authorized capital stock of the Company consists of (i)
100,000,000 shares of common stock, $0.001 par value per share ("COMMON
STOCK") and (ii) 10,000,000 shares of preferred stock, $0.001 par value per
share. As of May 10, 1999, (i)(A) 1,000,000 shares of preferred stock were
designated as series of Junior Preferred Stock, none of which were issued
and outstanding, and (B) 27,200,699 shares of Common Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, and no shares were held in treasury, (ii) 8,051,551
shares of Common Stock were reserved for future issuance pursuant to stock
options ("STOCK OPTIONS") or other equity incentives granted or to be
granted under the Company's Restated Equity Incentive Plan, as amended by
the Company's Board of Directors (the "BOARD") subject to stockholder
approval, the Company's 1996 Non-Employee Directors Automatic Stock Option
Plan or the Company's 1997 Equity Incentive Plan for Non-Employee Directors
(collectively, the "COMPANY STOCK OPTION PLANS"), (iv) 2,178,490 shares of
Common Stock were reserved for future issuance upon the exercise of certain
warrants set forth on Schedule 2.3, and (v) shares of Common Stock were
------------
reserved for future issuance from time to time as required pursuant to the
Company's 401(k) Plan.
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<PAGE>
(b) On or prior to the Closing Date, the Certificate of Designation
(as hereinafter defined) will have been duly adopted and filed with the
Secretary of State of Delaware and, on the Closing Date, shall be in full
force and effect. On or prior to the Closing Date, the Company shall
reserve for issuance the number of shares of Common Stock issuable upon the
conversion of the Shares issued to the Purchasers pursuant to this
Agreement. All shares of Common Stock issuable pursuant to the preceding
sentence, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non assessable. The Shares issued on the
Closing Date will, upon payment of the Purchase Price therefor, be duly
authorized, validly issued, fully paid and nonassessable.
(c) As of the date hereof, except as set forth in Schedule 2.3 or the
------------
Company SEC Reports, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue or sell any
shares of capital stock of, or other equity interests in, the Company or
any of its subsidiaries. All shares of Common Stock subject to issuance
thereunder, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in
Schedule 2.3, there are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock or the capital stock of any subsidiary
or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other
entity other than guarantees of obligations of subsidiaries entered into in
the ordinary course of business and except for the terms of the Company
Stock Option Plans. Except as set forth in Schedule 2.3, all of the
outstanding shares of capital stock of each of the Company's subsidiaries
are duly authorized, validly issued, fully paid and nonassessable, and all
such shares are beneficially owned by the Company or another subsidiary of
the Company, free and clear of all security interests, liens, claims,
pledges, agreements, limitations in the Company's voting rights, charges or
other encumbrances of any nature whatsoever (collectively "LIENS").
(d) Except as set forth in Schedule 2.3, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders
of the Company may vote.
(e) Except for the Transaction Documents (as hereinafter defined) or
as set forth in Schedule 2.3, the Company is not a party to any agreement
or arrangement restricting the voting or transfer of any outstanding shares
of the Common Stock or Preferred Stock of the Company.
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<PAGE>
(f) Except as set forth in Schedule 2.3 or in the Transaction
Documents and as provided by statutes of general application, there are no
legal, contractual or other restrictions on the payment of dividends or
other distributions or amounts on or in respect of any of the Common Stock
or Preferred Stock of the Company.
(g) Except as set forth in Schedule 2.3 or in the Transaction
Documents, there are no agreements or arrangements to which the Company or
any of its subsidiaries is a party pursuant to which the Company is or
could be required to register shares of Common Stock or other securities
under the Securities Act.
(h) All outstanding shares of Common Stock and Preferred Stock of the
Company were issued in compliance with the registration provisions of or
were exempt from registration under applicable federal and state securities
laws.
Section 2.4. Authority Relative to this Agreement and DGCL Section 203.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, the Notes, the Registration Rights
Agreement in the form of Exhibit F hereto among the Company and the
Purchasers (the "REGISTRATION RIGHTS AGREEMENT"), the Standstill Agreement
dated as of the date hereof among the Company and the Purchasers (the
"STANDSTILL AGREEMENT"), and the Warrants (as defined in Section 6.3)
(collectively, the "TRANSACTION DOCUMENTS"), and to perform its obligations
under the Transaction Documents and to consummate the transactions
contemplated thereby. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the
part of the Company are necessary to authorize or to consummate the
transactions so contemplated (other than the adoption and filing of the
Certificate of Designation and the approval of the Stock Purchase by the
stockholders as contemplated herein). The Board has determined that it is
advisable and in the best interest of the Company's stockholders for the
Company to consummate the Stock Purchase upon the terms and subject to the
conditions of this Agreement, and, except for Messrs. Fillat and Murray,
who abstained, has unanimously recommended that the Company's stockholders
approve and adopt this Agreement. Each of the Transaction Documents has
been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the Purchasers,
constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought,
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<PAGE>
and (iii) the enforcement of the indemnification provisions contained in
the Registration Rights Agreement are subject to applicable securities laws
and principles of public policy.
(b) The Board has taken all actions so that the restrictions
contained in Section 203 of the Delaware General Corporation Law, as from
time to time in effect, applicable to a "business combination" (as defined
in Section 203) will not apply to the execution, delivery or performance of
this Agreement by the interested stockholders (as defined in Section 203)
or their consummation of the transactions contemplated hereby.
Section 2.5. No Conflict; Required Filings and Consents.
(a) The Company has made available to the Purchasers copies of (i)
all loan agreements, indentures, mortgages, pledges, conditional sale or
title retention agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease purchase
agreements to which the Company or any of its subsidiaries is a party or by
which any of them is bound, each in a principal outstanding amount equal to
or exceeding $2,000,000, but excluding any such agreement between the
Company and its wholly-owned subsidiaries or between two or more wholly-
owned subsidiaries of the Company; (ii) all contracts, agreements,
commitments or other understandings or arrangements to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business and involving, in each
case, aggregate payments or receipts by the Company or any of its
subsidiaries of less than $2,000,000 in any single instance; and (iii) all
agreements which, as of the date hereof, are required to be filed by the
Company as "material contracts" with the Securities Exchange Commission
("SEC") pursuant to the requirements of the Securities Exchange Act of
1934, as amended, and the SEC's rules and regulations thereunder (the
"EXCHANGE ACT") (collectively, the "MATERIAL CONTRACTS"). Schedule 2.5
sets forth a correct and complete list of the Material Contracts.
(b) Except as set forth in Schedule 2.5, (i) neither the Company nor
any of its subsidiaries has breached, is in default under, or has received
written notice of any breach of or default under, any Material Contract,
(ii) to the knowledge of the Company, no other party to any of the Material
Contracts has breached or is in default of any of its obligations
thereunder, and (iii) each of the Material Contracts is in full force and
effect and constitutes a legal, valid and binding obligation of the parties
thereto enforceable against such parties in accordance with its terms,
except in any such case for breaches, defaults or failures to be in full
force and effect that do not constitute a Material Adverse Effect. Except
as set forth in Schedule 4.7, the execution and delivery of this Agreement
by the Company does not, and the performance of this
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<PAGE>
Agreement by the Company will not, constitute a breach of or default under
any Material Contract, or require any consent pursuant to any Material
Contract, except where the failure to obtain such consent does not
constitute a Material Adverse Effect or materially adversely affect the
Purchasers with respect to their rights under the Transaction Documents.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws of the Company,
(ii) conflict with or violate any federal, foreign, state or provincial
law, rule, regulation, order, judgment or decree (collectively, "LAWS")
applicable to the Company or any of its subsidiaries or by which its or any
of their respective properties are bound or affected, or (iii) except as
set forth on Schedule 4.7, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a
default under), or impair the Company's or any of its subsidiaries' rights
or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any of the properties or assets
of the Company or any of its subsidiaries pursuant to any Material
Contract, except in any such case for any such conflicts, violations,
breaches, defaults or other occurrences that do not constitute a Material
Adverse Effect.
(d) Except as set forth on Schedule 2.5, the execution and delivery
of this Agreement by the Company does not, and the performance of this
Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any federal,
foreign, state or provincial governmental or regulatory authority except
(i) for applicable requirements, if any, of the Securities Act, the
Exchange Act, state securities laws ("BLUE SKY LAWS") and the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), (ii) applicable requirements of
the Communications Act (as hereinafter defined) and the FCC (as hereinafter
defined), (iii) filing of the Certificate of Designation, and (iv) where
the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Closing, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, or would not otherwise
have a Material Adverse Effect.
Section 2.6 Compliance.
(a) Neither the Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any Law applicable to the Company
or any of its subsidiaries or by which its or any of their respective
properties are bound or affected or (ii) any
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<PAGE>
Material Contract, except for any such conflicts, defaults or violations
which do not constitute a Material Adverse Effect.
(b) Each of the Company and its subsidiaries has filed or caused to
be filed with each applicable Governmental Body all reports, applications,
documents, instruments and information required to be filed by it pursuant
to all applicable laws, rules, regulations, ordinances, judgment, decrees,
rulings, orders, awards, injunctions, recommendations or other official
actions of any Governmental Body, other than those as to which the failure
to file do not constitute a Material Adverse Effect.
Section 2.7. SEC Filings; Financial Statements.
(a) The Company has filed with the Securities and Exchange Commission
all reports, schedules, forms, statements and other documents required by
the Securities Act or the Exchange Act to be filed by the Company since
January 1, 1998 as filed on or before the date of this Agreement
(collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein the "COMPANY SEC
REPORTS"). Schedule 2.7 sets forth a list of all Company SEC Reports. As
of their respective dates (except if revised or superseded by a subsequent
filing on or before the date of this Agreement, as of such date), the
Company SEC Reports (including the financial statements included therein)
(i) complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules
and regulations thereunder, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company
has filed with the Securities and Exchange Commission as exhibits to the
Company SEC Reports all agreements, contracts and other documents or
instruments required to be so filed, and such exhibits are in all material
respects true and complete copies of such agreements, contracts and other
documents or instruments, as the case may be (subject to any confidential
treatment requests allowing excision of confidential information from the
publicly filed document). None of the subsidiaries of the Company is
required to file any reports, schedules, statements or other documents with
the Securities and Exchange Commission.
(b) The consolidated balance sheets of the Company and its
consolidated subsidiaries as of each of December 31, 1998 and March 31,
1999 and the related consolidated statements of income (loss) and
stockholders' equity and cash flows for the 12 month period and three month
period then ended, true and complete copies of which have been delivered to
the Purchasers, fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of their respective dates and
their consolidated results of operations and cash flows for the respective
periods then ended, in accordance with U.S. generally accepted accounting
principles applied on a consistent
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basis except as described in the footnotes to the financial statements or
as disclosed in Schedule 2.7.
(c) The Company has made available to the Purchasers copies of each
management letter delivered to any of the Company and its subsidiaries by
PricewaterhouseCoopers LLP in connection with the financial statements
referred to in this Section 2.7 or relating to any review by them of the
internal controls of the Company and its subsidiaries during the twelve
months ended December 31, 1998 or thereafter, and has made available for
inspection for the twelve month period ended December 31, 1998 and, subject
to the approval of PricewaterhouseCoopers LLP, after the date of this
Agreement will make available for inspection all reports and working papers
produced or developed by them or management in connection with their
examination of those financial statements and the other financial
statements for the three years then ended, as well as all such reports and
working papers for prior periods for which any liability of any of the
Company and its subsidiaries for Taxes (as hereinafter defined) has not
been finally determined or barred by applicable statutes of limitation.
(d) Since January 1, 1998, to the knowledge of the Company, there has
been no material disagreement (within the meaning of Item 304(a)(1)(iv) of
Regulation S-K under the Securities Act) between the Company and its
independent accountants with respect matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedures
which if not resolved to the satisfaction of such accountant would cause it
to make a reference to the subject matter of the disagreements in
connection with its report.
Section 2.8. Absence of Certain Changes or Events. Except as set forth in
Schedule 2.8 or in the Company SEC Reports or as contemplated by this Agreement,
since December 31, 1998, the Company has conducted its business in the ordinary
course and there has not occurred: (a) any Material Adverse Effect; (b) any
amendments or changes in the Certificate of Incorporation or By-Laws of the
Company; (c) any damage to, destruction or loss of any asset of the Company
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect; (d) any material change by the Company in its
accounting methods, principles or practices; (e) any material revaluation by the
Company of any of its assets, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; or (f) any sale of a material amount of property of
the Company or any of its subsidiaries, except in the ordinary course of
business.
Section 2.9. No Undisclosed Liabilities. Except as set forth in the
Company SEC Reports or on Schedule 2.9, neither the Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) in the aggregate adequately provided for in the Company's
audited balance sheet (including any related notes thereto) for the fiscal year
ended December 31, 1998 included in the Company SEC Reports (the "1998
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COMPANY BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under U.S. generally accepted accounting principles to be reflected on
the 1998 Company Balance Sheet, (c) incurred since December 31, 1998 in the
ordinary course of business consistent with past practice, (d) incurred in
connection with this Agreement, or (e) which do not constitute a Material
Adverse Effect.
Section 2.10. Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties or
rights of the Company or any of its subsidiaries, before any federal, foreign,
state or provincial court, arbitrator or administrative, governmental or
regulatory authority or body that could reasonably be expected to have a
Material Adverse Effect.
Section 2.11. Employee Benefit Plans. Except as set forth in Schedule
2.11 and in the Company SEC Reports:
(a) The Company and its subsidiaries are not and have not been
required to contribute to any employee benefit plan or any other profit
sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other material plan or arrangement for the
benefit of the Company, its subsidiaries and current or former directors,
officers, or employees (collectively "EMPLOYEE PLANS").
(b) None of the Company and its subsidiaries has incurred, or has any
reason to expect that it will incur, any liability to the Pension Benefit
Guaranty Corporation (other than premium payments) or otherwise under Title
IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including any withdrawal liability) or under the Internal
Revenue Code of 1986, as amended (the "CODE") with respect to any such
employee benefit plan which is an employee pension benefit plan.
(c) Each Employee Plan maintained by the Company is, and has been at
all times, maintained and operated in compliance with all statutes, orders
or governmental rules or regulations, including but not limited to ERISA,
the Code and applicable federal or state securities laws, and any and all
collective bargaining agreements and other contracts applicable thereto and
there have been no acts or omissions by the Company, its subsidiaries or
its officers which have given rise to or could reasonably be expected to
give rise to fines, penalties, taxes or related charges or liability under
ERISA or the Code, except where such charges and liabilities do not
constitute a Material Adverse Effect.
(d) All plans and related trusts that are intended to qualify under
Sections 401(a) and 501(a) of the Code, have been determined by the
Internal Revenue Service
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to be so qualified, and copies of such determination letters have been made
available to the Purchasers.
Section 2.12. Proxy Statement. The information supplied by the Company
for inclusion in the proxy statement to be sent to the stockholders of the
Company in connection with the meeting of the stockholders of the Company to
consider the sale of the Shares (the "STOCKHOLDERS MEETING") (such proxy
statement as amended or supplemented is referred to herein as the "PROXY
STATEMENT"), will not, on the date the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact, or shall
omit to state any material fact necessary in order to make the statements made
therein not false or misleading, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meeting which has become false or
misleading. If at any time prior to the Closing Date any event relating to the
Company or any of its affiliates, officers or directors should be discovered by
the Company which is required to be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform the Purchasers and shall amend such
Proxy Statement to correct such omission. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any statement or
omission based on information supplied by the Purchasers which is contained in
any of the foregoing documents.
Section 2.13. Title to Property.
(a) Except as set forth in Schedule 2.13 or in the Company SEC
Reports, the Company and each of its subsidiaries have good and marketable
title to all of their properties and assets, free and clear of all liens,
charges and encumbrances, except liens for taxes not yet due and payable
and such liens or other imperfections of title which do not constitute a
Material Adverse Effect; and, to the knowledge of the Company, all leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property, are in good standing, valid
and effective in accordance with their respective terms, and there is not,
to the knowledge of the Company, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time,
or both, would constitute a default), except where such default or event of
default does not constitute a Material Adverse Effect.
(b) All tangible Company properties are in such condition and repair,
and are suitable, sufficient in amount, size and type and so situated, as
is appropriate and adequate for the uses for which they are used and
intended and to carry on the business of the Company or such subsidiary, as
the case may be, as now conducted.
Section 2.14. Restrictions on Business Activities. Except as set forth
in the Company SEC Reports or on Schedule 2.14, to the Company's knowledge,
there is no agreement,
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judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any business practice of the Company or any of its
subsidiaries, acquisition of property by the Company or any of its subsidiaries
or the conduct of business by the Company or any of its subsidiaries as
currently conducted or as proposed to be conducted by the Company, except for
any prohibition or impairment as does not constitute a Material Adverse Effect.
Section 2.15. Taxes.
(a) For purposes of this Agreement, "TAX" or "TAXES" shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions
or charges of any kind in the nature of (or similar to) taxes, payable to
any federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment,
social security, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "TAX RETURNS"
shall mean returns, reports, and information statements with respect to
Taxes required to be filed with the Internal Revenue Service or any other
federal, foreign, state or provincial taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary
tax returns.
(b) Except as set forth in the Company SEC Reports: (i) The Company
and its subsidiaries have filed all Tax Returns required to be filed by
them, except where the failure to file a Tax Return does not constitute a
Material Adverse Effect and (ii) the Company and its subsidiaries have paid
all Taxes covered by such Tax Returns and have paid all other Taxes as are
due, except those with respect to which the Company is maintaining adequate
reserves, unless the failure to do so does not constitute a Material
Adverse Effect. Except as set forth in the Company SEC Reports or except
as does not involve or would not result in liability to the Company or any
of its subsidiaries that could reasonably be expected to have a Material
Adverse Effect: (i) there are no tax liens on any assets of the Company or
any subsidiary thereof; and (ii) neither the Company nor any of its
subsidiaries has granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax.
The accruals and reserves for Taxes (including deferred taxes) reflected in
the 1998 Company Balance Sheet are in all material respects adequate to
cover all Taxes required to be accrued through the date thereof (including
interest and penalties, if any, thereon and Taxes being contested) in
accordance with U.S. generally accepted accounting principles.
Section 2.16. Environmental Matters. Except in all cases as, in the
aggregate, do not constitute a Material Adverse Effect, and except for any
matters as to which remediation
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efforts have been completed, the Company and each of its subsidiaries to the
Company's knowledge: (i) have obtained all franchises, grants, authorizations,
licenses, permits, consents, approvals and orders ("APPROVALS") which are
required to be obtained under all applicable federal, state, foreign or local
laws or any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder relating to pollution
or protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water, or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes by the
Company or its subsidiaries or their respective agents ("ENVIRONMENTAL LAWS");
(ii) each of such Approvals is in full force and effect and each of the Company
and each of its subsidiaries in compliance with all terms and conditions of such
required Approvals and also is in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental Laws; (iii) as of
the date hereof, are not aware of nor have received notice of any past or
present violations of Environmental Laws or any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against the Company or any of its subsidiaries based
on or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous or toxic
material or waste; and (iv) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
Section 2.17. Intellectual Property.
(a) To its knowledge, the Company, directly or indirectly, owns, or
is licensed or otherwise possesses (or has applied for), legally
enforceable rights to use, all copyrights, uncopyrighted works, trademarks,
trademark rights, service marks, trade names, trade name rights, patents,
patent rights, unpatented inventions, licenses, permits, trade secrets,
know-how, inventions, computer software, seismic data and intellectual
property rights and other proprietary rights together with applications and
licenses for any of the foregoing (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), except where the failure to so own, be licensed or otherwise
possess legally enforceable rights to use does not constitute a Material
Adverse Effect.
(b) No claims with respect to the Company Intellectual Property
Rights have been asserted or, to the knowledge of the Company, are
threatened by any person, that reasonably would be expected to have a
Material Adverse Effect on the Company or any of its subsidiaries, (i) to
the effect that the manufacture, sale, licensing or use of
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any of the products of the Company or any of its subsidiaries as now
manufactured, sold or licensed or used or currently proposed for
manufacture, use, sale or licensing by the Company or any of its
subsidiaries infringes on any copyright, patent, trademark, service mark or
trade secret, (ii) against the use by the Company or any of its
subsidiaries of any material trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of the Company and its
subsidiaries as currently conducted, or (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property
Rights. All registered trademarks, service marks and copyrights held by the
Company are valid and subsisting. To the knowledge of the Company, there is
no unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its subsidiaries, which could
reasonably be expected to have a Material Adverse Effect. No Company
Intellectual Property Right or product of the Company or any of its
subsidiaries is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by the Company
or any of its subsidiaries.
(c) To the best of the Company's knowledge, none of the hardware or
software currently owned, leased or licensed by the Company and used or
proposed to be used in the business and operations of any of the Company
and its subsidiaries contains imbedded logic or code that will fail to
recognize the year 2000 as such, or that might fail or cause other hardware
or software to cease to perform according to specifications or to the needs
of the business of the Company or the subsidiary, as the case might be, by
reason of the date change after December 31, 1999, except where such
condition does not constitute a Material Adverse Effect.
Section 2.18. Certain Agreements of Officers and Employees. To the
Company's knowledge, no employee of the Company is, or is now expected to be, in
violation of any term of any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant relating to the right of any such officer or employee to be employed by
the Company because of the nature of the business conducted or to be conducted
by the Company or relating to the use of trade secrets or propri etary
information of others.
Section 2.19. Regulatory Matters Except to the extent as would not have a
Material Adverse Effect and except as set forth in Schedule 2.19:
(a) The Company and its subsidiaries are in compliance with the
Communications Act of 1934, as amended by the Telecommunications Act of
1996 (the "COMMUNICATIONS ACT") and with all applicable rules, regulations
and policies of the Federal Communications Commission (the "FCC").
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<PAGE>
(b) Schedule 2.19 sets forth a complete and accurate list of all
licenses (the "FCC LICENSES") granted to the Company and its subsidiaries
by the FCC. All the FCC Licenses are currently valid and in full force and
effect and the Company and its subsidiaries have met material applicable
construction or build-out regulations required to be met as of this date
for each of the FCC Licenses. Neither the Company nor any of its
subsidiaries has received any notification of an investigation, violation
or forfeiture, any notice of apparent liability, or any other order or
complaint issued by or before any court or governmental body, including the
FCC that could in any manner threaten or adversely affect the validity,
continued effectiveness, material terms, or likelihood of renewal of any of
the FCC Licenses, nor to the knowledge of the Company is any such action
threatened. Neither the Company nor any of its subsidiaries has knowledge
of any other proceedings (other than proceedings relating to the wireless
communications or 38 GHz industries generally) that could in any manner
threaten or adversely affect the validity, continued effectiveness,
material terms, or likelihood of renewal of any of the FCC Licenses.
(c) No event has occurred or failed to occur which (i) results in, or
after notice or lapse of time or both would result in, revocation,
suspension, adverse modification, non-renewal, impairment, restriction or
termination of, or order of forfeiture with respect to, any FCC License or
(ii) adversely affects or could reasonably be expected in the future to
adversely affect any of the rights of the Company or any of its
subsidiaries thereunder except for legislation or rule making of general
applicability.
(d) The Company and its subsidiaries have duly filed in a timely
manner all filings, reports, applications, documents, instruments and
information required to be filed by them under the Communications Act or
the applicable rules, regulations and policies of the FCC, and all such
filings are true, correct and complete in all material respects.
(e) Neither the Company nor any of its subsidiaries has any reason to
believe that any of the FCC Licenses will not be renewed in the ordinary
course.
Section 2.20. Rank of Notes. The Notes rank and will rank on a parity in
right of payment with all senior indebtedness of the Company outstanding on the
date hereof or that may be incurred hereafter.
Section 2.21. Interested Party Transactions. Except as contemplated by
this Agreement or as set forth on Schedule 2.21, since December 31, 1998, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
Section 2.22. Insurance. The Company and its subsidiaries maintain in
full force and effect insurance policies with reputable insurance carriers. Such
policies provide adequate
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coverage for all normal risks incident to the business of the Company and its
subsidiaries and their respective properties and assets and are in character and
amount similar to that carried by entities engaged in similar businesses and
subject to the same or similar perils or hazards, except as do not constitute a
Material Adverse Effect.
Section 2.23. Brokers. No broker, finder or investment banker (other than
Morgan Stanley & Co. Incorporated ("MORGAN STANLEY"), the fees and expenses of
which will be paid by the Company) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or its
subsidiaries or affiliates. The Company has heretofore made available to the
Purchasers a complete and correct copy of all agreements between the Company and
Morgan Stanley pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder.
Section 2.24. Disclosure. This agreement including the schedules and
exhibits hereto and the certificates delivered hereunder does not, and at
Closing will not, contain any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements herein, in light of the
circumstances under which they were made, not misleading. With respect to
projections contained in the Business Strategy Plan (as hereinafter defined),
the Company notes that actual results may vary materially from the projections
and represents only that such projections were prepared in good faith and are
based on a set of assumptions believed by the Company to be reasonable as of the
date hereof.
Section 2.25. Securities Laws. Assuming that each of the Purchaser's
representations and warranties contained in Article III hereof are, and continue
to be at the Closing Date and at the date of exercise of the Warrants, true and
correct, the issuance and sale of the Notes and the Warrants are as of the date
hereof, and the issuance and sale of the Shares on the Closing Date will be, and
the issuance of the shares of Common Stock upon conversion of the Preferred
Stock will be, exempt from the registration and prospectus delivery requirements
of the Securities Act and from registration and qualification under applicable
Blue Sky Laws.
Section 2.26. Acquiring Person. Assuming that each of the Purchaser's
representations and warranties contained in Article III hereof are at the
Closing Date true and correct, at the Closing Date no Purchaser will constitute
an Acquiring Person as defined in the Rights Agreement dated as of June 20, 1997
between the Company and BankBoston, NA as Rights Agent.
Section 2.27. Acceleration. Except as set forth on Schedule 2.27, the
execution and performance of this Agreement will not in and of itself result in
the acceleration of the vesting of any options issued by the Company or the
payments by the Company to any employee, officer or director.
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Section 2.28. Board of Directors. Schedule 2.28 sets forth the Company's
directors as of the date hereof, and the nominating class of each such director.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Subject to Section 7.1 hereof, each of the Purchasers severally represents
and warrants to the Company that:
Section 3.1. Organization. Such Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with all requisite power and authority to own, lease and operate
its properties and to conduct its business as now being conducted.
Section 3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into this Agreement, the Registration Rights Agreement and
the Standstill Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement, the Registration
Rights Agreement and the Standstill Agreement by such Purchaser and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on behalf of such
Purchaser. Each of this Agreement, the Registration Rights Agreement and the
Standstill Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and binding agreement of such Purchaser enforceable in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, (ii) the remedy of specific
performance and injunctive and other form of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and (iii) the enforcement of the
indemnification provisions contained in the Registration Rights Agreement are
subject to applicable securities laws and principles of public policy.
Section 3.3. Acquisition for Investment. Such Purchaser is acquiring the
Shares being purchased by it for its own account for the purpose of investment
and not with a view to or for sale in connection with any distribution thereof,
and such Purchaser has no present intention or plan to effect any distribution
of Shares other than pursuant to Rule 144A under the Securities Act or in an
offering registered under the Securities Act. Such Purchaser does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participations to such person or to any third person, with
respect to any of the Shares.
Section 3.4. Brokers or Finders. No agent, broker, investment banker or
other firm or Person acting on behalf of such Purchaser, including any of the
foregoing that is an affiliate of
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such Purchaser, is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
Section 3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
Section 3.6. Financial Condition. Such Purchaser's financial condition is
such that it is able to bear the risk of holding the Shares for an indefinite
period of time and can bear the loss of its entire investment in the Shares.
Section 3.7. Experience. Such Purchaser has such knowledge and experience
in financial and business matters and in making high risk investments of this
type that it is capable of evaluating the merits and risks of the purchase of
Shares.
Section 3.8. Non-U.S. Ownership. To the knowledge of such Purchaser, except
as set forth on Schedule 3.8, the percentage of the capital stock or ownership
or voting interests of such Purchaser that, for purposes of Section 3.10(b) of
the Communications Act is owned or voted, directly or indirectly, beneficially
or otherwise, by foreign entities or persons, does not exceed 25%.
Section 3.9. Beneficial Ownership. Each Purchaser that is a party to the
Standstill Agreement represents that as of the date hereof it has not entered
into any agreement, other than the "Stockholders Agreement" (as defined in the
Standstill Agreement) and the Transaction Documents, with respect to the
acquisition, voting or disposition of the Shares with any party.
Section 3.10. Affiliates. Except for securities such Purchaser has agreed
to purchase hereunder or as set forth on Schedule III, such Purchaser does not
beneficially own, directly or indirectly, beneficially, any of the Company's
capital stock.
Section 3.11. Proxy Statement. The information supplied by such Purchaser
in writing specifically for inclusion in the Proxy Statement will not, on the
date the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact, or shall omit to state any material
fact necessary in order to make such information not false or misleading. If at
any time prior to the Closing Date any event relating to such Purchaser or any
of its affiliates, officers or directors should be discovered by such Purchaser
which is required to be set forth in a supplement to the Proxy Statement, such
Purchaser shall promptly inform the Company.
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ARTICLE IV
ADDITIONAL AGREEMENTS
The Company and each of the Purchasers severally agree that:
Section 4.1. HSR Act. As promptly as practicable after the date of the
execution of this Agreement, the Company, those Purchasers required by law to
file and all other necessary parties shall file notifications under and in
accordance with the HSR Act in connection with the Stock Purchase and the
transactions contemplated hereby and shall respond as promptly as practicable to
any inquiries and requests received (i) from the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") for additional information or documentation or (ii) from any State
Attorney General or other governmental authority in connection with antitrust
matters.
Section 4.2. Proxy Statement. Unless the Closing is to occur without a
vote of the Company's stockholders, the Company shall use its best efforts, to
prepare and file with the SEC as promptly as possible preliminary proxy
materials seeking stockholder approval of the Stock Purchase (the "PROXY
STATEMENT"). The Purchasers shall use their best efforts to furnish the
Company such information about the Purchasers and the directors proposed by the
Purchasers as may be necessary to prepare and file the definitive Proxy
Statement on such schedule. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and the
Purchasers of all information required to be contained therein, the Company
shall use its reasonable best efforts to mail the Proxy Statement to its
stockholders, as soon thereafter as practicable. The Proxy Statement shall
include the recommendation of the Board in favor of the Stock Purchase, subject
to Section 4.4.
Section 4.3. Stockholders Meeting. Unless the Closing is to occur without
a vote of the Company's stockholders, the Company shall call and hold its
Stockholders Meeting as promptly as practicable and in accordance with
applicable laws for the purpose of voting upon the approval of the Stock
Purchase. Except as contemplated by Section 4.4, the Company shall use all
reasonable efforts to solicit from its stockholders proxies in favor of adoption
of this Agreement and approval of the transactions contemplated hereby and shall
take all other action necessary or advisable to secure the vote or consent of
stockholders to obtain such approvals.
Section 4.4. Alternative Transactions. The Company shall not, or permit
any of its officers, directors, employees, financial advisors and other
representatives on behalf of the Company to:
(1) enter into any agreement or other arrangement with respect
to, or take any other action to effect, any Alternative Transaction (as
hereinafter defined);
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(2) solicit, initiate or encourage (including, without
limitation, by way of furnishing information), or take any other action to
facilitate, any inquiry or the making of any proposal to any of the
Company, its subsidiaries and its stockholders from any person which
constitutes, or may reasonably be expected to lead to, a proposal with
respect to an Alternative Transaction with respect to any of the Company
and its subsidiaries, or endorse any Alternative Transaction; or
(3) continue, enter into or participate in any activities,
discussions or negotiations regarding any of the foregoing, or furnish to
any other person any information with respect to the business, properties,
operations, prospects or condition (financial or otherwise) of any of the
Company and its subsidiaries or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek to do
any of the foregoing;
provided, that this Section 4.4 shall not prohibit (i) the Company from (A)
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furnishing to any person that has made an unsolicited, bona fide written
proposal with respect to an Alternative Transaction information concerning the
Company and its subsidiaries and the business, properties, operations, prospects
or condition (financial or otherwise) of the Company and its subsidiaries or (B)
engaging in discussions or negotiations with such person that has made such
written proposal with respect to an Alternative Transaction, (ii) following
receipt of such written proposal with respect to an Alternative Transaction, the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) under the Exchange Act, (iii) following receipt of such written
proposal with respect to an Alternative Transaction, the Board from withdrawing
or modifying the Board's approval of the Stock Purchase, or (iv) the Board from
recommending that the stockholders of the Company accept and approve such
proposal with respect to an Alternative Transaction or authorizing, recommending
or proposing an agreement with respect to such written proposal; provided,
--------
however, that the Company or the Board, as the case may be, shall (w) take any
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action referred to in the preceding clause (iv) only after the Company gives the
Purchasers two business days advance notice of its intention to take any such
action, (x) take any action referred to in the preceding clauses (i), (iii) and
(iv) above only after the Board (after having consulted with its financial
advisors) concludes in good faith that any proposed Alternative Transaction
referred to in such clauses offers terms more favorable to the Company and its
stockholders from a financial point of view than the Investment (including
arrangements under the Commercial Agreements), taking into account (A) the terms
and conditions of the proposed Alternative Transaction and this Agreement
(including the other Transaction Documents and the Commercial Agreements),
respectively, (B) all other legal, financial, regulatory and other aspects of
such proposed Alternative Transaction and the Investment (including arrangements
under the Commercial Agreements), (C) the identity of the person proposing such
Alternative Transaction, (D) the Board's determination of whether such proposed
Alternative Transaction is reasonably capable of being completed and (E) whether
financing for such proposed Alternative Transaction, to the extent required, as
reasonably determined by the Board of Directors, will be available (an
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Alternative Transaction meeting the forgoing criteria on its most recently
amended or modified terms, if amended or modified, a "Superior Proposal"), and
only if in the good faith opinion of the Board (based upon an opinion of the
Company's outside counsel) to do so is required in the exercise of the
directors' fiduciary duties and (y) furnish to the person making such Superior
Proposal any information referred to in the preceding clause (i) only if both
(A) the Company then promptly furnishes such information to the Purchasers, or
shall have previously furnished such information to the Purchasers, and (B) such
information shall be so furnished to such person pursuant to a confidentiality
agreement no less favorable to the Company then the terms of the Confidentiality
Agreement referred to in Section 4.6 and (z) shall take any action referred to
in the preceding clauses (i), (ii) and (iii) only if the Board of Directors of
the Company shall promptly thereafter, by written notice delivered to the
Purchasers, inform the Purchasers of its intention to take such action. The
Company will promptly notify the Purchasers if any person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing. The Company
shall cease and cause to be terminated any existing activities, discussions or
negotiations with all persons (other than the Purchasers or any affiliate of, or
any person acting in concert with, the Purchasers) conducted on or before the
date of this Agreement with respect to any Alternative Transaction. The Company
shall inform the persons referred to in the first sentence of this Section 4.4
of the obligations undertaken by it in this Section 4.4.
Section 4.5. Access to Information. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released), the
Company shall (and shall cause each of its subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
Purchasers, reasonable access, during the period from the date hereof until the
Closing Date, to all of its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to the Purchasers and the officers, employees,
accountants, counsel and other representatives of the Purchasers, all
information concerning its business, properties and personnel as the Purchasers
may reasonably request, and shall make available to the Purchasers the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the Company's business, properties and
personnel as the Purchasers may reasonably request. Each party shall keep such
information confidential in accordance with the terms of Section 4.6 hereof.
Section 4.6. Confidentiality. It is understood by each of the Purchasers
that the information, documents and instruments delivered to such Purchaser
directly or indirectly by the Company or its agents and the information,
documents and instruments delivered to the Company by the Purchasers or their
respective agents are of a confidential and proprietary nature (the
"confidential information"). Each of the parties hereto agrees that both prior
and subsequent to the Closing it will maintain the confidentiality of all such
confidential information delivered to it by each of the other parties hereto or
their agents in connection with the negotiation of this Agreement or in
compliance with the terms, conditions and covenants
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hereof and will only disclose such confidential information to its duly
authorized officers, partners, directors, representatives and agents. The term
"confidential information" does not include any information that (i) at the time
of disclosure or thereafter is generally available to and known by the public
(other than as a result of its disclosure directly or indirectly by a Purchaser
or one of its agents), (ii) was available to such Purchaser on a non-
confidential basis from a source other than the Company or its advisors,
provided that such source is not and was not bound by a confidentiality
agreement regarding the Company, or (iii) has been independently acquired or
developed by such Purchaser without violation of any obligations under this
section. Each of the parties hereto further agrees that if the transactions
contemplated hereby are not consummated, it will return all such documents and
instruments and all copies thereof in its possession to the other party to this
Agreement. Each of the parties hereto recognizes that any breach of this Section
4.6 would result in irreparable harm to the other parties to this Agreement and
their affiliates and that therefore either the Company or the Purchasers, as the
case may be, shall be entitled to seek an injunction to prohibit any such breach
or anticipated breach, without the necessity of posting a bond, cash or
otherwise, in addition to all of their other legal and equitable remedies.
Nothing in this Section 4.6, however, shall prohibit the use of such
confidential information as in the opinion of the Company's counsel or any
Purchaser's counsel are required by law or governmental regulations or judicial
process; provided, however, that no such disclosure shall be made without
reasonable notice to the party that is the source of such confidential
information.
Section 4.7. Consents; Approvals. The Company shall use commercially
reasonable efforts to obtain all consents, waivers, approvals, authorizations or
orders required in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby (including, without
limitation, (i) consents under the agreements set forth on Section 4.7 of the
Company's Disclosure Schedule and (ii) all United States and foreign
governmental and regulatory rulings and approvals), and the Company shall make
all filings (including, without limitation, all filings with United States and
foreign governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby, in each case as
promptly as practicable. The Company and the Purchasers shall furnish promptly
all information required to be included in the Proxy Statement or for any
application or other filing to be made pursuant to the rules and regulations of
any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement. The Company also shall use
commercially reasonable efforts to obtain all necessary permits and approvals
required under applicable Blue Sky Laws to carry out the transactions
contemplated hereby and shall furnish all information as may be reasonably
requested in connection with any such action. Nothing in this Section 4.6 or
any other provision of any Transaction Document shall require any Purchaser to
sell or otherwise dispose of any substantial amount of the assets of any of the
Purchasers and their respective subsidiaries, whether as a condition to
obtaining any consent, waiver, approval, authorization or order from a
Governmental Body or any other person or for any other reason.
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Section 4.8. Public Announcements. The Purchasers and the Company shall
consult with each other before issuing any press release or public statement or
making any filing with respect to the Stock Purchase or this Agreement and shall
not issue any such press release or make any such public statement or filing
without the prior consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement or filing as may upon the advice of counsel be required by law or the
rules and regulations of the Nasdaq National Market ("NASDAQ"), if it has used
all reasonable efforts to consult with the other party prior thereto, and shall
promptly notify the other parties hereto thereof.
Section 4.9. Listing. The Company shall use its best efforts to (i)
continue the quotation of its Common Stock on the Nasdaq during the term of this
Agreement and for so long as any of the Shares are outstanding and (ii) to file
all forms, accompanied by the appropriate fee, to include the shares of Common
Stock into which the Shares are convertible and for which the Warrants may be
exercisable, in the Common Stock listed for quotation.
Section 4.10. Board of Directors. The Certificate of Designation provides
for up to two directors to be elected by class vote of the holders of Preferred
Stock. For so long as the Purchasers or their permitted assignees have a right
under the Certificate of Designation to elect one or more directors, this
Section 4.10 shall govern the mechanism of their election, and is to operate in
conformity with, rather than in addition to, the Certificate of Designation. At
such time as such provisions in the Certificate of Designation no longer apply,
the provisions of this Section 4.10 shall determine the Company's obligations
with regard to the nomination of directors representing the Purchasers.
(a) On the day after the Closing Date the Company shall take all
necessary action to elect two nominees of the Purchasers to the Company's
Board as provided in the Certificate of Designation. No later than the
Closing Date, each of U.S. Telesource, Inc. ("TELESOURCE") and Oak shall
provide to the Company one nominee's name (the "TELESOURCE NOMINEE" and the
"OAK NOMINEE", respectively, and together the "NOMINEES") as soon as
practicable after the Closing. The Telesource Nominee shall be elected to
the class of directors whose current term expires in 2000 (the "CLASS II")
and the Oak Nominee shall be elected to the class of directors whose
current term expires in 2001 ("CLASS I").
(b) The Company agrees to take the following action regarding ongoing
representation on the Board of Directors:
(i) Until the date that Telesource and its affiliates no longer
own a number of shares of Preferred Stock and Common Stock greater than or
equal to one-quarter of the number of shares of Preferred Stock issued to
Telesource on the Closing Date (or Common Stock into which such Preferred
Stock was convertible), Telesource will have the right to nominate the
Telesource Nominee
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for a Class II director upon each regular election of such class of
directors. Such number of shares shall be appropriately adjusted to
reflect stock splits, dividends, recapitalizations and the like.
(ii) Until the date that Oak, MeriTech, Accel, Brentwood,
Worldview, Bessemer Venture Partners IV, L.P. and Adams Capital
Management, L.P. together no longer own a number of shares of
Preferred Stock and Common Stock greater than or equal to one-quarter
of the number of shares of Preferred Stock issued to all of them on
the Closing Date (or Common Stock into which such Preferred Stock was
convertible), Oak will have the right to nominate the Oak Nominee for
a Class I director upon each regular election of such class of
directors. Such number of shares shall be appropriately adjusted to
reflect stock splits, dividends, recapitalizations and the like.
(iii) In the event that the right of the holders of Preferred
Stock to elect two directors pursuant to Section 4(d) of the
Certificate of Designation shall terminate, the Purchasers shall
designate whichever Nominee is in the class of directors to be elected
at the next meeting of stockholders, or if neither Nominee is in such
class, then in the next-subsequent class, as the director as to whom a
class vote of the Preferred Stock is required. The other Nominee
shall then continue in accordance with the Company's by-laws, and the
provisions of this Section 4.10 shall control the re-election or
replacement of such Nominee. In the event that holders of Preferred
Stock have no right to elect any directors pursuant to the Certificate
of Designation, this Section 4.10 shall govern the nomination of the
Nominees.
(iv) Each of Telesource and Oak shall notify the Company in
writing of the identity of its Nominee, as applicable, for election to
the Board at the same time shareholder proposals are due as set forth
in the Company's proxy statement filed the preceding year for an
election year when either of them has such a right, which notice shall
be conclusive evidence of the consent of such nominee to serve as a
director of the Company. In the event either Telesource or Oak fails
to provide such notice, the then-serving Telesource Nominee or Oak
Nominee, as applicable, for the class of directors being elected shall
be deemed to be renominated. The notice shall include all information
with respect to such nominee as is required to be included in a proxy
statement soliciting proxies for the election of directors pursuant to
Regulation 14A of the Exchange Act. In the event of any vacancy
arising by reason of the resignation, death, removal or inability to
serve of the Telesource Nominee or the Oak Nominee, Telesource or Oak,
as applicable, shall notify the Company of its choice to fill such
vacancy, and the Company shall take all actions necessary to elect
such person to serve until the next meeting of the stockholders for
the election of directors of the Company.
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(v) In any year when either Telesource or Oak has such a right,
the Company shall cause the Telesource Nominee or the Oak Nominee, as
applicable, nominated by Telesource or Oak for election to the Board
to be included in the slate of nominees presented by the Board to the
stockholders of the Company for election as directors at the relevant
annual meeting of the stockholders, and shall use its reasonable
efforts to cause the election of such Telesource Nominee or Oak
Nominee, as applicable, including soliciting proxies in favor of the
election of such nominee. The Company shall not solicit proxies of
the stockholders of the Company to vote against any such nominee or
for the approval of any stockholder or other proposals that are
inconsistent with the rights afforded the Purchasers pursuant to this
Section 4.10.
(vi) For so long as the Purchasers' have such a right, the
Company shall use its best efforts at all times to take such action as
is necessary to ensure that the Board nominates and presents to
stockholders the proposed election of the Telesource Nominee or the
Oak Nominee, as applicable. As a condition precedent to the inclusion
of any proposed nominee to be presented to stockholders by the Board
pursuant to this Section 4.10, the Board or, if established, the
nominating committee of the Board, may review the information provided
pursuant to this Section 4.10 to evaluate in good faith such nominee's
character and fitness to serve as a director. If the Board or the
nominating committee, as the case may be, determines in good faith
that any such nominee lacks the character or fitness to serve as a
director based on applicable legal and reasonable commercial
standards, the Board or the nominating committee, as the case may be,
shall inform Telesource or Oak, as applicable, of such determination,
and Telesource or Oak, as applicable, shall then have the right to
propose an alternative nominee.
(vii) For so long as the Purchasers have the right to nominate
nominees for election to the Board as set forth in this Section 4.10,
any committee of the Board shall include at least one of the Purchaser
Nominees (except for any committee on which neither of them is
eligible to serve under the Nasdaq listing rules).
Section 4.11. Certificate of Designation. The Company shall, prior to
the Closing, cause to be filed with the Secretary of State of Delaware, a
certificate of designation in the form attached hereto as Exhibit C,
---------
establishing the terms and conditions of the Preferred Stock (the "CERTIFICATE
OF DESIGNATION").
Section 4.12. Increase of Option Pool. The Company shall submit for
stockholder approval at the Stockholders Meeting a proposal to approve a 4
million share increase in the number of shares of Common Stock issuable pursuant
to the Company's Restated Equity Incentive Plan.
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Section 4.13. Use of Proceeds. The proceeds received by the Company from
the issuance of the Notes will be used in accordance with the provisions of
Section 4.14 hereof, and the proceeds from the sale of the Shares shall be used
by the Company in the furtherance of the business plan approved by the Board of
Directors on May , 1999, as such plan may be amended by the Board following
the Closing (the "BUSINESS STRATEGY PLAN").
Section 4.14. Interim Operations. The Company covenants and agrees that
during the period from the date of this Agreement and until the earlier of the
termination of this Agreement pursuant to Section 6.1 or the Closing, unless the
Company and Two-Thirds in Interest of the Purchasers otherwise prior thereto
agree, each of the Company and its subsidiaries shall conduct its business in
the ordinary course in the three markets, two pilot programs and facility update
programs listed on Schedule 4.14 or in furtherance of the Business Plan as it
relates to the period prior to commencement of revenue operations thereunder and
shall not, except either as contemplated by this Agreement or in furtherance of
the Business Strategy Plan, do any of the following: (i) except for any payments
required to obtain consents required to be obtained pursuant to this Agreement,
incur, assume or guarantee any liability or pay, discharge or satisfy any
liability other than in the ordinary course of business; (ii) create or assume
any Lien other than in the ordinary course of business; (iii) waive, release,
cancel, settle or compromise any debt, claim or right of any material value;
(iv) transfer or waive any material right under any material lease, license or
agreement or any material Company Intellectual Property; (v) pay or agree to pay
any bonus, extra compensation, pension, continuation, severance or termination
pay, or otherwise increase the wage, salary, pension, continuation, severance or
termination pay or other compensation (of any nature) to its directors, officers
or employees, except as required by law, other than for normal compensation
increases and promotions for employees (other than for executive officers) in
the ordinary course of business, as provided in the Company's plans and
agreements identified in the Disclosure Schedule or as are not material in the
aggregate; (vi) make any loan to or enter into any transaction with any of its
directors, officers or employees (other than pursuant to any such person's
status as an employee of the Company) giving rise to any claim or right of, by,
or against any person in an amount or having a value in excess of $10,000
individually, except travel and entertainment advances in the ordinary course of
business and consistent with Company policies; (vii) enter into, amend or
terminate any material agreement or transaction; (viii) make any contribution to
any Employee Plan, other than regularly scheduled contributions and
contributions required to maintain the funding levels of any Employee Plan, or
make or incur any commitment to establish or increase the obligation of the
Company or a subsidiary to any Employee Plan; (ix) create, assume or incur any
indebtedness for money borrowed, or guaranties thereof, except for trade
accounts payable incurred in the ordinary course of business or borrowings under
the Company's working capital line of credit facility as in effect on the date
hereof, or issue any debt securities, warrants or other rights to acquire any
debt securities of the Company or any of its subsidiaries; (x) issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares of
capital stock of any class, any securities convertible into or exercisable for,
or
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any rights, warrants or options to acquire, any such shares, of the Company
or any of its subsidiaries except for (A) the grant of options to acquire not
more than 100,000 shares in the aggregate to new employees or promoted employees
(other than executive officers) in the ordinary course of business pursuant to
its equity incentive plans or automatic grants of options and deferred stock
pursuant to the director's equity incentive plan, in each case as in effect on
the date hereof or (B) stock issued upon exercise of outstanding options and
warrants; (xi) amend or modify any provision of the Business Strategy Plan;
(xii) amend or modify any provision of its charter, by-laws or other governing
documents, except for the proposed amendments to the Company's by-laws set forth
on Schedule 2.8; (xiii) make any capital expenditures for capital improvements
or commitments therefor except as committed on the date hereof and in any event
limited in the aggregate to $6,200,000; (xiv) expand the Company's network or
operations beyond its three existing markets, two pilot programs and facility
update program or expand its marketing beyond its three existing markets; (xv)
sell, assign or dispose of any of the FCC Licenses listed on Exhibit 2.19 or any
right thereunder; or (xvi) agree to or make any commitment to take any actions
prohibited by this Section 4.14.
Section 4.15. Restricted Securities. Each Purchaser understands that the
Shares purchased by it and the Common Stock issued upon conversion thereof
(collectively the "SECURITIES") may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act, or an exemption
therefrom, and that in the absence of an effective registration statement
covering such Securities or an available exemption from registration under the
Securities Act, such Securities must be held indefinitely. Each Purchaser
agrees not to make any disposition of all or any portion of the Securities
unless and until:
(1) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement and all applicable Blue
Sky Laws; or
(2) (A) Such Purchaser shall have notified the Company of the
proposed disposition and (B) such Purchaser shall have furnished the
Company with an opinion from counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Securities Act and any applicable Blue Sky Laws in connection
with such disposition.
Notwithstanding the provisions of paragraphs (1) and (2) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by any Purchaser with or without consideration to a partner, member, subsidiary,
shareholder or affiliate of such Purchaser, including, without limitation, any
partner of such Purchaser and any venture capital fund now or hereafter existing
which is controlled by or is under common control with one or more general
partners of such Purchaser, provided such transferee becomes a party to this
Agreement and specifically agrees to be bound by the agreement in this Section
4.15.
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Section 4.16. Preemptive Rights.
(a) Subject to the provisions of Section 4.16 (c), in the event that
following the Closing, the Company proposes to raise additional capital
through the issuance of Common Stock (or securities convertible into or
exercisable or exchangeable for Common Stock) other than an issuance of
Excluded Securities ("New Securities"), each Purchaser shall have the right
to purchase equity of such type and on substantially the same economic
terms, including purchasing other securities issued by the Company, as the
Company issues or sells, such that the Purchaser shall have the opportunity
to maintain its then fully-diluted equity ownership percentage in the
Company, subject to and in accordance with the provisions of Sections 4.16
(b). The then fully-diluted equity ownership percentage of each Purchaser
(such Purchaser's "Purchaser Percentage") shall be the quotient of (i) the
sum of the number of shares of Common Stock then held by such Purchaser
plus the number of shares of Common Stock issuable upon conversion of any
Shares then held by such Purchaser plus the number of shares of Common
Stock then held by such Purchaser issued to such Purchaser as New
Securities, or issuable upon exercise or conversion of New Securities
issued to such Purchaser then held by such Purchaser divided by (ii) the
total number of shares of Common Stock outstanding plus the number of
shares of Common Stock issuable upon conversion of any Shares then
outstanding plus the number of shares of Common Stork issuable upon the
exercise or conversion of any security exercisable or exchangeable for or
convertible into Common Stock.
(b) The rights of the Purchaser under Section 4.16(a) shall be
effected in accordance with the following:
(i) The Company shall give written notice to each Purchaser as
soon as practicable of its intention to issue New Securities;
(ii) The Company shall supply each Purchaser with copies of all
relevant documents relating to such issuance as are provided to
potential purchasers in such an issuance at substantially the same
time as provided to such potential purchasers;
(iii) The Company shall inform potential purchasers of such New
Securities of the rights of the Purchasers under this Section 4.16 to
subscribe for a portion of such issuance. Each Purchaser shall make a
good faith effort to provide the Company with an estimate of its
intent to exercise its rights under this Section 4.16 before the
Company distributes final documents to potential purchasers of the New
Securities;
(iv) The Company shall provide each Purchaser with copies of all
of the executed agreements relating to each such issuance; and
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(v) Within ten days following each Purchaser's receipt of
agreements pursuant to (iv) above, such Purchaser shall provide
written notice to the Company (the "Commitment Notice") as to whether
such Purchaser exercises its rights under this Section 4.16 with
respect to such issuance, and, if so, the number of securities to be
purchased by such Purchaser. If any Purchaser fails to provide the
Commitment Notice within the stated ten day period, such Purchaser
will be deemed to have waived its rights under Section 4.16 of this
Agreement with respect to such issuance. The Commitment Notice of
each Purchaser shall constitute a binding and enforceable commitment
by such Purchaser subject to any closing conditions contained in the
agreements referred to in clause (iv) above, to purchase the lower of
(a) number of securities specified in such Purchaser's Commitment
Notice and (b) such Purchaser's Purchaser Percentage of the number of
securities sold in such issuance at the price and on all of the other
terms and conditions of such issuance (including, if appropriate,
signing the same documents as signed by other purchasers) either (i)
if such issuance has not yet been consummated, at the same time as
such securities are sold or (ii) if such issuance has been
consummated, within twenty days of the date of the receipt by
Purchaser of the agreements pursuant to (iv) above.
(c) The rights of each Purchaser under this Section 4.16 shall
terminate on the first date on which such Purchaser no longer holds Common
Stock or Preferred Stock representing at least 25% of the Common Stock into
which the Shares purchased by such Purchaser hereunder are ultimately
convertible (determined on an as if fully converted basis).
(d) "Excluded Securities" shall mean (i) any securities issued
pursuant to any Company equity incentive plan or benefit plan or, (ii) any
securities issued in connection with any stock split, stock dividend or
other similar event, (iii) any securities issued pursuant to the Rights
Plan, (iv) any security issued upon exercise, conversion or exchange of any
New Security, Excluded Security or security outstanding on the date hereof,
(v) any issuance of securities in a private placement in an offering
customarily known as a "144A Offering" in which either the investors have
the right to exchange any purchased securities for securities registered
under the Securities Act or a similar right to cause the registration of or
otherwise freely trade such securities, (vi) any issuance of securities
issued to financial institutions or other lenders in connection with any
offering of debt securities or borrowing by the Company, (vii) any issuance
of securities in a public offering registered under the Securities Act,
(viii) any issuance of securities as consideration for the acquisition of
assets or any ownership interest in any Person, (ix) any conversion of the
Preferred Stock and (x) any other securities deemed to be Excluded
Securities by the Company and Two-Thirds in Interest of the Purchasers.
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Section 4.17. Amendment of Rights Agreement. Prior to the Closing, the
Company shall have amended the Rights Agreement in substantially the form
presented to the Purchasers on the date hereof.
Section 4.18. FCC Approvals. The Company covenants and agrees that within
ninety (90) days following the Closing, the Company shall file and use
commercially reasonable efforts to obtain a grant of substantive transfer of
control applications with the FCC detailing the new ownership of the Company to
avoid regulatory delays for future conversion of convertible instruments.
ARTICLE V
CONDITIONS TO THE STOCK PURCHASE
Section 5.1. Conditions to Obligation of Each Party to Effect the Stock
Purchase. The respective obligations of each party to effect the Stock Purchase
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Stock Purchase shall have been
approved by the holders of at least a majority of the votes cast at the
Special Meeting, provided that a quorum shall be present;
(b) HSR Act. All waiting periods applicable to the consummation of
the Stock Purchase under the HSR Act shall have expired or been terminated;
and
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Stock Purchase shall be in
effect, nor shall any proceeding brought by any administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; and there shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Stock Purchase, which makes
the consummation of the Stock Purchase illegal.
Section 5.2. Additional Conditions to Obligations of the Purchasers. The
obligations of the Purchasers to effect the Stock Purchase are also subject to
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct (as if
any materiality qualifications were not contained therein) at and as of the
Closing Date as if made at and as of such date, except for (i) changes
contemplated by this Agreement, (ii) those representations
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and warranties which address matters only as of a particular date (which
shall have been true and correct as of such date) and (iii) where the
failure to be true and correct does not constitute a Material Adverse
Effect, with the same force and effect as if made at and as of the Closing
Date and the Purchasers shall have received a certificate to such effect
signed on behalf of the Company by the Chairman, President or the Chief
Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or
prior to the Closing Date, and the Purchasers shall have received a
certificate to such effect signed on behalf of the Company by the Chairman,
President or Chief Financial Officer of the Company;
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the due authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders could not reasonably be expected to (i) have a
Material Adverse Effect on the Company, or (ii) significantly delay or
prevent the consummation of the Stock Purchase;
(d) Amendment of the Indenture. The Company shall have obtained the
consent of holders of not less than two-thirds in principal amount of the
Company's senior notes issued pursuant to the Indenture dated as of
February 6, 1997 between the Company and The Bank of New York, as Trustee
(the "INDENTURE") to the valid and effective amendment of the Indenture
pursuant to an instrument in substantially the form provided to the
Purchasers on the date hereof, unless otherwise agreed to by the Company
and Two-Thirds in Interest of the Purchasers;
(e) Opinion of Counsel. The Purchasers shall have received a written
opinion from Ropes & Gray, in form and substance reasonably satisfactory to
the Purchasers, substantially in the form of Exhibit D hereto;
---------
(f) FCC Opinion. The Purchasers shall have received a written
opinion from Wiley, Rein & Fielding, the Company's FCC counsel, in form and
substance reasonably satisfactory to the Purchasers, substantially in the
form of Exhibit E hereto;
---------
(g) Blue Sky Laws. The Company shall have received all permits and
other authorizations necessary under the Blue Sky Laws to issue the Shares
and the Common Stock issuable upon conversion thereof pursuant to the Stock
Purchase;
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(h) Nasdaq Listing. The shares of Common Stock issuable upon
conversion of the Shares shall have been listed or approved for listing
upon notice of issuance on Nasdaq;
(i) Registration Rights Agreement. The Company shall have executed
and delivered to the Purchasers the Registration Rights Agreement in
substantially the form of Exhibit F hereto;
---------
(j) Delivery of Shares. The Company shall have delivered the Shares
to be delivered pursuant to Section 1.2 hereof against the payment of the
Purchase Price;
(k) Resignation of Directors. Two current members of the Board shall
have resigned immediately prior to Closing and there shall be one Class I
vacancy and one Class II vacancy on the Board, to be filled in accordance
with Section 4.10;
(l) Commercial Agreements. The Company and Qwest Communications
Corporation ("Qwest") shall have executed and delivered (i) the Qwest
Communications Corporation Private Line Services Agreement between the
Company and Qwest in the form of Exhibit G, (ii) the Collocation License
Agreement between the Company and Qwest in the form of Exhibit H, and (iii)
the Coordinated Marketing Agreement between the Company and Qwest in the
form of Exhibit I (collectively, the "COMMERCIAL AGREEMENTS"); and
(m) Corporate Proceedings. The Secretary or an Assistant Secretary of
the Company shall have delivered to the Purchasers a certificate, dated as
of the Closing, certifying to the Company's charter and bylaws, the
incumbency and specimen signatures of its certain officers and the
corporate action taken by the Company in connection with the Transaction
Documents.
Section 5.3. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Stock Purchase is also subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchasers contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, except for
(i) changes contemplated by this Agreement and (ii) those representations
and warranties which address matters only as of a particular date (which
shall have been true and correct as of such date), with the same force and
effect as if made on and as of the Closing Date, and the Company shall have
received a certificate to such effect signed by the President or Chief
Financial Officer of each Purchaser or of the general partner of each of
the Purchasers, as applicable;
(b) Agreements and Covenants. The Purchasers shall have performed or
complied in all material respects with all agreements and covenants
required by this
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Agreement to be performed or complied with by them on or prior to the
Closing Date, and the Company shall have received a certificate to such
effect signed by the President or Chief Financial Officer of the general
partner or manager of each of the Purchasers;
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the due authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders could not reasonably be expected to (i) have a
Material Adverse Effect on the Company, or (ii) significantly delay or
prevent the consummation of the Stock Purchase; provided, that the Company
--------
will be deemed to have waived this condition if the failure to obtain such
consents and waivers is due to the Company's material breach of its
obligations under this Agreement;
(d) Payment of Purchase Price. Each of the Purchasers shall have
delivered full payment of the Purchase Price for the Shares to be purchased
by such Purchaser at the Closing as set forth on Schedule I hereof.
(e) Standstill Agreement. The Standstill Agreement in the form of
Exhibit K shall have been duly executed and delivered by each of the
Purchasers party thereto and shall be in full force and effect and shall
not have been breached in any material respect by any of such Purchasers.
(f) Commercial Agreements. The Company and Qwest shall have executed
and delivered each of the Commercial Agreements.
ARTICLE VI
TERMINATION
Section 6.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date, notwithstanding approval thereof by the stockholders
of the Company:
(a) by mutual written consent of the Company and Two-Thirds in
Interest of the Purchasers; or
(b) by either Two-Thirds in Interest of the Purchasers or the Company
if a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a nonappealable final
order, decree or ruling or taken any
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<PAGE>
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Stock Purchase; or
(c) by Two-Thirds in Interest of the Purchasers, if the requisite
vote of the stockholders of the Company shall not have been obtained by the
Final Maturity Date (provided that the right to terminate this Agreement
under this Section 6.1(c) shall not be available to the Purchasers to the
extent that their failure to provide information required to be included in
the proxy statement has been the cause of or resulted in the failure to
obtain the requisite stockholder vote on or before such date); or
(d) by Two-Thirds in Interest of the Purchasers or the Company, (i)
if any representation or warranty of the Company or the Purchasers,
respectively, set forth in this Agreement shall be untrue when made, or
(ii) upon a breach of any covenant or agreement on the part of the Company
or the Purchasers set forth in this Agreement, such that the conditions set
forth in Sections 5.2(a), 5.2(b), 5.3(a) or 5.3(b), as the case may be,
would not be satisfied, provided that if any of the circumstances set forth
in clause (i) or (ii) is curable within forty-five calendar days after
notice of the Company's or the Purchasers', as the case may be, intent to
terminate this Agreement, through the exercise of reasonable efforts and
for so long as the Company or the Purchasers, as the case may be, continues
to exercise such reasonable efforts, neither the Purchasers nor the
Company, as the case may be, may terminate this Agreement under this
Section 6.1(d) until after the last day of such period; or
(e) by Two-Thirds in Interest of the Purchasers, if the Company or
the Board shall have (A) authorized or recommended (or publicly announced
its intention to authorize or recommend) an agreement with respect to an
Alternative Transaction with respect to any of the Company and its
subsidiaries, (B) recommended that the stockholders of the Company accept
or approve any such Alternative Transaction or (C) modified or amended the
approval by the Board of the Stock Purchase, including any modification or
rescission of the adoption of resolutions covering the matters addressed in
Section 2.4(b) and Section 4.17, in any respect materially adverse to the
Purchasers or withdrawn such Board approval or authorized or recommended
opposing the transaction; provided that (x) a communication of the Company
--------
to the Purchasers that advises that the Company has received a proposal
with respect to an Alternative Transaction and that takes no position with
respect to such proposal shall not be deemed to be a modification,
amendment or withdrawal of the Board's approval of the Stock Purchase and
(y) a "stop-look-and-listen" communication of the nature contemplated in
Rule 14d-9(e) under the Exchange Act with respect to an unsolicited tender
offer or exchange offer that, if concluded in accordance with the terms
thereof, would constitute or result in an Alternative Transaction with
respect to any of the Company and its subsidiaries (other than the Stock
Purchase), without more, shall not be deemed to be a modification,
amendment or withdrawal of the Board's approval of the Stock Purchase if,
within the time period contemplated by Rule 14e-2 under the Exchange Act,
the
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<PAGE>
Board shall publicly confirm its approval of the Stock Purchase and
recommend against the acceptance of such tender offer or exchange offer by
the stockholders of the Company; or
(f) by the Company, if (A) the Board of Directors of the Company
shall have determined that an unsolicited, bona fide proposal made by any
person with respect to an Alternative Transaction with respect to the
Company is a Superior Proposal, (B) the Board of Directors of the Company
shall have complied in all material respects with Section 4.4 with respect
to actions taken or proposed to be taken by the Company or the Board of
Directors of the Company with respect to such Superior Proposal, (C) the
Company shall have notified the Purchasers in writing, not less than two
business days in advance of taking such action, of its election to
terminate the obligations of the parties pursuant to this Section 6.1(f)
for the purpose of recommending that the stockholders of the Company accept
or approve such Superior Proposal or authorizing, recommending or proposing
an agreement with respect to such Superior Proposal, (D) the Company and
its advisors and representatives shall have discussed with the Purchasers
during such two day period the modifications to the terms of this
Agreement, the Transaction Documents and the Commercial Agreements that
would permit the Company to conclude the Investment in lieu of concluding
such Superior Proposal, and (E) at the end of such two business day period
the Board of Directors of the Company shall have determined that such
Superior Proposal continues to constitute a Superior Proposal; or
(g) by the Company or Two-Thirds in Interest of the Purchasers, if
the Closing has not occurred by the end of the second business day
following the Final Maturity Date (provided that the right to terminate
this Agreement under this Section 6.1(g) shall not be available to any
party whose material breach of any representation or warranty or failure to
fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date).
Section 6.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 6.3 and Section 7.1 hereof, and (ii) nothing herein shall relieve any
party from liability for any breach hereof.
Section 6.3. Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, whether or not the Stock Purchase is
consummated; provided that, the Company shall pay the reasonable fees (not to
exceed $150,000) and expenses of counsel to the Purchasers incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and any other instruments and agreements contemplated hereby, and the
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<PAGE>
Company shall pay all fees incurred in connection with all required filings
under the HSR Act (not to exceed $180,000).
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc.
(a) Except as otherwise provided in this Section 7.1, the
representations, warranties and agreements of each party hereto shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether
prior to or after the execution of this Agreement. The representations,
warranties and agreements in this Agreement and certificates delivered
pursuant hereto shall survive the Closing Date until the date that is three
months after the filing of the Company's Annual Report on Form 10-K for the
period ended December 31, 1999 or upon the termination of this Agreement
pursuant to Section 6.1, as the case may be, at which time they shall
terminate and be of no further force or effect, except that the agreement
set forth in Section 4.6 shall survive for two years from the Closing Date,
the agreements contained in Sections 4.10, 4.13, 4.15, 4.16, 7.1 or 7.2
shall last indefinitely, unless sooner terminated in accordance with their
respective terms and the agreement set forth in Section 6.3 shall survive
the Closing Date until paid.
(b) Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule shall be deemed disclosed with respect to any
section with such Disclosure Schedule to which such disclosure reasonably
relates.
Section 7.2. Restrictive Legends. Each certificate representing Shares or
Conversion Shares shall bear legends in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 or the securities laws of any state and
may not be sold or otherwise disposed of except pursuant to an effective
registration statement under such Act and applicable state securities laws
or an applicable exemption to the registration requirements of such Act or
such laws.
The securities represented by this certificate were issued pursuant to, and
the holder hereof is entitled to certain rights and subject to certain
obligations contained in, a Stock Purchase Agreement dated as of June __,
1999, a copy of which is available for inspection at the principal office
of the issuer hereof, and will be furnished without charge to the holder of
such securities upon written request.
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<PAGE>
Each certificate representing Shares or Conversion Shares shall also bear
any other legends required by any applicable law.
Section 7.3 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to the Purchasers, to such address listed on Schedule I
hereto, with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attn: Brooks Stough, Esq.
Telecopier No.: (650) 321-2800
Telephone No.: (650) 463-5370
and to:
O'Melveny & Myers LLP
1999 Avenue of the Stars
Los Angeles, CA 90067-6035
Attn: Steven L. Grossman, Esq.
Telecopier No.: (310) 246-6779
Telephone No.: (310) 553-6700
(b) If to the Company:
Advanced Radio Telecom Corp.
500 108th Avenue NE, Suite 2600
Bellevue, WA 98004
Attn: Thomas M. Walker, Esq., General Counsel
Telecopier No.: (425) 990-1642 or (425) 688-0703
Telephone No.: (425) 990-1669
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Mary E. Weber, Esq.
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7391
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<PAGE>
Section 7.4. Certain Definitions. For purposes of this Agreement, the
term:
(a) "AFFILIATE" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation,
any partnership or joint venture in which the first mentioned person
(either alone, or through or together with any other subsidiary) has,
directly or indirectly, an interest of 10% or more;
(b) "ALTERNATIVE TRANSACTION" means, whether concluded or intended to
be concluded in any transaction or series of transactions, any of the
following with respect to the Company and its subsidiaries (other than the
transactions contemplated by this Agreement):
(1) the acquisition from the Company or from any third persons of
any equity securities of the Company as a result of which the
holders of equity securities of the Company immediately before
such transaction would own beneficially directly or indirectly
less than 75% of the equity securities of the Company issued and
outstanding immediately after such transaction;
(2) the merger or consolidation of any of the Company with or
into any person other than the Company or one of its wholly-owned
subsidiaries as a result of which the holders of equity
securities of the Company immediately before such transaction
would own beneficially directly or indirectly less than 75% of
the equity securities of the Company or the surviving entity
issued and outstanding immediately after such transaction;
(3) the sale of a substantial portion of the assets of the
Company and its subsidiaries to any person or group other than
the Company or its wholly-owned subsidiaries; or
(4) any transaction (whether or not any of the Company or its
subsidiaries shall be a party thereto) as a result of which a
majority of the members of the board of directors, or similar
officials, of the Company or such subsidiary would not be persons
who on the day after the closing date of such transaction were
members of the board of directors, or similar officials, or who
were nominated for election or elected with the approval of a
majority of the directors, or similar
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<PAGE>
officials, who were directors, or similar officials, on that date
or whose nomination or election was previously so approved.
(c) "CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(d) "GOVERNMENTAL BODY" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, county or local,
domestic or foreign, of competent jurisdiction.
(e) "KNOWLEDGE" means the actual knowledge of any director or
executive officer after reasonable investigation;
(f) "MATERIAL ADVERSE EFFECT" means, when used in connection with the
Company or any of the Company's subsidiaries, as the case may be, any
change, effect or circumstance that, individually or when taken together
with all changes, effects or circumstances that have occurred prior to the
date of determination of the occurrence of the Material Adverse Effect and
with respect to which such phrase is used, (a) has been, is or could
reasonably be expected to be materially adverse to the business, assets,
results of operations or condition (financial or otherwise) of the Company
and its subsidiaries, in each case taken as a whole, or (b) is or is
reasonably likely to delay or prevent the consummation of the transactions
contemplated hereby.
(g) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
(h) "SUBSIDIARY" or "SUBSIDIARIES" of the Company or any other person
means any corporation, partnership, joint venture or other legal entity of
which the Company, or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
(i) "TWO-THIRDS IN INTEREST" means, prior to the Closing, Purchasers
who have agreed to purchase more than 66-2/3% of the Shares and, on and
after the Closing, Purchasers holding more than 66-2/3% of the Shares then
owned by the Purchasers.
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<PAGE>
Section 7.5. Notification. The Company and each Purchaser agrees to give
prompt notice to the other parties to this Agreement or any other Transaction
Document, as the case may be, of (1) the occurrence, or failure to occur, of any
event that would be likely to cause any representation or warranty of the party
contained herein or therein to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Closing Date, any failure of
the party to perform or otherwise comply with, in any material respect, any
covenant, condition or agreement to be performed or complied with by it
hereunder or thereunder and (2) the receipt by the party of written or oral
notice from any Governmental Body or other person stating, or causing such party
to believe, that there is a reasonable likelihood that a consent, waiver,
approval, authorization or order required by this Agreement to be obtained from
such Governmental Body or other person will not be obtained timely or at all;
which covenant of notification shall not limit the right of any other party
hereunder or thereunder to require as a condition precedent to the performance
of its obligations hereunder or thereunder the continuing accuracy and
performance of the representations and warranties and covenants of the notifying
party made herein or therein and to receive an unqualified certificate with
respect to the same.
Section 7.6. Amendment. This Agreement may be amended upon the written
consent of the Company and Two-Thirds in Interest of the Purchasers, at any time
prior to the Closing Date, and such amendment shall be binding on all of the
Purchasers. This Agreement may not be amended except by an instrument in
writing signed by the Company and Two-Thirds in Interest of the Purchasers.
Section 7.7. Waiver. At any time prior to the Closing Date, the parties
hereto, upon the written consent of the Company and Two-Thirds in Interest of
the Purchasers, may (a) extend the time for the performance of any of the
obligations or other acts, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or (c)
waive compliance with any of the agreements or conditions contained herein. Any
such waiver shall be binding on all of the Purchasers.
Section 7.8. Cooperation. Each Purchaser severally and the Company agree
to take, or to cause to be taken, all such reasonable and lawful action as may
be necessary to make effective and consummate the transactions contemplated by
this Agreement.
Section 7.9. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 7.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in
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<PAGE>
an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
Section 7.11. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement dated as of March 1, 1999 between Oak Investment
Partners and the Company), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof.
Section 7.12. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that each Purchaser may assign this
Agreement to any direct or indirect wholly-owned subsidiaries of its ultimate
parent and to any limited partners of any Purchaser and to any affiliate or
sidecar fund of any such Purchaser; provided, however, that the Purchasers'
-------- -------
rights pursuant to Section 4.10 may be assigned only to direct or indirect
wholly-owned subsidiaries of any Purchaser's ultimate parent, unless the
Company's prior written consent is obtained, such consent not to be unreasonably
withheld. Such assignment shall not be valid unless as a condition to such
assignment, the person to whom this Agreement is assigned (i) delivers to the
Company a written instrument by which such person agrees to be bound by the
obligations imposed upon the Purchasers under this Agreement to the same extent
as if such person had been an original Purchaser hereunder and (ii) becomes a
Purchaser hereunder.
Section 7.13. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation.
Section 7.14. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
Section 7.15. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to contracts executed and fully performed within the State of New
York.
Section 7.16. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
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[This space intentionally left blank.]
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<PAGE>
[Preferred Stock Purchase Agreement]
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Preferred Stock Purchase Agreement to be executed as of the date first above
written by their respective officers thereunto duly authorized.
The Company: ADVANCED RADIO TELECOM CORP.
By: /s/ Henry C. Hirsch
---------------------------------------
Name: Henry C. Hirsch
Title: Chairman and CEO
The Purchasers: U.S. TELESOURCE, INC.
By: /s/ Marc B. Weisberg
---------------------------------------
Name: Marc B. Weisberg
Title:
OAK INVESTMENT PARTNERS VIII, LIMITED PARTNERSHIP
By: Oak Associates VIII, LLC, General Partner
/s/ Bandel L. Carano
-------------------------------------------
By: Bandel L. Carano, Managing Member
OAK VIII AFFILIATE FUND, LIMITED PARTNERSHIP
By: Oak VIII Affiliates, LLC, General Partner
/s/ Bandel L. Carano
-------------------------------------------
By: Bandel L. Carano, Managing Member
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<PAGE>
[Preferred Stock Purchase Agreement]
MERITECH CAPITAL PARTNERS
By:
---------------------------------------
Name:
Title:
-45-
<PAGE>
[Preferred Stock Purchase Agreement]
ACCEL VI L.P.
BY: ACCEL VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
---------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
BY: ACCEL INTERNET FUND II ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
---------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
By: ACCEL DEIRETSU VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
---------------------------------
Managing Member
ACCEL INVESTORS '98 L.P.
By: /s/ G. Carter Sednaoui
----------------------------------
General Partner
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<PAGE>
[Preferred Stock Purchase Agreement]
BRENTWOOD ASSOCIATES IX, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partners
By: /s/ John L. Walecka
----------------------------------
Name: John L. Walecka
Title: Managing Member
BRENTWOOD AFFILIATES FUND III, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ John L. Walecka
----------------------------------
Name: John L. Walecka
Title: Managing Member
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<PAGE>
[Preferred Stock Purchase Agreement]
COLUMBIA CAPITAL ARTT INVESTORS, LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ James B. Fleming, Jr.
-----------------------------------
Name: James B. Fleming, Jr.
Title: Managing Director
COLUMBIA CAPITAL ARTT PARTNERS, LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ James B. Fleming, Jr.
---------------------------------
Name: James B. Fleming, Jr.
Title: Managing Director
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[Preferred Stock Purchase Agreement]
WORLDVIEW TECHNOLOGY PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
---------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW TECHNOLOGY INTERNATIONAL II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
--------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW STRATEGIC PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
--------------------------------------------
Name: James Wei
Title: Member
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<PAGE>
[Preferred Stock Purchase Agreement]
GLOBAL PRIVATE EQUITY II - EUROPE LIMITED PARTNERSHIP
GLOBAL PRIVATE EQUITY II - PGGM LIMITED PARTNERSHIP
DIGITAL MEDIA AND COMMUNICATIONS II LIMITED PARTNERSHIP
OAKSTONE VENTURES LIMITED PARTNERSHIP
ADVENT CROWN FUND II C.V.
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation,
General Partner
By: Andrew Fillat, Senior Vice President*
ADVENT GLOBAL GECC LIMITED PARTNERSHIP
By: Advent Global Management Limited Partnership,
General Partner
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General Partner
By: Andrew Fillat, Senior Vice President*
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation, General Partner
By: Andrew Fillat, Senior Vice President*
*For all of the above:
/s/ Andrew Fillat
----------------------------------------------------------
Andrew Fillat, Senior Vice President
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<PAGE>
[Preferred Stock Purchase Agreement]
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
---------------------------------------
Name: Robert H. Buescher
Title: Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
--------------------------------------
Name: Robert H. Buescher
Title: Manager
COVE VENTURES, LLC
By: Cove Road Associates, LLC, Managing Member
By: /s/ Robert Goodman
--------------------------------------
Name: Robert Goodman
Title: Managing Member
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[Preferred Stock Purchase Agreement]
ADAMS CAPITAL MANAGEMENT, L.P.
By: ACM Capital Partners II, L.P., General Partner
By: Joel P. Adams, General Partner
By: /s/ Joel P. Adams
---------------------------------------
Name: Joel P. Adams
Title: General Partner
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<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Telesource, Inc. 945,146 179,854 358,565 N/A $17,928,287 N/A $90,000,000
555 17th Street
State of Residence:
Denver, CO 80202
- -----------------------------------------------------------------------------------------------------------------------------------
Oak Investment Partners 412,084 78,416 156,335 46,872.00 $7,816,733 $2,343,568 $39,240,000
VIII, Limited Partnership
525 University Avenue
Suite 1300
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Oak VIII Affiliate Fund, 7,981 1,519 3,028 N/A $151,394 N/A $760,000
Limited Partnership
525 University Avenue
Suite 1300
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
MeriTech Capital Partners 262,541 49,959 99,602 N/A $4,980,080 N/A $25,000,000
[address]
State of Residence:
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Accel VI L.P. 128,225 24,400 48,645 14,307 $2,432,271 $715,373 $12,210,000
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Accel Internet Fund II L.P. 16,383 3,117 6,215 1,828 $310,757 $91,399 $1,560,000
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Accel Keiretsu VI L.P. 2,048 390 777 228 $38,845 $11,425 $195,000
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Accel Investors '98 L.P. 10,869 2,068 4,124 1,213 $206,175 $60,640 $1,035,000
428 University Avenue
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-54-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Brentwood Associates 152,799 29,076 57,968 17,576 $2,898,406 $878,837 $14,550,000
IX, L.P.
3000 Sand Hill Road,
Bldg. 1, Suite 260
Menlo Park, CA 94025
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Brentwood Affiliates Fund 4,726 899 1,793 N/A $89,641 N/A $450,000
III, L.P.
3000 Sand Hill Road,
Bldg. 1, Suite 260
Menlo Park, CA 94025
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Columbia ARTT Investors, 105,016 19,984 39,841 N/A $1,992,032 N/A $10,000,000
LLC a Virginia LLC
- -----------------------------------------------------------------------------------------------------------------------------------
Columbia ARTT Partners, 105,016 19,984 39,841 N/A $1,992,032 N/A $10,000,000
LLC a Virginia LLC
201 North Union Street,
Suite 300
State of Residence:
Alexandria
VA 22314-2642
703/519-3581
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-55-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Worldview Technology 116,808 22,228 44,314 17,577.00 $2,215,713 $878,837 $11,122,881
Partners II, L.P.
435 Tasso, Suite 120
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Worldview Technology 35,758 6,804 13,566 N/A $678,280 N/A $3,404,964
International II, L.P.
435 Tasso, Suite 120
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Worldview Strategic 4,958 944 1,881 N/A $94,055 N/A $472,155
Partners II, L.P.
435 Tasso
Palo Alto, CA 94301
State of Residence:
California
- -----------------------------------------------------------------------------------------------------------------------------------
Global Private Equity II- 10,502 1,998 3,984 N/A $199,203 N/A $1,000,000
Europe Limited
Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Global Private Equity II- 26,254 4,996 9,960 N/A $ 498,008 N/A $2,500,000
PGGM Limited Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Digital Media and 22,684 4,316 8,606 N/A $ 430,279 N/A $2,160,000
Communications II Limited
Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Oakstone Ventures Limited 16,204 3,083 6,147 N/A $307,371 N/A $1,543,000
Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Advent Crown Fund II C.V. 16,204 3,083 6,147 N/A $307,371 N/A $1,543,000
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence:
Netherlands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-57-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Adwest Limited Partnership 4,201 799 1,594 N/A $79,681 N/A $400,000
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Advent Global GECC Limited 105,016 19,984 39,841 N/A $1,992,032 N/A $10,000,000
Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Advent Partners Limited 8,968 1,707 3,402 N/A $170,120 N/A $854,000
Partnership
c/o Advent International
75 State Street
Boston, MA 02109
State of Residence: Delaware
- -----------------------------------------------------------------------------------------------------------------------------------
Bessemer Venture 31,505 5,995 11,952 N/A $597,610 N/A $3,000,000
Partners IV L.P.
1400 Old Country Road,
Suite 407
Westbury, NY 11590
Attn: Robert H. Buescher
State of Residence: New York
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-58-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
MERITECH
WARRANTS WARRANTS MERITECH
SERIES A SERIES B EXERCISABLE EXERCISABLE PORTION OF
PREFERRED PREFERRED FOR # OF FOR # OF BRIDGE BRIDGE TOTAL
PURCHASERS AND STATES OF STOCK # OF STOCK # OF SHARES OF SHARES OF LOAN LOAN PURCHASE
RESIDENCE SHARES SHARES COMMON STOCK COMMON STOCK COMMITMENT COMMITMENT PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bessec Ventures IV, L.P. 21,003 3,997 7,968 N/A $398,406 N/A $2,000,000
1400 Old Country Road,
Suite 407
Westbury, NY 11590
Attn: Robert H. Buescher
State of Residence: New York
- -----------------------------------------------------------------------------------------------------------------------------------
Cove Ventures, LLC 31,505 5,995 11,952 N/A $597,610 N/A $3,000,000
1013 Cove Road
Mamaroneck, NY 10543
Attn: Robert Goodman
State of Residence: New York
- -----------------------------------------------------------------------------------------------------------------------------------
Adams Capital 31,505 5,995 11,952 N/A $597,610 N/A $3,000,000
Management, L.P.
518 Broad Street
Sewickley, PA 15143
State of Residence:
Pennsylvania
- -----------------------------------------------------------------------------------------------------------------------------------
Total: 2,635,908 501,592 1,000,000 99,601.00 $50,000,000 $4,980,079 $251,000,000
===================================================================================================================================
</TABLE>
Basic Assumptions:
1. Current Outstanding = 27,200,699
2. Preferred (as converted) = 31,375,000
----------
3. Total Shares Post-deal 58,575,699
4. 45% of Total = 26,359,065
5. Series A Total Shares = 26,359,065/10 = 2,635,907
Series B Total Shares = 5,015,935 = 501,593
6. Series B Percent of
Total Purchase Shares = 15.987%
7. Series A Percent = 84.013%
Total Purchased Shares
To calculate Series A Shares for a fund: ($Purchase Price/$80) x .84013
To calculate Series B Shares for a fund: ($Purchase Price/$80) x .15987
-59-
<PAGE>
SCHEDULE II
Wire Transfer Instructions
US Bank
ABA 091000022
Account Name: Phase 3 Wire Account
Account #: 173101852106
Please reference:
Account Name: Advanced Radio Telecom Corp.
Account #: 41278979
Contact: Alex
Phone: 206-340-8050
-60-
<PAGE>
SCHEDULE III
Schedule of Beneficial Ownership
-61-
<PAGE>
EXHIBIT 10.32
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE ACT.
ADVANCED RADIO TELECOM CORP.
COMMON STOCK PURCHASE WARRANT
No. W-_____ Certificate June __, 1999
ADVANCED RADIO TELECOM CORP., a Delaware corporation (the "Company"), for
value received, hereby certifies that investor (the "Investor") or registered
and permitted assigns, is entitled to purchase from the Company WordNumber
(amount) duly authorized, validly issued, fully paid and nonassessable shares of
common stock, $0.001 par value per share (the "Common Stock"), of the Company at
the Exercise Price (as hereinafter defined), at any time or from time to time on
or after the Effective Date (as defined below) and prior to 5:00 P.M., New York
City time, on June __, 2004 (the "Expiration Date"), all subject to the terms,
conditions and adjustments set forth below in this Warrant.
This Common Stock Purchase Warrant is issued pursuant to the Preferred
Stock Purchase Agreement dated as of June __, 1999 by and among the Company, the
Investor and the other parties thereto (the "Purchase Agreement").
The "Effective Date" shall be the date, if any, on which the Purchase
Agreement is terminated by the Purchasers (as defined in the Purchase Agreement)
pursuant to Section 6.1(c), (d) or (e) thereof or by the Company pursuant to
Section 6.1(f) thereof.
Certain capitalized terms used in this Warrant are defined in Section 9
hereof.
1. EXERCISE OR CONVERSION OF WARRANT.
1.1. Manner of Exercise or Conversion; Payment.
1.1.1. Exercise. This Warrant may be exercised by the holder
hereof, in whole or in part, during normal business hours on any business
day on or after the Effective Date and on or prior to the Expiration Date,
by surrender of this Warrant to the Company at its office maintained
pursuant to Section 7.2(a) hereof, accompanied by an
<PAGE>
exercise notice in substantially the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such holder and accompanied
by payment, in cash, by wire transfer or by certified check payable to the
order of the Company, in the amount obtained by multiplying (a) the number
of shares of Common Stock designated in such subscription by (b) the
Exercise Price (as defined in Section 9 hereof), and such holder shall
thereupon be entitled to receive the number of shares of Common Stock
determined as provided in Section 2 hereof.
1.1.2. Conversion. This Warrant may be converted by the holder
hereof, in whole or in part, into shares of Common Stock, during normal
business hours on any business day on or after the Effective Date and on or
prior to the Expiration Date, by surrender of this Warrant to the Company
at its office maintained pursuant to Section 7.2(a) hereof, accompanied by
a conversion notice in substantially the form attached to this Warrant (or
a reasonable facsimile thereof) duly executed by such holder, and such
holder shall thereupon be entitled to receive the same number of shares of
Common Stock that such holder would receive if the Warrant were being
exercised pursuant to Section 1.1.1 for the number of shares designated in
the conversion notice minus a number of shares equal to (x) the Exercise
-----
Price multiplied by (y) the number of shares designated in the conversion
----------
notice divided by (z) the Current Market Price.
-------
For all purposes of this Warrant (other than this Section 1.1), any
reference herein to the exercise of this Warrant shall be deemed to include
a reference to the conversion of this Warrant into Common Stock in
accordance with the terms of this Section 1.1.2.
1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1 hereof, and at such time the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such exercise as provided in Section 1.3 hereof shall be deemed
to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable after
each exercise of this Warrant, in whole or in part, and in any event within five
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to Section 7 hereof, as such holder
(upon payment by such holder of any applicable transfer taxes) may direct:
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock to
which such holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash in
an amount equal to the same fraction of the Market Price per share on the
business day next preceding the date of such exercise; and
<PAGE>
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, dated the date hereof and calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock equal
(without giving effect to any adjustment thereof) to the number of such
shares called for on the face of this Warrant minus the number of such
shares designated by the holder upon such exercise as provided in Section
1.1 hereof.
2. ADJUSTMENT OF EXERCISE PRICE AND/OR NUMBER OF SHARES. In order to protect
the rights granted under this Warrant, the Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2, and the number of
shares of Common Stock obtainable upon exercise of this Warrant shall be subject
to adjustment from time to time as provided in this Section 2.
2.1. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, or combines (by reverse stock split or otherwise) its outstanding shares
of Common Stock into a smaller number of shares, the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately adjusted
so that the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of such subdivision or combination
shall be equal to the number of shares of Common Stock which a record holder of
the same number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event would own or be entitled to receive in respect
of such shares upon the happening of such event.
2.2. Reorganization, Reclassification, Consolidation, Merger or Sale. In
the event of any reorganization, reclassification, consolidation or merger of
the Company with or into another corporation where the Company is not the
surviving corporation or where there is a conversion of or distribution with
respect to the Common Stock outstanding immediately prior to such consolidation
or merger, sale or other disposition of all or substantially all of the
Company's assets to another Person or other similar transaction which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
("Other Property") with respect to or in exchange for Common Stock (any such
transaction being referred to herein as an "Organic Change"), prior to the
consummation of such Organic Change, the Company shall make appropriate
provision to insure that the holder shall thereafter have the right to receive,
upon exercise of this Warrant, in lieu of or in addition to (as the case may be)
the shares of Common Stock immediately theretofore acquirable and receivable
upon the exercise of this Warrant, such Other Property as may be issuable or
payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
(and payment or satisfaction of the Exercise Price) in connection with such
Organic Change. In any such case, the Company shall make appropriate provision
with respect to the holders' rights and interests to insure that the provisions
of this Section 2 and Section 3 shall thereafter continue to be applicable to
this Warrant.
<PAGE>
3. REPORT AS TO ADJUSTMENTS. In each case of any adjustment or readjustment in
the Exercise Price and/or in the number of shares of Common Stock issuable upon
the exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant
and prepare a report setting forth such adjustment or readjustment and showing
in reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based. The Company will keep copies of all
such reports at its office maintained pursuant to Section 7.2(a) hereof and will
cause the same to be available for inspection at such office during normal
business hours by any holder of this Warrant or any prospective purchaser of
this Warrant designated by the holder hereof.
4. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of Common
Stock for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities of the Company, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, the date, if
any such date is to be fixed, as of which the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for the securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up and a description in reasonable detail of the transaction. Such
notice shall be mailed to the extent practicable at least 15 days prior to the
date therein specified.
5. RESTRICTIONS ON TRANSFER.
5.1. Restrictive Legends. Except as otherwise permitted by this Section
5, each certificate for Common Stock issued upon the exercise of any Warrant,
each certificate for Common Stock issued upon the direct or indirect transfer of
any such Common Stock, and each Warrant issued upon direct or indirect transfer
of or in substitution for any Warrant pursuant to Section 7 hereof shall be
transferable only upon satisfaction of the conditions
<PAGE>
specified in this Section 5 and shall be stamped or otherwise imprinted with
legends in substantially the form appearing at the beginning of this Warrant.
5.2. Notice of Proposed Transfer; Opinion of Counsel. Prior to any
transfer of any Restricted Securities, the holder thereof will give written
notice to the Company of such holder's intention to effect such transfer and to
comply in all other respects with this Section 5.2. Each such notice shall
describe the manner and relevant circumstances of the proposed transfer. If in
the opinion of counsel for the holder, which opinion is reasonably acceptable to
the Company, the proposed transfer may be effected without registration of such
Restricted Securities under the Securities Act, such holder shall thereupon be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by such holder to the Company.
5.3. Termination of Restrictions. The restrictions imposed by this
Section 5 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such Restricted
Securities shall have been effectively registered under the Securities Act, or
(b) when, in the opinion of counsel for the holder thereof, which opinion is
reasonably acceptable to the Company, such restrictions are no longer required
in order to insure compliance with the Securities Act. Whenever any restrictions
on transferability imposed by this Section 5 shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense (other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable legend or legends required
by Section 5.1 hereof.
6. RESERVATION OF STOCK, ETC. The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of this Warrant, the
number of shares of Common Stock from time to time issuable upon exercise of
this Warrant. All shares of Common Stock issuable upon exercise of this Warrant
shall be duly authorized and, when issued upon such exercise, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof. At any such time as the Common
Stock is listed on any national securities exchange or the Nasdaq National
Market System, the Company will, at its expense, obtain promptly and maintain
the approval for listing on each such exchange or the Nasdaq National Market
System, upon official notice of issuance, the shares of Common Stock issuable
upon exercise of this Warrant and maintain the listing of such shares after
their issuance.
7. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
7.1. Ownership of Warrants. The Company may treat the person in whose
name this Warrant is registered on the register kept at the office of the
Company maintained pursuant to Section 7.2(a) hereof as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary.
7.2. Office; Transfer and Exchange of Warrants.
<PAGE>
(a) The Company will maintain an office (which may be an agency
maintained at a bank) at its principal executive offices at 500 108th
Avenue, NE, Suite 2600, Bellevue, Washington, 98004, where notices,
presentations and demands in respect of this Warrant may be made upon it.
Such office shall be maintained at such location until such time as the
Company shall notify the holder of this Warrant of any change of location
of such office.
(b) The Company shall cause to be kept at its office maintained
pursuant to Sec tion 7.2(a) hereof a register for the registration and
transfer of this Warrant. The name and address of the holder of this
Warrant, the transfers thereof and the names and addresses of transferees
of this Warrant shall be registered in such register.
(c) Upon the surrender of this Warrant, properly endorsed, for
registration of transfer or for exchange at the office of the Company
maintained pursuant to Sec tion 7.2(a) hereof, the Company at its expense
will (subject to compliance with Section 5 hereof, if applicable) execute
and deliver to or upon the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock called for on the face or faces of the Warrant so
surrendered.
7.3. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon surrender of this Warrant for
cancellation at the office of the Company maintained pursuant to Section 7.2(a)
hereof, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor and dated the date hereof.
7.4. Division or Combination. This Warrant may be divided or combined
with other Warrants upon presentation hereof at the office of the Company
maintained pursuant to Section 7.2(a) hereof, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the holder hereof or its agent or attorney. Subject to compliance with
the provisions of this Warrant as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
8. DIVIDENDS. In the event that the Company at any time or from time to time
after the date hereof shall declare, order, pay or make a dividend or
distribution in respect of its Common Stock, whether payable in cash, evidences
of indebtedness or other securities or property, then upon any exercise of this
Warrant the Company shall pay to the holder hereof the amount of cash, and shall
deliver to the holder hereof in kind the evidences of indebtedness, securities
or other property, that would have been payable or deliverable with respect to
each share of Common Stock being purchased upon such exercise (including, in the
<PAGE>
event of a conversion of this Warrant pursuant to Section 1.1.2 above, any
shares of Common Stock being subtracted from the number of shares that would
otherwise be issuable upon exercise hereof) if such shares of Common Stock had
been outstanding as of the record date for such dividend or distribution. In
connection with the delivery to the holder hereof of any such evidences of
indebtedness, securities or other property, the Company shall also pay or
deliver to such holder any interest, dividends or other payments that the holder
of this Warrant would have received had such holder continuously held such
evidences of indebtedness, securities or other property from the date of the
related dividend payment or distribution until the date of exercise of this
Warrant.
9. DEFINITIONS. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Common Stock: As defined in the introduction to this Warrant, such term
includes any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock. Common Stock
will include any stock and other securities of the Company or any other Person
which the holder of this Warrant at any time shall be entitled to receive, or
shall have received, upon the exercise of this Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock pursuant to
Section 3 hereof or otherwise.
Company: Advanced Radio Telecom Corp., a Delaware corporation.
Convertible Securities: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for shares of Common Stock.
Current Market Price: On any date specified herein, the average daily
Market Price during the period of the most recent 30 trading days, ending on
such date, except that if no class of the Common Stock is then listed or
admitted to trading on any national securities exchange or quoted in the over-
the-counter market, the Current Market Price shall be the Market Price on such
date.
Exercise Price: Initially $0.01 per share, as adjusted from time to time
pursuant to Section 2 hereof.
Expiration Date: As defined in the introduction to this Warrant.
Market Price: On any date specified herein, the amount per share of Common
Stock equal to (a) the last sale price of Common Stock, regular way, on such
date or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially reported
on the principal national securities exchange on which Common Stock is then
listed or admitted to trading, or (b) if Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national
<PAGE>
market system security by the NASD, the last trading price of Common Stock on
such date, or (c) if there shall have been no trading on such date or if Common
Stock is not so designated, the average of the closing bid and asked prices of
Common Stock on such date as shown by the NASD automated quotation system, or
(d) if Common Stock is not then listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the fair value thereof
determined in good faith by the Board of Directors of the Company as of the date
as of which the determination is to be made; provided that such determination of
fair value may be challenged in good faith by the holder of any Warrant, and any
dispute shall be resolved by an investment banking or appraisal firm of
recognized national standing selected by the Company and acceptable to the
holders of Warrants representing a majority of the number of shares of Common
Stock issuable upon all such Warrants. The decision of such investment banking
or appraisal firm shall be binding on the Company and all holders of Warrants.
The fees and expenses of such investment bank or appraisal firm shall be borne
one-half by the Company and one-half by the holders of the Warrants challenging
such good faith determination.
NASD: The National Association of Securities Dealers, Inc.
Person: A corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.
Restricted Securities: All of the following: (a) any Warrant bearing the
applicable restricted securities legend referred to in Section 5.1 hereof, (b)
any shares of Common Stock which have been issued upon the exercise of any
Warrant and which are evidenced by a certificate or certificates bearing the
applicable restricted securities legend referred to in such Section, and (c)
unless the context otherwise requires, any shares of Common Stock which are at
the time issuable upon the exercise of any Warrant and which, when so issued,
will be evidenced by a certificate or certificates bearing the applicable
restricted securities legend referred to in such Section.
Securities Act: The Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations thereunder of the Securities and
Exchange Commission or any successor federal agency, all as the same shall be in
effect at the time.
Warrants: This Warrant and any warrant of like tenor issued pursuant to
the Purchase Agreement, upon partial exercise of any such Warrant in accordance
with Section 1.1 hereof, upon transfer or exchange of any such Warrant in
accordance with Section 7.2 hereof or upon replacement of any such Warrant in
accordance with Section 7.3 hereof.
10. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
<PAGE>
11. NOTICES. Any notice or other communication in connection with this Warrant
shall be deemed to be delivered if in writing (or in the form of a telex or
telecopy) addressed as hereinafter provided and if either (x) actually delivered
at said address (evidenced in the case of a telex by receipt of the correct
answerback) or (y) in the case of a letter, three business days shall have
elapsed after the same shall have been deposited in the United States mails,
postage prepaid and registered or certified: (a) if to any holder of this
Warrant, at the registered address of such holder as set forth in the register
kept at the office of the Company maintained pursuant to Section 7.2(a) hereof;
or (b) if to the Company, to the attention of its President at its office
maintained pursuant to Section 7.2(a) hereof; provided, however, that the
exercise of this Warrant shall be effective in the manner provided in Section 1
hereof.
12. TERMINATION. This Warrant shall immediately terminate and be of no further
force and effect upon the earliest to occur of (i) the Expiration Date; (ii) the
Closing (as such term is defined in the Purchase Agreement) and (iii) the
termination of the Purchase Agreement pursuant to Section 6.1(a), 6.1(b) or
6.1(g) thereof. The Investor agrees to return this Warrant to the Company to
the extent unexercised on the date of termination.
13. GOVERNING LAW. All questions concerning the construction, interpretation
and validity of this Warrant shall be governed by and construed and enforced in
accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. In furtherance of
the foregoing, the internal law of the State of New York will control the
interpretation and construction of this Warrant, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. The section headings in this Warrant are for purposes of convenience
only and shall not constitute a part hereof.
IN WITNESS WHEREOF, ADVANCED RADIO TELECOM CORP. has caused this Common
Stock Purchase Warrant to be signed by its duly authorized officer under its
corporate seal.
ADVANCED RADIO TELECOM CORP.
By:
-----------------------------------
Title:
<PAGE>
FORM OF EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
ADVANCED RADIO TELECOM CORP.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, __________/1/ shares of
the Common Stock covered by the within Warrant and herewith makes payment in
full therefor of $________ per share or $________ in the aggregate, and requests
that the certificates for such shares be issued in the name of, and delivered to
__________________, whose address is __________________.
Dated: ______________________________________
(Name)
______________________________________
(Title)
______________________________________
(Corporation)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
- -------------
/1/ Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to
which this Warrant is being exercised), in either case without making any
adjustment in the number of shares (or securities, cash or property) to be
delivered upon exercise pursuant to the adjustment provisions of this
Warrant. In the case of a partial exercise, a new Warrant or Warrants will
be issued and delivered, representing the unexercised portion of the
Warrant, to the holder surrendering the Warrant.
<PAGE>
FORM OF CONVERSION NOTICE
[To be executed only upon conversion of Warrant]
To ADVANCED RADIO TELECOM CORP.
The undersigned registered holder of the within Warrant hereby irrevocably
converts such Warrant with respect to __________/1/ shares of the Common Stock
covered by the within Warrant which such holder would be entitled to receive
upon the exercise hereof, and requests that the certificates for such shares be
issued in the name of, and delivered to __________________, whose address is
___________________.
Dated: ______________________________________
(Name)
______________________________________
(Title)
______________________________________
(Corporation)
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
- -------------
/1/ Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial conversion, the portion thereof as to
which this Warrant is being converted), in either case without making any
adjustment in the number of shares (or securities, cash or other property)
to be delivered upon conversion pursuant to the adjustment provisions of
this Warrant. In the case of a partial conversion, a new Warrant or
Warrants will be issued and delivered, representing the unconverted portion
of the Warrant, to the holder surrendering the Warrant.
<PAGE>
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto __________________ the right
represented by such Warrant to purchase __________/1/ shares of Common Stock of
ADVANCED RADIO TELECOM CORP. to which such Warrant relates, and appoints
_________________ Attorney to make such transfer on the books of ADVANCED RADIO
TELECOM CORP. maintained for such purpose, with full power of substitution in
the premises.
Dated:
______________________________________
(Street Address)
______________________________________
(City) (State) (Zip Code)
Signed in the presence of: _______________________________
(Name)
___________________________ _______________________________
(Title)
_______________________________
(Corporation)
- -------------
/1/ Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial assignment, the portion thereof as to
which this Warrant is being assigned), in either case without making any
adjustment in the number of shares (or securities, cash or other property)
to be delivered upon assignment pursuant to the adjustment provisions of
this Warrant. In the case of a partial assignment, a new Warrant or
Warrants will be issued and delivered, representing the unassigned portion
of the Warrant, to the holder surrendering the Warrant.
<PAGE>
EXHIBIT 10.33
Exhibit A
---------
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
$________________ June __, 1999
FOR VALUE RECEIVED, the undersigned, Advanced Radio Telecom Corp., a
Delaware corporation (the "Borrower"), hereby promises to pay to ____________
(the "Lender"), or order, on the Maturity Date (as defined below), the principal
sum of $___________, together with interest at a rate of eleven percent (11%)
per annum on the aggregate principal amount of the Note from time to time
unpaid, which interest shall accrue daily but not compound. The Maturity Date
shall be the first to occur of (i) the Final Maturity Date (as defined in the
Preferred Stock Purchase Agreement dated as of June __, 1999, as from time to
time in effect, by and among the Borrower, the Lender and the other parties
thereto (the "Agreement")) and (ii) the date the Lender or the Borrower
terminates the Agreement pursuant to Section 6 thereof.
This Note evidences borrowings under, and is entitled to the benefits of,
and is subject to the provisions of the Agreement. The principal of this Note
may be prepaid without penalty in whole or from time to time in part. All
payments made under this Note shall be made by wire transfer of immediately
available funds in accordance with the instructions contained in the Agreement,
as amended by the Lender in writing from time to time.
If the Borrower shall default in the payment of any principal of or accrued
interest on this Note when the same is due and payable, the Borrower agrees to
pay, to the extent permitted by law, interest on such defaulted amount at the
rate of fourteen percent (14%) per annum until all amounts due hereunder are
paid in full.
In the event that (a) the Borrower (i) voluntarily files for protection
under any bankruptcy or insolvency law, or appoints or consents to the
appointment of a receiver or makes a general assignment for the benefit of
creditors or (ii) has filed against it any petition commencing an involuntary
case under any bankruptcy or insolvency law and such case is not dismissed
within sixty (60) days of such filing or (b) obligations of the Borrower under
either
<PAGE>
(i) the Indenture dated as of February 6, 1997 between the Borrower and
The Bank of New York, as Trustee or (ii) obligations of the Borrower with
respect to money borrowed under the Credit Agreement dated September 17, 1998
between the Borrower and Lucent Technologies, Inc. ("Lucent") and the Working
Capital Credit Agreement dated September 17, 1998 between the Borrower and
Lucent (collectively, the "Lucent Loan") are accelerated and such acceleration
is not withdrawn (each of the above events, an "Event of Default"), then the
Lender may by notice in writing to the Borrower declare all or any part of the
unpaid principal of this Note, together with accrued interest thereon, due and
payable (unless pursuant to clause (a), in which case the entire unpaid
principal of this Note, together with accrued interest thereon, shall
automatically become immediately due and payable) and the Lender shall have the
right to enforce this Note by exercise of the rights and remedies granted to it
by applicable law. No failure by the Lender to take action with respect to any
Event of Default hereunder shall affect its subsequent rights to take action
with respect to the same or any other Event of Default. In the event of any
Event of Default the Borrower agrees to pay all reasonable costs of collection,
including reasonable attorneys' fees, to the extent allowed by law.
If any Event of Default occurs hereunder, the Lender may protect and
enforce its rights by suit in equity, action at law and/or other appropriate
proceeding for specific performance of this Note.
This Note shall be governed by and construed in accordance with the laws
(other than the conflict of laws rules) of the State of New York.
The Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically otherwise
provided in the Agreement, and assents to extensions of time of payment,
forbearance or other indulgence without notice.
Acceptance by the Lender of any payment hereunder which is less than
payment in full of all amounts due and payable at the time of such payments
shall not constitute a waiver of the right to demand payment in full at that
time or any subsequent time. No modification or waiver of any provision of this
Note, nor any departure therefrom, shall in any event be effective unless the
same shall be in a written instrument signed by the Lender and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose given.
This Note is one of the several notes in an aggregate principal amount of
$50,000,000 (together, the "Bridge Notes") made by the Borrower in favor of the
Lender and the other parties to the Agreement pursuant to Section 1.3 of the
Agreement. All action in connection with the enforcement of, or the exercise of
any remedies in respect of, the Bridge Notes shall be taken only by two-thirds
in interest of the holders of the Bridge Notes, and all such actions shall be
binding on all of the holders of the Bridge Notes.
-2-
<PAGE>
This Note may be amended upon the written consent of the Borrower and the
Lender.
[SEAL] ADVANCED RADIO TELECOM CORP.
By
---------------------------------
Title:
-3-
<PAGE>
EXHIBIT 10.34
Execution Copy
STANDSTILL AGREEMENT
This Standstill Agreement (the "Agreement"), dated as of June 1, 1999, is
between Advanced Radio Telecom Corp., a Delaware corporation (the "Company") and
each of the parties listed on Schedule I hereto (the "Purchasers").
WHEREAS, simultaneously with the execution of this Agreement, the
Purchasers are entering into an agreement to purchase shares of the Company's
Series A and Series B Convertible Preferred Stock (the "Preferred Stock")
pursuant to the Stock Purchase Agreement (the "Purchase Agreement") among the
Company and the Purchasers dated as of the date hereof; and
WHEREAS, the Company and each of the Purchasers desire to establish in this
Agreement certain conditions of such Purchaser's and such Purchaser's
Affiliates' relationship with Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
(a) "ACQUISITION PROPOSAL" shall mean a bona fide, written proposal,
which proposal includes all material terms of a proposed transaction,
received by the Board of Directors of the Company from any Person or Group
proposing to enter into a transaction which, if effected, would constitute
a Change of Control of the Company.
(b) "AFFILIATE" shall have the meaning given it in Rule 12b-2 under
the Exchange Act.
(c) "ASSOCIATE" shall have the meaning given it in Rule 12b-2 under
the Exchange Act.
(d) "BENEFICIAL OWNER" shall have the meaning given it in Rule
13(d)(3) under the Exchange Act; and "Beneficially Own" and "Beneficial
Ownership" shall apply to securities held by a Beneficial Owner.
<PAGE>
(e) "CHANGE OF CONTROL" shall mean (1) the acquisition by a Third
Party of more than 50% of the Company's then outstanding Voting Stock,
excluding however, a purchase agreement with an underwriter or group of
underwriters in a registered public offering to the public; (2) the
consummation of a merger, acquisition, consolidation or reorganization or
series of such related transactions involving the Company, unless both (x)
immediately after such transaction or transactions, the stockholders of the
Company immediately prior to such transaction shall Beneficially Own at
least 50% of the outstanding Voting Stock of the Company (or, if the
Company shall not be the surviving company in such merger, consolidation or
reorganization, the Voting Stock of the surviving corporation issued in
such transaction in respect of Voting Stock of the Company shall represent
at least 50% of the Voting Stock of such surviving company), and (y) the
Company is not subject to an agreement that provides that individuals who
are directors of the Company immediately prior to such transaction (or
individuals designated by the Company at or before the closing of such
transaction) shall constitute less than a majority of the directors of the
Company (or such surviving company, as the case may be) after the closing
of such transaction; (3) a change or changes in the membership of the
Company's Board of Directors which represents a change of a majority or
more of such membership during any twelve month period (unless such change
or changes in membership are caused by the actions of the then-existing
Board of Directors); (4) an Insolvency Proceeding (as defined below); or
(5) the consummation of a sale of all or substantially all of the Company's
assets unless immediately after such transaction, the stockholders of the
Company immediately prior to such transaction shall beneficially own at
least 50% of the Voting Stock of the acquiring company.
(f) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "GROUP" shall have the meaning provided in Section 13(d)(3) of the
Exchange Act.
(h) "INSOLVENCY PROCEEDING" shall mean (1) an assignment for the
benefit of creditors, (2) the filing by the Company of a petition to have
the Company adjudged insolvent, bankrupt or seeking a reorganization or
liquidation under any law relating to bankruptcy, insolvency or
receivership, (3) an appointment of a receiver or trustee for all or
substantially all of the assets of the Company unless appointed without the
Company's consent, in which case if after 60 days such appointment has not
been vacated or stayed, (4) a public admission in writing of the Company's
inability to pay its debts as they come due, or (5) the adoption of a plan
of liquidation or dissolution by the Board of Directors of the Company.
(i) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization or other entity.
-2-
<PAGE>
(j) "STOCKHOLDERS AGREEMENT" shall mean the Stockholders Agreement in
the form attached as Exhibit A, and as amended with the agreement of the
Company.
(k) "THIRD PARTY" shall mean any Person (other than any Purchaser and
its Affiliates and Associates) or Group (other than any Group that includes
any Purchaser or its Affiliates or Associates).
(l) "TOTAL VOTING POWER" at any date, with respect to any Person,
shall mean the total combined Voting Power of all the Voting Stock of such
Person then outstanding and entitled to vote.
(m) "TWO-THIRDS IN INTEREST" means, prior to the closing of the
transactions contemplated by the Purchase Agreement, Purchasers (and
permitted assignees) who have agreed to purchase more than 66 2/3% of the
shares of Preferred Stock pursuant to the Purchase Agreement and, on and
after the closing of the transactions contemplated by the Purchase
Agreement, Purchasers (and transferees, pursuant to Section 4.01(a) hereof)
holding more than 66 2/3% of the shares of Preferred Stock purchased
pursuant to the Purchase Agreement then owned by the Purchasers.
(n) "VOTING POWER" with respect to any Voting Securities of any Person
on any date shall mean the voting power in the general election of
directors of the relevant Person to which such Voting Securities would be
entitled on such date.
(o) "VOTING STOCK" of any Person shall mean any securities entitled to
vote generally in the election of directors of such Person, or any direct
or indirect rights or options or warrants to acquire any such securities or
any securities (including, without limitation, the Preferred Stock)
convertible or exercisable into or exchangeable for such securities,
whether or not such securities are so convertible, exercisable or
exchangeable at the time of determination.
ARTICLE II
TERM
SECTION 2.01 Term. The term (the "Term") of this Agreement shall commence
on the date hereof and shall continue until the earliest to occur of the
following:
(a) the fourth anniversary of the Closing under the Purchase
Agreement;
(b) the termination of the Purchase Agreement prior to the Closing in
accordance with its terms; and
-3-
<PAGE>
(c) the date, following the Closing, on which the Company has no
further obligations under Section 4.9 of the Purchase Agreement with
respect to the election to the Company's Board of Directors of any nominee
of UST or Oak Investment Partners and no nominee of UST or Oak Investment
Partners designated and elected to the Company's Board of Directors
pursuant to the provisions of Section 4.9 of the Purchase Agreement is a
director of the Company
.
ARTICLE III
STANDSTILL PROVISIONS
SECTION 3.01 Restrictions of Certain Actions. Each of the Purchasers
hereby severally agrees that during the Term, neither it nor any Affiliate or
Associate of such Purchaser will, singly or as part of a Group, directly or
indirectly:
(a) acquire or offer, make a proposal or agree to acquire (whether
publicly or otherwise), in any manner, any material assets of the Company
or its subsidiaries or any equity securities of the Company or its
subsidiaries (or Beneficial Ownership thereof), except (1) pursuant to a
stock split, stock dividend, recapitalization, reclassification or similar
transaction not effected pursuant to a violation of this Section 3.01, (2)
upon the conversion of the Preferred Stock into Common Stock in accordance
with the Company's Certificate of Incorporation, (3) pursuant to the Rights
Agreement dated as of June 20, 1997 between the Company and BankBoston,
N.A. or (4) pursuant to the exercise of rights pursuant to Section 4.16 of
the Purchase Agreement.
(b) make or in any way propose or participate in any "solicitation" of
"proxies" to vote (as such terms are defined in Rule 14a-1 under the
Exchange Act), solicit any consent or communicate with or seek to advise or
influence any Person, other than the Company, with respect to the
solicitation or voting of any Voting Securities of the Company in
opposition to any matter that has been recommended by the Board or in favor
of any matter that has not been approved by the Board, or become a
"participant" in any "election contest" (as such terms are defined or used
in Rule 14a-11 under the Exchange Act) with respect to Company except
pursuant to the Stockholders Agreement.
(c) form, be a member of, join or encourage the formation of, any
Group with respect to any Voting Securities of the Company or the
acquisition of any assets of the Company other than any such Group
resulting from, and solely to the extent set forth in, the Stockholders
Agreement;
(d) deposit any Voting Stock of the Company into a voting trust or
subject any such Voting Stock to any arrangement or agreement with respect
to the voting thereof other than the Stockholders Agreement;
-4-
<PAGE>
(e) seek election to or seek to place a representative on the Board of
Directors of the Company (except pursuant to Section 4.10 of the Purchase
Agreement or Section 4.4 of the Certificate of Designation (the
"Certificate") relating to the Preferred Stock and except for any chief
executive officer of the Company) or seek the removal of any member of the
Board of Directors the Company other than pursuant to the Stockholders
Agreement or the Certificate;
(f) call or seek to have called any meeting of the stockholders of
Company other than participation as a director of the Company in calling,
or seeking to have called, meetings of stockholders generally;
(g) solicit, seek to effect, negotiate with or provide any information
to any other party with respect to, or make any statement or proposal,
whether written or oral, to the Board of Directors of Company or otherwise
make any public announcement or proposal whatsoever with respect to a
merger or acquisition of the Company the sale of all or a substantial
portion of the assets of the Company and its subsidiaries, liquidation of
the Company, recapitalization of the Company or similar business
transactions with respect to the Company or take any action which might
require either party to make a public announcement with respect to any such
matters (the foregoing shall not limit the Purchaser from discussing any
Third Party Acquisition Proposal with, or providing any information with
respect thereto to, the Company or other Purchasers); or
(h) instigate, encourage or assist, or enter into any discussions or
arrangements with, any Third Party to do any of the actions described in
Sections 3.01(a) through (h) (the foregoing shall not limit the Purchaser
from discussing any Third Party Acquisition Proposal with the Company or
other Purchasers);
(i) If any Purchaser or any of its Affiliates or Associates owns or
acquires any Voting Securities in violation of this Agreement, such Voting
Securities shall immediately be disposed of to persons who are not
Affiliates or Associates thereof but only in compliance with the provisions
of this Section 3.01 and Section 4.01; provided, however, that Company may
also pursue any other available remedy to which it may be entitled as a
result of such violation.
Notwithstanding the restrictions contained in this Section 3.01, the Purchasers
shall not be prevented from complying with the requirements of Sections 13(d)
and 16(a) of the Exchange Act and the rules and regulations thereunder, in each
case, as from time to time in effect, or any successor provisions or rules with
respect thereto, or any other applicable law or rule or regulation of any
governmental body. Notwithstanding the restrictions contained in this Section
3.01, if, prior to the Closing (as defined in the Purchase Agreement), the
Company receives an Acquisition Proposal from a Third Party and the Company (i)
publicly announces that it is considering the Acquisition Proposal or that it is
engaged in discussions with respect to a sale or other transaction involving a
Change of Control, (ii) withdraws or modifies its approval of the Stock Purchase
(as
-5-
<PAGE>
defined in the Purchase Agreement) or (iii) notifies the Purchasers of its
intent to terminate the Purchase Agreement pursuant to Section 6.1 (f) of the
Purchase Agreement (each of the foregoing is a "Limited Trigger") then the
Purchasers shall be free to take any action otherwise prohibited by Sections
3.01(a) (but limited to any acquisition from, offer to, proposal to or agreement
with the Company or its subsidiaries), 3.01(b), 3.01(c), 3.01(g) or 3.01(h) in
contemplation of, and to make, an Acquisition Proposal to be made during the
period from the occurrence of the Limited Trigger until the Company notifies the
Purchasers that the Company has rejected such Acquisition Proposal.
SECTION 3.02 Suspension of Restrictions. The limitations provided in
Section 3.01 and Section 4.01 shall immediately be suspended upon the occurrence
of any of the following events.
(a) any Third Party commences a tender or exchange offer seeking to
acquire Beneficial Ownership of 50% or more of the outstanding shares of
Voting Stock, but only if (i) the Company has not within 10 days after
commencement of such offer (or such longer period as may then be permitted
under applicable law for the Company's initial recommendation with respect
to such offer), publicly recommended that such offer not be accepted, or
(ii) all of the material conditions to such offer relating to the
elimination or satisfaction of the material defensive provisions
established by the Company, including any rights plan or similar defensive
provision of the Company have been satisfied or waived;
(b) the Company's receipt of an Acquisition Proposal from any Third
Party but only if the Company has not, within 15 days after such receipt,
rejected such Acquisition Proposal;
(c) the occurrence of a Change of Control of the Company;
(d) the public announcement by the Company that it is "for sale";
(e) the execution of a definitive agreement which, if consummated,
would result in a Change of Control of the Company;
(f) the public announcement by or on behalf of any Person or Group
(other than the Purchaser and its Affiliates) of the commencement of a bona
fide proxy or consent solicitation subject to Section 14 of the Exchange
Act (or any successor provision) to elect or remove a majority of the
directors of the Company which is not, within 10 days after the
announcement of such proxy or consent solicitation (or such longer period
as may then be permitted under applicable law for the Company's initial
recommendation with respect to such contest if such a period is specified)
publicly opposed by the Company's Board of Directors and which would, if
successful, result in a change in the composition of a majority of the
Board of Directors of the Company; or
-6-
<PAGE>
(g) the adoption by the Board of Directors of a plan of liquidation or
dissolution.
The Company shall provide the Purchaser with prompt written notice of the
occurrence of any of the events set forth in this Section 3.01 or of the receipt
by the Company of an Acquisition Proposal from any Third Party (such notice to
be provided within ten days after receipt thereof, but without disclosing the
terms thereof or the identity of such Third Party). Upon any (i) withdrawal or
lapsing of any such tender or exchange offer referred to in Section 3.02(a) in
which such Third Party does not acquire more than 15% of the outstanding Voting
Stock of the Company, (ii) withdrawal, rejection or termination of an
Acquisition Proposal referred to in Section 3.02(b), (iii) the public withdrawal
of any "for sale" notice referred to in Section 3.02(d), (iv) the termination of
the agreement referred in Section 3.02(e) without consummation thereof, (v) the
withdrawal or termination or failure of the solicitation referred to in Section
3.02(f) or (vi) the termination of the plan of liquidation referenced in Section
3.02(g), as the case may be, the limitations provided in Sections 3.01 and 4.01
(except to the extent then suspended as a result of any other event specified in
Section 3.02) shall again be applicable for so long as and only to the extent
provided therein without any extension of the term thereof.
ARTICLE IV
TRANSFER RESTRICTIONS
SECTION 4.01 Permitted Transfers. During the Term, but only until the
second anniversary of the Closing under the Purchase Agreement, the Purchaser
shall not sell, pledge, hypothecate, assign or otherwise transfer (each a
"Transfer") any Voting Securities of the Company other than the following
Transfers:
(a) A Transfer to an Affiliate of such Purchaser, provided that such
Affiliate becomes a party to, and agrees to be bound by, this Agreement;
(b) A Transfer by partnerships by way of distribution to a limited
partner or former limited partner of such Purchaser that is not an
Affiliate of such Purchaser;
(c) A private Transfer (i) to any "person" (within the meaning of
Section 13(d)(3) of the Exchange Act), that is not an Affiliate or
Associate of such Purchaser, which to the knowledge of the Purchaser after
inquiry beneficially owns or, as a result of such sale or transfer, will
beneficially own less than ten percent (10%) of the Total Voting Power of
the Company (a "Permitted Transferee"), provided, that such person will not
be Permitted Transferee and no such transfer shall be permitted if such
person, has proposed a business combination or similar transaction with, or
a Change of Control of the Company or (ii) to an account managed by an
institutional manager described in Rule 13f-1 of the Exchange Act with
respect to which the transferred Voting Securities would constitute
"Section 13(f) securities" within the meaning of Rule 13f-1(c) of the
Exchange Act; and
-7-
<PAGE>
(d) a sale to the public (i) pursuant to Rule 144 of the Securities
Act or (ii) pursuant to the exercise by the Purchasers of their rights
under the Registration Rights Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Enforcement. Each of the Purchasers, on the one hand, and
Company, on the other, acknowledge and agree that irreparable damage would occur
if any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, the parties will
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically its provisions in any court having
jurisdiction, this being in addition to any other remedy to which they may be
entitled at law or in equity.
SECTION 5.02 Entire Agreement; Waivers. This Agreement, the Purchase
Agreement, the Stockholder Agreement and the Registration Rights Agreement
constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof and thereof and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties with respect to such subject matter. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), shall constitute a continuing
waiver unless otherwise expressly provided nor shall be effective unless in
writing and executed (i) in the case of a waiver by Company, by the Company and
(ii) in the case of a waiver by the Purchasers, by "Two-Thirds in Interest" of
the Purchasers.
SECTION 5.03 Amendment or Modification. The parties hereto may not amend
or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by the Company and Two-Thirds in Interest of the
Purchasers.
SECTION 5.04 Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns (each of which
such transferees, successors and assigns shall be deemed to be a party hereto
for all purposes hereof); provided, however, that (i) neither Company nor any
Purchaser may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Two-Thirds in Interest of the
Purchasers or the Company, respectively and (ii) no transfer or assignment by
any party shall relieve such party of any of its obligations hereunder.
SECTION 5.05 Severability. If any provision of this Agreement is held by
a court of competent jurisdiction to be unenforceable, the remaining provisions
shall remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining
-8-
<PAGE>
provisions without including any that may be declared unenforceable.
SECTION 5.06 Headings. Descriptive headings are for convenience only and
will not control or affect the meaning or construction of any provision of this
Agreement.
SECTION 5.07 Counterparts. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties, and each such
executed counterpart will be an original instrument.
SECTION 5.08 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing (including
telecopy or similar teletransmission), addressed as follows:
If to the Company, to:
Advanced Radio Telecom Corp.
500 108th Avenue NE, Suite 2600
Bellevue, WA 98004
Attn: Thomas M. Walker, Esq., General Counsel
Telecopier No: (425) 990-1642 or (425) 688-0703
Telephone No: (425) 990-1669
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Mary E. Weber, Esq.
Telecopier No: (617) 951-7050
Telephone No: (617) 951-7391
(a) if to the Purchasers, to such address listed on Schedule I to the
Purchase Agreement, with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attn: Brooks Stough, Esq.
Telecopier No: (650) 321-2800
Telephone No: (650) 463-5370
O'Melveny & Myers, LLP
1999 Avenue of the Stars
-9-
<PAGE>
Los Angeles, California 90067-6035
Attn: Steven Grossman, Esq.
Telecopier No: (310) 246-6779
Telephone No: (310) 553-6700
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) in the case of any notice or communication sent other than
by mail, on the date actually delivered to such address (evidenced, in the case
of delivery by overnight courier, by confirmation of delivery from the overnight
courier service making such delivery, and in the case of a telecopy, by receipt
of a transmission confirmation form or the addressee's confirmation of receipt),
or (b) in the case of any notice or communication sent by mail, three business
days after being sent, if sent by registered or certified mail, with first-class
postage prepaid. Each of the parties hereto shall be entitled to specify a
different address by giving notice as aforesaid to each of the other parties
hereto.
SECTION 5.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic substantive law of the State of New
York, without giving effect to any choice or conflict of law provision or rule
that would cause the application of the law of any other jurisdiction.
SECTION 5.10 Termination. This Agreement will terminate at the end of the
Term or earlier upon the written approval of the Company and Two-Thirds in
Interest of the Purchasers.
SECTION 5.11 Fiduciary Duties. Notwithstanding the restrictions set forth
herein, any director of the Company may exercise his fiduciary duties in his
capacity as a director with respect to the Company, as opposed to taking action
with respect to the direct or indirect ownership of any Voting Stock, and no
such exercise of fiduciary duties shall be deemed to be a breach of or a
violation of the restrictions set forth herein, and none of the Purchasers shall
have any liability hereunder for any such exercise of fiduciary duties by such
director in his capacity as a director of the Company.
[Remainder of Page Intentionally Blank]
-10-
<PAGE>
[Standstill Agreement]
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed as of the date first above written by their respective
officers thereunto duly authorized.
The Company: ADVANCED RADIO TELECOM CORP.
By: /s/ Henry C. Hirsch
-------------------------------------------
Name: Henry C. Hirsch
Title: Chairman and CEO
The Purchasers: U.S. TELESOURCE, INC.
By: /s/ Marc B. Weisberg
-------------------------------------------
Name: Marc B. Weisberg
Title:
OAK INVESTMENT PARTNERS VIII, LIMITED PARTNERSHIP
By: Oak Associates VIII, LLC, General Partner
/s/ Bandel L. Carano
-----------------------------------------------
By: Bandel L. Carano, Managing Member
OAK VIII AFFILIATE FUND, LIMITED PARTNERSHIP
By: Oak VIII Affiliates, LLC, General Partner
/s/ Bandel L. Carano
----------------------------------------------
By: Bandel L. Carano, Managing Member
<PAGE>
[Standstill Agreement]
MERITECH CAPITAL PARTNERS
By:
---------------------------
Name:
Title:
<PAGE>
[Standstill Agreement]
ACCEL VI L.P.
BY: ACCEL VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
--------------------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
BY: ACCEL INTERNET FUND II ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
--------------------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
BY: ACCEL KEIRETSU VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
--------------------------------------------
Managing Member
ACCEL INVESTORS '98 L.P.
By: /s/ G. Carter Sednaoui
-------------------------------------------
General Partner
<PAGE>
[Standstill Agreement]
BRENTWOOD ASSOCIATES IX, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partners
By: /s/ John L. Walecka
-------------------------------------------
Name: John L. Walecka
Title: Managing Member
BRENTWOOD AFFILIATES FUND IX, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ John L. Walecka
-------------------------------------------
Name: John L. Walecka
Title: Managing Member
<PAGE>
[Standstill Agreement]
WORLDVIEW TECHNOLOGY PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
-------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW TECHNOLOGY INTERNATIONAL II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
--------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW STRATEGIC PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
-------------------------------------------
Name: James Wei
Title: Member
<PAGE>
[Standstill Agreement]
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
-------------------------------------------
Name: Robert H. Buescher
Title: Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
-------------------------------------------
Name: Robert H. Buescher
Title: Manager
COVE VENTURES, LLC
By: Cove Road Associates, LLC, Managing Member
By: /s/ Robert Goodman
-------------------------------------------
Name: Robert Goodman
Title: Managing Member
<PAGE>
[Standstill Agreement]
ADAMS CAPITAL MANAGEMENT, L.P.
By: ACM Capital Partners II, L.P., General Partner
By: Joel P. Adams, General Partner
By: /s/ Joel P. Adams
-------------------------------------------
Name: Joel P. Adams
Title: General Partner
<PAGE>
EXHIBIT 10.35
Execution Copy
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of June 1, 1999 (this
"Agreement"), among Advanced Radio Telecom Corp., a Delaware corporation (the
"Company"), and the purchasers listed on Schedule I hereto (the "Purchasers").
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and the Series A Purchasers have entered into a Preferred
Stock Purchase Agreement dated as of June 1, 1999 (as in effect from time to
time, the "Purchase Agreement") in connection with the issuance and sale by the
Company to the Purchasers of certain shares (the "Shares") of the Company's
Series A Convertible Preferred Stock, $0.001 par value per share, and Series B
Non-voting Convertible Preferred Stock, $0.001 par value per share
(collectively, the "Preferred Stock"); and
WHEREAS, it is a condition to the purchase of the Shares under the Purchase
Agreement that the Company and the Purchasers enter into this Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Company and the Purchasers hereby agree
as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
-----------
terms shall have the following meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other Governmental Authority at the time administering the Securities Act.
"COMMON STOCK" shall mean the Company's common stock, $0.001 par value
per share.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean a domestic or foreign, federal,
state or local governmental entity (including a department, agency, bureau, or
political subdivision of such governmental entity).
"INSPECTORS" shall have the meaning given to it in Section 5(i).
<PAGE>
"INVESTORS" means the Purchasers and any other Person who becomes a
party to this Agreement either as an Investor pursuant to Section 13 hereof or
through the operation of Section 7.12 of the Purchase Agreement allowing the
Purchasers to assign their rights under the Purchase Agreement to certain
affiliates.
"LUCENT AGREEMENT" means the Registration Rights Agreement dated
August 26, 1998 between the Company and Lucent Technologies, Inc.
"MAJORITY OF THE INVESTORS" means those Investors who hold in the
aggregate in excess of 50% of the Registrable Shares (based on common stock
equivalents) held by all of the Investors.
"MATERIAL TRANSACTION" means any material transaction in which the
Company or any of its material subsidiaries proposes to engage or is engaged,
including a purchase or sale of assets or securities, financing, merger,
consolidation, tender offer or any other transactions that would require
disclosure pursuant to the Exchange Act, and with respect to which the Board of
Directors of the Company reasonably has determined in good faith that compliance
with this Agreement may reasonably be expected to either materially interfere
with the Company's or such subsidiary's ability to consummate such transaction
in a timely fashion or require the Company to disclose material, non-public
information prior to such time as it would otherwise be required to be disclosed
and that such disclosure would not be in the best interests of the Company to
disclose at that time.
"NASD" shall have the meaning given to it in Section 6(m).
"ORIGINAL AGREEMENT" means the Second Restated and Amended
Registration Rights Agreement dated July 3, 1996, among the Company and the
other parties identified therein, as amended on October 16, 1996.
"OTHER SHARES" shall mean at any time those shares of Common Stock
which do not constitute Primary Shares or Registrable Shares.
"PERSON" shall be construed as broadly as possible and shall include
an individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a Governmental Authority.
"PRIMARY SHARES" shall mean at any time the authorized but unissued
shares of Common Stock or shares of Common Stock held by the Company in its
treasury.
"PURCHASER" shall have the meaning given to it in the preamble.
"RECORDS" shall have the meaning given to it in Section 5(i).
-2-
<PAGE>
"REGISTRABLE SHARES" shall mean, at any time, and with respect to any
Investor, the Restricted Shares held by such Investor. As to any particular
Registrable Shares, once issued, such Registrable Shares shall cease to be
Registrable Shares when (A) they have been registered under the Securities Act,
the Registration Statement in connection therewith has been declared effective
and they have been disposed of pursuant to and in the manner described in such
effective Registration Statement, (B) they are sold or distributed pursuant to
Rule 144, (C) they have been otherwise transferred and new certificates or other
evidences of ownership for them not bearing a restrictive legend and not subject
to any stop transfer order or other restriction on transfer shall have been
delivered by the Corporation or the issuer of other securities issued in
exchange for the Registrable Shares, or (D) they have ceased to be outstanding.
A "REGISTRATION STATEMENT" means (A) a registration statement filed by
the Company in accordance with Section 5 of the Securities Act, including
exhibits and financial statements thereto, in the form in which it shall become
effective, the documents incorporated by reference therein pursuant to Item 12
of Form S-3 (or any similar provision or forms then in force) under the
Securities Act and information deemed to be a part of such registration
statement pursuant to paragraph (B) of Rule 430A under the Securities Act (or
any similar provision then in force) and (B) in the event of any amendment
thereto after the effective date of the registration statement, then from and
after the effectiveness of the amendment, the registration statement as so
amended.
"RESTRICTED SHARES" shall mean, at any time and with respect to any
Investor, the shares of Common Stock issued either upon conversion of the Shares
(or upon the conversion of any securities into which the Shares are convertible)
or the exercise of the Warrants which are held by such Investor.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act or
any successor rule thereto or any complementary rule thereto (such as Rule
144A).
"SECURITIES ACT" shall mean the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SHARES" shall have the meaning given to it in the preamble.
"WARRANTS" shall mean the warrants to purchase Common Stock issued to
the Purchasers pursuant to the Purchase Agreement and which are exercisable in
certain events as set forth therein.
SECTION 2. REGISTRATIONS ON DEMAND.
-----------------------
(a) Registration on Request. At any time more than six months
-----------------------
after the date hereof, a Majority of Investors may, by written notice to
the Company, request
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<PAGE>
that the Company effect the registration under the Securities Act of
Registrable Shares with an aggregate market value of at least $25 million
based on the public trading price on the date of the request of the shares
to be registered. If the Investors initiating such registration intend to
distribute the Registrable Shares in an underwritten offering, they shall
so state in their request. Promptly after receipt of such notice, the
Company will give written notice of such requested registration to all
other holders of Registrable Shares. The Company will then use its best
efforts expeditiously to effect the registration under Securities Act of
the Registrable Shares which the Company has been requested to register by
such Investors, and all other Registrable Shares which the Company has been
requested to register by other holders of Registrable Securities by notice
delivered to the Company within 10 business days after the giving of such
notice by the Company.
(b) Registration on Form S-3. For so long as the Company shall
------------------------
be qualified for the use of Form S-3 promulgated under the Securities Act
or any successor form thereto, any one or more of the Investors shall have
the right to request in writing registrations on Form S-3 or such successor
form of Registrable Shares, which request or requests shall (i) specify the
number of Registrable Shares intended to be sold or disposed of, which
shall have an aggregate market value of at least $20 million based on the
public trading price of the shares to be registered on the date of the
request, and (ii) state the intended method of disposition of such
Registrable Shares. Promptly after receipt of any such request, the
Company shall give written notice of such proposed registration to the
other Investors. The Company will then use its best efforts expeditiously
to effect the registration under Securities Act of the Registrable Shares
requested to be included in such proposed registration by such holders who
respond in writing to the Company's notice within 10 business days after
delivery of such Notice (which response shall specify the number of
Registrable Shares proposed to be included in such registration).
(c) Anything contained in Section 2(a) to the contrary
notwithstanding, the Company may delay the filing or effectiveness of any
registration pursuant to Sections 2(a) and 2(b) for a period of up to 90
days if (1) the Company in good faith determines that such registration
would materially impede, delay or interfere with any material financing,
offer or sale of equity securities or debt securities of the Company, or
acquisition, disposition or other material transaction by the Company or
any of its material subsidiaries, or (2) the Company in good faith
determines that the Company is in possession of material non-public
information the disclosure of which during the period specified in such
notice the Company reasonably believes would not be in the best interests
of the Company; provided that the Company may not take any action pursuant
to this Section 2(c) for more than one 90 day period in any twelve month
period.
(d) A requested registration under Section 2(a) may be rescinded
prior to such registration being declared effective by the Commission by
written notice to the Company from Investors holding a majority of the
Registrable Shares proposed to be registered pursuant to such registration
statement pursuant to Section 2(a).
-4-
<PAGE>
(e) The Company shall not be required to effect more than six
registrations pursuant to Section 2(a) during the term of this Agreement,
and shall not be required to effect more than two registrations pursuant to
this Section 2 in any twelve month period; provided that a registration
--------
statement shall be deemed not to have been prepared and filed if (A) the
registration statement (i) is withdrawn by such Investors as a result of
delay pursuant to Section 2(c), or (ii) does not become effective for any
other reason except the withdrawal therefrom of 20% or more of the
Registrable Shares requested to be included in such registration statement
or the determination by selling Investors owning 30% or more of such
Registrable Shares not to proceed with the contemplated distribution of
such Registrable Shares or (B) the Company fails to use its best efforts to
cause the registration statement to remain effective under the Securities
Act and the Prospectus to remain current during the entire period referred
to in Section 5(b).
SECTION 3. PIGGYBACK REGISTRATION. If the Company at any time
----------------------
proposes for any reason to register Primary Shares or Other Shares under the
Securities Act (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto and other than pursuant to a
registration statement covered by Rule 462 promulgated under the Securities
Act), it shall promptly give written notice to each Investor of its intention so
to register the Primary Shares or Other Shares and, upon the written request,
given within 10 business days after delivery of any such notice by the Company,
of any such Investor to include in such registration Registrable Shares (which
request shall specify the number of Registrable Shares proposed to be included
in such registration), the Company shall use its best efforts to cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that if the managing underwriter advises the Company that the
- -------- -------
inclusion of all Registrable Shares or Other Shares proposed to be included in
such registration would interfere with the successful marketing (including
pricing) of Primary Shares proposed to be registered by the Company, then the
number of Primary Shares, Registrable Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(a) first, the Primary Shares;
(b) second, the Other Shares or other securities, if any,
entitled to be included in such registration pursuant to the Original
Agreement;
(c) third, the Other Shares or other securities, if any, entitled
to be included in such registration pursuant to the Lucent Agreement;
(d) fourth, the Registrable Shares requested to be included
pursuant to this Agreement; and
(e) fifth, any Other Shares or securities requested to be
included.
-5-
<PAGE>
The Company shall be under no obligation to complete any offering it proposes to
make and shall incur no liability to any Investor for its failure to do so. No
registration of Registrable Shares effected under this Section 3 shall relieve
the Company of any of its obligations to effect registrations of Registrable
Securities pursuant to Section 2 hereof.
SECTION 4. HOLDBACK AGREEMENT. If the Company at any time shall
------------------
register shares of Common Stock under the Securities Act for sale to the public
in an underwritten offering, each of the Investors agrees not to, directly or
indirectly, sell, seek registration under the Securities Act of, or otherwise
dispose of any shares or Common Stock or securities convertible into or
exchangeable for Common Stock (other than Registrable Shares included in such
registration pursuant to Section 2 or 3) without the prior written consent of
the managing underwriter for a period from two business days prior to the date
of the final prospectus pursuant to which such public offering shall be made
through 90 days after the date of such final prospectus or such longer period as
the Company's board of directors determines in good faith to be appropriate.
SECTION 5. PREPARATION AND FILING. If and whenever the Company is
----------------------
under an obligation pursuant to the provisions of this Agreement to use its best
efforts to effect the registration of any Registrable Shares, the Company shall,
as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and (in the case of a
registration pursuant to Section 2 hereof) use its best efforts to cause
such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 180 days or until all of such
Registrable Shares have been disposed of (if earlier) and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares, provided that the Company may
suspend (and such suspension shall extend such 180-day period by the same
duration) for up to 45 days the effectiveness of such registration
statement, or elect not to amend such registration statement or supplement
the prospectus used in connection therewith so that sales may not be made
thereon for up to 45 days (and such period of delay shall extend such 180-
day period by the same duration), if the making of disclosures required by
such registration statement would have a material adverse affect upon the
Company or its securities and such disclosures are not otherwise required
to be made; provided that any such suspensions, along with suspensions or
--------
delays pursuant to Section 2(c) hereof are limited to an aggregate of 90
days in any twelve month period;
-6-
<PAGE>
(c) notify in writing one firm acting as counsel for the Selling
Investors on whose behalf the Registrable Shares are being registered
promptly (i) of any comments by the Commission with respect to such
registration statement or prospectus, or any request by the Commission for
the amending or supplementing thereof or for additional information with
respect thereto, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or prospectus
or any amendment or supplement thereto or the initiation of any proceedings
for that purpose and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions
as any seller of Registrable Shares reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to
enable such seller of Registrable Shares to consummate the disposition in
such jurisdictions of the Registrable Shares owned by such seller;
provided, however, that the Company will not be required to qualify
-------- -------
generally to do business, subject itself to general taxation or consent to
general service of process in any jurisdiction where it would not otherwise
be required so to do but for this paragraph (d);
(e) furnish to each seller of such Registrable Shares such number
of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits and
documents incorporated by reference therein, except that the Company shall
not be obligated to furnish any such seller with more than two copies of
such exhibits and documents), such number of copies of the prospectus
included in such registration statement (including any summary prospectus
or other prospectus, including a preliminary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as
such seller of Registrable Shares may reasonably request in order to
facilitate the public sale or other disposition of such Registrable Shares;
(f) use its best efforts to cause such Registrable Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable the seller or sellers thereof to consummate the
disposition of such Registrable Shares;
(g) notify on a timely basis each seller of such Registrable
Shares at any time when a prospectus relating to such Registrable Shares is
required to be delivered under the Securities Act within the appropriate
period mentioned in subparagraph (a) of this Section 5, of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the
-7-
<PAGE>
statements therein not misleading in light of the circumstances then
existing and, at the request of such seller, prepare and furnish to such
seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(h) give each seller of such Registrable Shares, any underwriter
participating in any disposition pursuant to such registration statement
and any attorney, accountant or other agent retained by any such seller or
underwriter (collectively, the "Inspectors") the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein, and each amendment and supplement thereto, and give each Inspector
all pertinent financial and other records, pertinent corporate documents
and properties of the Company, as shall be reasonably necessary to enable
them to exercise their due diligence responsibility;
(i) use its best efforts to obtain, from its independent
certified public accountants, a "cold comfort" letter in customary form and
covering such matters of the type customarily covered by cold comfort
letters;
(j) use its best efforts to obtain, from its counsel, an opinion
or opinions in customary form;
(k) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Shares;
(l) issue to any underwriter to which any seller of Registrable
Shares may sell shares in such offering, certificates evidencing such
Registrable Shares;
(m) use its best efforts to list such Registrable Shares on any
national securities exchange on which any shares of the Common Stock are
listed or for qualify such Registrable Shares for inclusion on the
automated quotation system of the National Association of Securities
Dealers, Inc. (the "NASD"), as applicable;
(n) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, earnings statements which need
not be audited covering a period of 12 months beginning within three months
after the effective date of the registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities
Act;
-8-
<PAGE>
(o) use its best efforts to take all other steps necessary to
effect the registration of such Registrable Shares contemplated hereby;
(p) if the registration involves an underwritten offering, enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting and deliver to each selling
Investor, its counsel and each underwriter of Registrable Shares owned by
the Registering stockholders to be distributed pursuant to such
registration, the certificates, opinions of counsel and comfort letters
that are customarily delivered in connection with underwritten offerings.
(q) before sales of Registrable Shares under a registration
statement, cooperate with the selling Investors and each underwriter of
Registrable Shares owned by the selling Investors to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing the Registrable Shares to be sold under the
Registration Statement and to enable such Registrable Shares to be in such
denominations and registered in such names as the seller or the underwriter
may request.
Each holder of the Registrable Shares, upon receipt of any notice from
the Company of any event of the kind described in Section 5(g) hereof, shall
forthwith discontinue disposition of the Registrable Shares pursuant to the
registration statement covering such Registrable Shares until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(g) hereof, and, if so directed by the Company, such holder shall
deliver to the Company all copies, other than permanent file copies then in such
holder's possession, of the most recent prospectus covering such Registrable
Shares at the time of receipt of such notice.
SECTION 6. EXPENSES. All expenses incurred by the Company in
--------
complying with Section 5, including, without limitation, all registration and
filing fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and blue sky laws, printing expenses, and
fees and expenses of the Company's counsel and accountants shall be paid by the
Company; provided, however, that all underwriting discounts and selling
-------- -------
commissions and all transfer taxes applicable to the Registrable Shares, and the
fees and expenses of counsel for the Investors on whose behalf the Registrable
Shares are being registered, shall not be borne by the Company but shall be
borne by the seller or sellers thereof, in proportion to the number of
Registrable Shares sold by such seller or sellers.
SECTION 7. INDEMNIFICATION.
---------------
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless the selling Investor, including its partners,
directors and officers, each underwriter, broker or any other Person acting
on behalf of such selling Investor and each other Person, if any, who
controls any of the foregoing Persons within the meaning of the
-9-
<PAGE>
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in the registration statement (including any documents
incorporated by reference therein) under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable
Shares, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or any violation
by the Company of the Securities Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction required of
the Company in connection with such registration or qualification under
such state securities or blue sky laws; and shall reimburse such selling
Investor, such underwriter, such broker or such other Person acting on
behalf of such selling Investor, including its partners, directors and
officers and each such controlling Person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, preliminary
prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity
with written information furnished to the Company through an instrument
duly executed by such selling Investor or underwriter, or a Person duly
acting on their behalf, specifically for use in the preparation thereof.
(b) In connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, each selling Investor
shall indemnify and hold harmless (in the same manner and to the same
extent as set forth in the preceding paragraph of this Section 7) the
Company, each director of the Company, each officer of the Company, each
underwriter, broker or other Person acting on behalf of such seller, each
Person who controls any of the foregoing Persons within the meaning of the
Securities Act with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus
contained therein, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or such underwriter through an
instrument duly executed by such seller or a Person duly acting on their
behalf specifically for use in connection with the preparation of such
registration statement, preliminary prospectus, final prospectus, amendment
or supplement; provided, however,
-10-
<PAGE>
that the maximum amount of liability in respect of such indemnification
shall be, limited, in the case of each selling Investor, to an amount equal
to the net proceeds actually received by such selling Investor from the
sale of Registrable Shares effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the
preceding paragraphs of this Section 7, such indemnified party will give
written notice to the indemnifying party of the commencement of such
action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for
any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof; provided, however, that if any
indemnified party shall have reasonably concluded that there may be one or
more legal or equitable defenses available to such indemnified party which
are additional to or conflict with those available to the indemnifying
party, or that such claim or litigation involves or could have an effect
upon matters beyond the scope of the indemnity agreement provided in this
Section 7, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such
indemnifying party shall reimburse such indemnified party and, any Person
controlling such indemnified party for that portion of the fees and
expenses of any one counsel retained by the indemnified party which are
reasonably related to the matters covered by the indemnity agreement
provided in this Section 7.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party with respect to any loss, claim, damage
or liability referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amounts paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions which resulted in such loss, claim, damage or liability as well
as any other relevant equitable considerations, limited, in the case of
each selling Investor, to an amount equal to the net proceeds actually
received by such selling Investor from the sale of Registrable Shares
effected pursuant to such registration. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
-11-
<PAGE>
SECTION 8. INFORMATION BY HOLDER. Each holder of Registrable Shares
---------------------
to be included in any registration shall furnish to the Company and the managing
underwriter such written information regarding such holder and the distribution
proposed by such holder as the Company or the managing underwriter may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this
Agreement.
SECTION 9. EXEMPT SALES.
------------
(a) The Company shall make all filings with the Commission
required by Rule 144(c) (or any similar provision then in force) under the
Securities Act to permit the sale of Registrable Shares by any holder
thereof (other than an affiliate of the Company) to satisfy the conditions
of Rule 144 (or any similar provision then in force). The Company shall,
promptly upon the written request of the holder of Registrable Shares,
deliver to such holder a written statement as to whether the Company has
complied with all such filing requirements.
(b) Before sales of Registrable Shares proposed to be sold
pursuant to an exemption from the registration requirements of the
Securities Act, the Company shall cooperate with the holder of such
Registrable Shares, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing such
Registrable Shares, in connection with the closing of the sales and to
enable such Registrable Shares to be in such denominations and registered
in such names as the holder may request.
SECTION 10. NO CONFLICT OF RIGHTS. The Company represents and
---------------------
warrants to the Investors that the registration rights granted to the Investors
hereby do not conflict with any other registration rights granted by the
Company. Notwithstanding anything to the contrary contained herein, the parties
hereto intend that the registration rights granted by this Agreement not
conflict with or impart the registration rights granted by the Original
Agreement and the Lucent Agreement, and this Agreement shall be interpreted
accordingly. The Company shall not, after the date hereof, grant any
registration rights which conflict with, or have any priority over, the
registration rights granted hereby. Without derogating from the generality of
this Section 10, after the date of this Agreement, the Company shall not enter
into, or amend or otherwise modify, any agreement to afford to any person other
than the Purchasers and the holders of Registrable Shares the right to require
the Company to include in any registration statement filed under Section 2 or
Section 3 hereof any securities of the Company pursuant to the exercise of any
"piggy-back" right under an agreement with the Company not in existence as of
the date of this Agreement unless such securities are junior in priority to the
Registrable Shares. In any public offering pursuant to Section 2(a), the
managing underwriter shall be a nationally recognized investment banking firm
selected by the Company and reasonably acceptable to Two-Thirds in Interest of
the Investors.
-12-
<PAGE>
SECTION 11. TERMINATION. This Agreement shall terminate and be of
-----------
no further force or effect on the earlier of (i) the date when there shall not
be any Registrable Shares outstanding or (ii) the fifth anniversary of the date
hereof; provided, however, that a particular Investor's rights under Sections 2
-------- -------
and 3 hereof shall cease to be in effect for so long as the Registrable Shares
held by such Investor may be sold by such Investor under Rule 144 and such
Registrable Shares constitute less than 1% of the class of the Company's
securities of which the Registrable Shares are a part.
SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
----------------------
inure to the benefit of the Company and the Investors and, subject to Section
14, their respective successors and assigns.
SECTION 13. ASSIGNMENT. Each Investor may assign its rights
----------
hereunder to any purchaser from such Investor of Restricted Shares with an
aggregate fair market value in excess of $3,000,000 at the time of such sale;
provided, however, that such purchaser shall, as a condition to the
- -------- -------
effectiveness of such assignment, be required to execute a counterpart to this
Agreement agreeing to be treated as an Investor whereupon such purchaser shall
have the benefits of, and shall be subject to the restrictions contained in,
this Agreement.
SECTION 14. NOTICES. All notices and other communications given or
-------
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
-13-
<PAGE>
(i) If to the Purchasers, to such address listed on
Schedule I hereto, with copies to:
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attn: Brooks Stough, Esq.
Telecopier No.: (650) 321-2800
Telephone No.: (650) 463-5370
O'Melveny & Myers, LLP
1999 Avenue of the Stars
Los Angeles, CA 90067-6035
Attn: Steven L. Grossman, Esq.
Telecopier No.: (310) 246-6779
Telephone No.: (310) 553-6700
(ii) If to the Company:
Advanced Radio Telecom Corporation
500 108th Avenue NE, Suite 2600
Bellevue, WA 98004
Attn: Thomas M. Walker, Esq., General Counsel
Telecopier No.: (425) 990-1642 or (425) 688-0703
Telephone No.: (425) 990-1669
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Mary E. Weber, Esq.
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7391
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery, telex, telegram or
telecopy, on the date of such delivery, (b) in the, case of overnight courier,
on the next business day, and (c) in the case of mailing, on the third business
day following such mailing.
-14-
<PAGE>
SECTION 15. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms and
----------------------------------
provisions of this Agreement may not be modified or amended, nor may any
provision applicable to the Investors be waived, except pursuant to a writing
signed by (i) the Company and (ii) Two-Thirds in Interest of the Investors.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 17. HEADINGS. The headings of the various sections of this
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 18. SEVERABILITY. It is the desire and intent of the
------------
parties that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 19. GOVERNING LAW. All questions concerning the
-------------
construction, interpretation and validity of this Agreement shall be governed by
and construed and enforced in accordance with the domestic laws of the State of
New York, without giving effect to any choice or conflict of law provision or
rule (whether in the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New York. In furtherance of the foregoing, the internal law of the State of New
York will control the interpretation and construction of this Agreement, even if
under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
SECTION 20. LEGEND ON CERTIFICATES. Any certificate representing
----------------------
securities subject to this Agreement shall bear a legend in substantially the
following form:
"The securities represented by this certificate are subject to a
Registration Rights Agreement dated as of June __, 1999, as
amended from time to time. A copy thereof is available for
inspection from the Company."
-15-
<PAGE>
SECTION 21. COUNTERPARTS; VALIDITY. This Agreement may be executed
----------------------
in counterparts and telecopied signatures are effective. The failure of any
Person holding Registrable Shares to execute this Agreement does not make it
invalid as against any other Person holding Registrable Shares.
SECTION 22. ENTIRE AGREEMENT. This Agreement and the other
----------------
documents, certificates, instruments, writings and agreements referred to herein
or delivered pursuant hereto contain the entire understanding of the parties
with respect to the subject matter hereof and supersede in their entirety any
and all prior agreements and understandings between any of the parties hereto
all of which are hereby terminated in their entirety and of no further force or
effect.
SECTION 23. AFFILIATE. Nothing contained in this Agreement shall
---------
constitute any Investor or any selling Investor an "affiliate" of the Company
within the meaning of the Securities Act or the Exchange Act, including, without
limitation, Rule 501 under the Securities Act and Rule 13e-3 under the Exchange
Act.
SECTION 24. FCC APPROVALS. If the sale of Registrable Shares
-------------
pursuant to a registration requested in accordance with Section 2 would result
in a substantial or insubstantial change of ownership transfer of control of the
Company or its FCC licenses requiring prior approval (as such concepts are
defined in the Communications Act and the rules and regulations of the FCC
adopted thereunder), then the Company shall promptly take all reasonable actions
deemed necessary by counsel to the Company to obtain from the FCC such consents
as may be necessary to permit such sale of such Registrable Shares. The Company
shall begin to take such actions within 15 days after the date on which the
Company has received the last request for the registration of Registrable Shares
in any one transaction, file necessary applications within 30 days of such date,
and generally shall use all reasonable efforts to secure all necessary FCC
consent. The selling Investors will provide reasonable assistance in connection
with the preparation and filing with the FCC of appropriate applications for
consent to any such transfer of control and obtaining such consent.
SECTION 25. SPECIFIC PERFORMANCE. The parties hereto recognize and
--------------------
agree that money damages may be insufficient to compensate the holders of any
Registrable Shares for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
[The remainder of this page has been intentionally left blank]
-16-
<PAGE>
[Registration Rights Agreement]
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Registration Rights Agreement to be executed as of the date first above written
by their respective officers thereunto duly authorized.
The Company: ADVANCED RADIO TELECOM CORP.
By: /s/ Henry C. Hirsch
-------------------------------------------
Name: Henry C. Hirsch
Title: Chairman and CEO
The Purchasers: U.S. TELESOURCE, INC.
By: /s/ Marc B. Weisberg
------------------------------------------
Name: Marc B. Weisberg
Title:
OAK INVESTMENT PARTNERS VIII, LIMITED PARTNERSHIP
By: Oak Associates VIII, LLC, General Partner
/s/ Bandel L. Carano
----------------------------------------------
By: Bandel L. Carano, Managing Member
OAK VIII AFFILIATE FUND, LIMITED PARTNERSHIP
By: Oak VIII Affiliates, LLC, General Partner
/s/ Bandel L. Carano
----------------------------------------------
By: Bandel L. Carano, Managing Member
<PAGE>
[Registration Rights Agreement]
MERITECH CAPITAL PARTNERS
By:
-----------------------------------------
Name:
Title:
<PAGE>
[Registration Rights Agreement]
ACCEL VI L.P.
BY: ACCEL VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
BY: /s/ G. Carter Sednaoui
----------------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
BY: ACCEL INTERNET FUND II ASSOCIATES L.L.C.
ITS GENERAL PARTNER
BY: /s/ G. Carter Sednaoui
-------------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
BY: ACCEL KEIRETSU VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ G. Carter Sednaoui
---------------------------------------
Managing Member
ACCEL INVESTORS '98 L.P.
By: /s/ G. Carter Sednaoui
---------------------------------------
General Partner
<PAGE>
[Registration Rights Agreement]
BRENTWOOD ASSOCIATES IX, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partners
By: /s/ John L. Walecka
--------------------------------
Name: John L. Walecka
Title: Managing Member
BRENTWOOD AFFILIATES FUND III, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ John L. Walecka
--------------------------------
Name: John L. Walecka
Title: Managing Member
<PAGE>
[Registration Rights Agreement]
COLUMBIA CAPITAL ARTT INVESTORS, LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ James B. Fleming, Jr.
-----------------------------------
Name: James B. Fleming, Jr.
Title: Managing Director
COLUMBIA CAPITAL ARTT PARTNERS, LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ James B. Fleming, Jr.
-----------------------------------
Name: James B. Fleming, Jr.
Title: Managing Director
<PAGE>
[Registration Rights Agreement]
WORLDVIEW TECHNOLOGY PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
----------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW TECHNOLOGY INTERNATIONAL II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
----------------------------------------------
Name: James Wei
Title: Member
WORLDVIEW STRATEGIC PARTNERS II, L.P.
By: Worldview Capital II, L.P., General Partner
By: Worldview Equity I, L.L.C., General Partner
By: /s/ James Wei
----------------------------------------------
Name: James Wei
Title: Member
<PAGE>
[Registration Rights Agreement]
GLOBAL PRIVATE EQUITY II - EUROPE LIMITED PARTNERSHIP
GLOBAL PRIVATE EQUITY II - PGGM LIMITED PARTNERSHIP
DIGITAL MEDIA AND COMMUNICATIONS II LIMITED PARTNERSHIP
OAKSTONE VENTURES LIMITED PARTNERSHIP
ADVENT CROWN FUND II C.V.
ADWEST LIMITED PARTNERSHIP
By: Advent International Limited Partnership, General
Partner
By: Advent International Corporation, General Partner
By: Andrew Fillat, Senior Vice President*
ADVENT GLOBAL GECC LIMITED PARTNERSHIP
By: Advent Global Management Limited Partnership,
General Partner
By: Advent International Limited Partnership,
General Partner
By: Advent International Corporation, General Partner
By: Andrew Fillat, Senior Vice President*
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation, General Partner
By: Andrew Fillat, Senior Vice President*
*For all of the above:
/s/ Andrew Fillat
---------------------------------------------------
Andrew Fillat, Senior Vice President
<PAGE>
[Registration Rights Agreement]
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
--------------------------------------
Name: Robert H. Buescher
Title: Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Robert H. Buescher
--------------------------------------
Name: Robert H. Buescher
Title: Manager
COVE VENTURES, LLC
By: Cove Road Associates, LLC, Managing Member
By: /s/ Robert Goodman
--------------------------------------
Name: Robert Goodman
Title: Managing Member
<PAGE>
[Registration Rights Agreement]
ADAMS CAPITAL MANAGEMENT, L.P.
By: ACM Capital Partners II, L.P., General Partner
By: Joel P. Adams, General Partner
By: /s/ Joel P. Adams
-------------------------------------------
Name: Joel P. Adams
Title: General Partner
<PAGE>
Exhibit 10.36
FIRST AMENDMENT TO
AMENDED AND RESTATED
PURCHASE AGREEMENT
This First Amendment to Amended and Restated Purchase Agreement (the
"Amendment") is made as of May 25, 1999 by and among Advanced Radio Telecom
Corp., a Delaware corporation ("Customer"), and Lucent Technologies Inc., a
Delaware corporation ("Seller").
RECITALS
--------
1. Customer and Seller are parties to a certain Amended and Restated
Purchase Agreement dated as of July 24, 1998 (the "Purchase Agreement").
Capitalized terms used in this Amendment without definition shall have the same
meaning as in the Purchase Agreement.
2. The parties wish to amend the Purchase Agreement to change certain
terms related to Customer's purchase commitment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendments. The Purchase Agreement is amended as follows:
----------
1.1. Article 1 of the Purchase Agreement is hereby amended by changing
the following subsections:
(h) the language "Section 2.8(b)" in the definition of "Average
Allocation" is hereby deleted and replaced with "Section 2.8."
(i) the language "Section 2.8(b), including Cure Purchases" in
the definition of "Average Allocation Test" is hereby deleted and
replaced with "Section 2.8."
(k) the definition of "Best In Class" is hereby deleted.
(o) the definition of "Characteristics" is hereby deleted.
(t) the definition of "Cure Purchases" is hereby deleted.
(u) the definition of "Customer Comparison" is hereby deleted.
<PAGE>
(w) the definition of "Deficiency Notice" is hereby deleted.
(x) the definition of "Deliverable" is hereby deleted.
(yyyy) the definition of "Total Contract Value" shall be
deleted.
1.2. Section 2.1 of the Purchase Agreement is hereby amended to replace
the two instances of the word "will" with, in each case, the word "may."
1.3. Section 2.2 of the Purchase agreement is hereby amended to replace
the phrase "that is not expected to exceed $1.2 billion" with the phrase
"to the extent purchased by Customer hereunder."
1.4. Section 2.8 of the Purchase Agreement is hereby deleted and
replaced with the following:
"2.8. Average Allocation. Customer may from time to time place
------------------
RS Orders and Orders with Seller. For purposes of this Agreement, the
"Average Allocation" for any Allocation Period shall be calculated by
averaging such RS Orders and Orders for any Allocation Period and all
previous Allocation Periods, provided that Customer shall at no time
have any obligation to place RS Orders or Orders and shall at all
times have the right to purchase products and licensed materials from
vendors other than Seller."
1.5. Section 2.9 of the Purchase Agreement is hereby deleted and
replaced with the following:
"2.9. International Orders. The parties agree that if the
--------------------
parties agree upon the provision by Seller of products, licensed
materials or services to Customer or its Subsidiaries in any
territories outside the United States, the amount of any orders placed
for such products, licensed materials and services shall be included
in the calculation of Average Allocation pursuant to Section 2.8
hereof."
1.6. A new Section 2.10 shall be added to the Purchase Agreement as
follows:
"2.10. Commitment. The parties hereby agree that Customer has no
----------
commitment to purchase any equipment, software or services from Seller
hereunder, including having no minimum purchase commitments hereunder,
and that Customer may purchase equipment, software and services from
other parties for its network. The parties agree that,
notwithstanding anything else in the Agreement, all other provisions
of this agreement shall be interpreted consistently with the foregoing
sentence."
-2-
<PAGE>
1.7. Section 3.1 of the Purchase Agreement is hereby deleted and
replaced with the following:
"3.1. Configuration of the Network. With respect to equipment,
----------------------------
software and services purchased prior to the date of the effectiveness
of Amendment 1 hereto and, with respect to equipment purchased after
the date of the effectiveness of Amendment 1 hereto then to the extent
agreed by the parties from time to time, Seller will configure and
engineer a state of the art Network to provide wireless, packet-based,
broadband data services to those major metropolitan areas throughout
the United States agreed upon by the parties, in accordance with the
Specifications and Responsibility Matrix which may be updated or
amended from time to time by mutual written agreement. In designing
the Network, in order to accommodate the ultimate demands on the
Network, Seller will assist Customer in evaluating the size and
potential requirements of the market for wireless, broadband data
services and in planning and structuring the Network to best realize
such potential."
1.8. Section 3.2 of the Purchase Agreement is hereby amended by adding
the following text to the beginning of the Section, immediately preceding
the word "Seller":
"With respect to equipment, software and services purchased prior
to the date of the effectiveness of Amendment 1 hereto and, with
respect to equipment purchased after the date of the effectiveness of
Amendment 1 hereto then to the extent agreed by the parties from time
to time,"
1.9. Section 3.4 of the Purchase Agreement shall be deleted in its
entirety.
1.10. Section 6.10 of the Purchase Agreement is hereby deleted and
replaced with the following:
"6.10. Security Interest. Seller retains and Customer hereby
-----------------
grants Seller a purchase money security interest in the Network to
secure any and all amounts due Seller under this Agreement for the
Purchase Price of the Network. Seller shall have the right, at any
time during the Term, to file in any state or local jurisdiction such
financing statements (e.g., UCC-1 financing statements) as Seller
deems necessary to perfect its purchase money security interest
hereunder, provided Customer is furnished a copy of such financing
statements before filing. Upon Seller's reasonable request, Customer
shall execute all documents necessary or desirable to evidence or
perfect Seller's purchase money security interest in the Network
including without limitation, UCC-1 financing statements. Customer
also agrees that this Agreement may be filed by Seller in any state or
local jurisdiction as a financing statement (or as other evidence of
the Seller's purchase money security interest). To the extent
Customer has no outstanding financial obligations to Seller hereunder,
Seller will, if
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<PAGE>
requested by Customer, take reasonable steps necessary to terminate
and release such security interests, including filing UCC-3
termination statements."
2. Ratification. Except as modified by this Amendment, the Purchase
------------
Agreement is hereby ratified and reconfirmed in all respects.
3. Indebtedness. Immediately following the closing of Customer's sale of
------------
convertible preferred stock pursuant to a Preferred Stock Purchase Agreement to
be executed in May 1999 among Customer and certain "Purchasers" named therein,
Customer shall repay Seller all amounts due Seller under the Purchase Money
Credit Agreement, dated September 17, 1998 and the Working Capital Credit
Agreement, dated September 17, 1998, each between Customer and Seller. Customer
and Seller intend to enter into an Amendment No. 1, Waiver and Consent Agreement
dated on or about the date hereof pursuant to which certain terms of the
foregoing agreements are to be modified. This agreement is intended to operated
in conjunction with such agreement and to be interpreted consistently therewith.
4. Counterparts. The Amendment may be executed simultaneously in one or
------------
more counterparts hereof, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
5. Effectiveness. This Amendment shall be effective upon the execution by
-------------
Customer and Seller.
[Remainder of Page Intentionally Blank]
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<PAGE>
The foregoing Amendment is hereby executed as of the date first above
written.
ADVANCED RADIO TELECOM CORP.
By: /s/ Henry C. Hirsch
-------------------------------
Name: Henry C. Hirsch
Title: Chairman & CEO
LUCENT TECHNOLOGIES INC.
By: /s/ Bill Plunkett
-------------------------------
Name: Bill Plunkett
Title: Senior Vice President
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<PAGE>
Exhibit 10.37
EXECUTION COPY
AMENDMENT NO. 1, WAIVER AND CONSENT
AMENDMENT NO. 1, WAIVER AND CONSENT to the Credit Agreements (hereinafter
defined), dated as of May 26, 1999, among Advanced Radio Telecom Corp. ("ART"),
the Lenders named in the Credit Agreements and Lucent Technologies Inc., as
Administrative Agent. Capitalized terms used herein without definition shall
have the meaning specified in the Credit Agreements.
WHEREAS, ART and the Lenders are parties to that certain Credit Agreement
(the "PM Credit Agreement"), dated as of September 17, 1998;
WHEREAS, ART and the Lenders are parties to that certain Working Capital
Credit Agreement (the "WC Credit Agreement", together with the PM Credit
Agreement, the "Credit Agreements") dated as of September 17, 1998;
WHEREAS, ART is entering into a transaction (the "Oak Transaction")
pursuant to which Oak Investment Partners and certain other investors
("Investors") will purchase Series A and Series B Preferred Stock of ART in
accordance with the terms set forth in a Preferred Stock Purchase Agreement
dated as of May __, 1999 among ART and the Investors (the "SPA") in exchange for
an investment of approximately $251,000,000 (the "Oak Investment"), subject to
the approval of ART's shareholders;
WHEREAS, pending such shareholder approval, the Investors will advance all
or part of the Oak Investment as a bridge loan to ART (the "Bridge Loan"), with
the principal amount plus accrued interest of the Bridge Loan to be applied to
the purchase price of the Series A and Series B Preferred Stock at closing;
WHEREAS, ART has requested that the Lender amend the Credit Agreements as
set forth in Section 1 below and waive compliance with certain provisions in the
Credit Agreements, and the Lenders are willing to amend the Credit Agreements
and so waive in accordance with the terms and conditions hereof;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE>
1. Amendments to Credit Agreements.
-------------------------------
1.1 Amendments to PM Credit Agreement
---------------------------------
1.1.1 Definitions. Section 1.01 of the PM Credit Agreement is
-----------
hereby amended to add the following definition in alphabetical order in such
section:
"Oak Transaction" means an investment of approximately
$250,000,000 by Oak Investment Partners and certain other
investors in Series A and Series B Preferred Stock of the
Borrower and related transactions pursuant to a Preferred
Stock Purchase Agreement dated May __, 1999 among the
Borrower and such investors (the "SPA"), including a bridge
loan to the Borrower pending the approval of the Oak
Transaction by stockholders of the Borrower, on terms
substantially similar to the terms set forth in the term
sheet attached as Appendix I to Amendment No. 1, Waiver and
Consent to this Agreement dated as of May __, 1999.
1.1.2 Section 6.01 Indebtedness. Section 6.01 of the PM Credit
-------------------------
Agreement is hereby amended to add a new subsection (h) on page 70 as follows
and to renumber existing subsections (h) and (i) as subsections (i) and (j),
respectively:
"(h) Indebtedness in an aggregate principal amount not
exceeding $50,000,000, consisting of a bridge loan or bridge
loans to the Borrower in connection with the Oak Transaction
on the terms set forth in Section 1.3 of the SPA and in the
notes referenced therein;"
1.2 Amendments to Working Capital Credit Agreement.
----------------------------------------------
1.2.1 Definitions. Section 1.01 of the WC Credit Agreement is
-----------
hereby amended to add the following definition in alphabetical order in such
section:
"Oak Transaction" means an investment of approximately
$250,000,000 by Oak Investment Partners and certain other
investors in Series A and Series B Preferred Stock of the
Borrower and related transactions pursuant to a Preferred
Stock Purchase Agreement dated May __, 1999 among the
Borrower and such investors (the "SPA"), including a bridge
loan to the Borrower pending the approval of the Oak
Transaction by stockholders of the Borrower, on terms
substantially similar to
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<PAGE>
the terms set forth in the term sheet attached as Appendix I
to Amendment No. 1, Waiver and Consent to this Agreement
dated as of May __, 1999.
1.2.2 Definition of Maturity Date. Section 1.01 of the WC
---------------------------
Credit Agreement is hereby amended by deleting the words "June 30, 1999"
appearing in the definition of "Maturity Date" and replacing them with the
phrase "the earlier to occur of the 150th day after the date the SPA is signed
and the date of the final vote of ART's stockholders on the Oak Transaction."
1.2.3 Definition of Prepayment Event. The definition of
------------------------------
"Prepayment Event" in Section 1.01 of the WC Credit Agreement is hereby amended
to add the following words at the end of such definition:
"provided further, that none of the funds received in
-------- -------
connection with the Oak Transaction shall be deemed to be
Net Proceeds of a Prepayment Event or Net Proceeds received
in respect of events described in clauses (a) and (b) above
for purposes of calculating the first $50,000,000 of Net
Proceeds pursuant to the first proviso of this definition."
1.2.4 Section 2.16 Extension of Maturity Date. Section 2.16
---------------------------------------
of the WC Credit Agreement is hereby amended by deleting the last proviso to the
last sentence thereof.
1.2.5 Section 6.01 Indebtedness. Section 6.01 of the WC
-------------------------
Credit Agreement is hereby amended by (a) deleting the word "and" appearing at
the end of clause (f) thereof, (b) deleting the period at the end of clause (g)
thereof and substituting therefor "; and" and (c) adding a new subsection (h) on
page 50 as follows:
"(h) Indebtedness in an aggregate principal amount not
exceeding $50,000,000, consisting of a bridge loan or bridge
loans to the Borrower in connection with the Oak Transaction
on the terms set forth in Section 1.3 of the SPA and in the
notes referenced therein,"
2. Waiver of Certain Provisions of the Credit Agreements.
-----------------------------------------------------
2.1 PM Credit Agreement. The Lender hereby waives (i) any
-------------------
requirement for prepayment of Borrowings under Section 2.09(e) of the PM Credit
Agreement as a result of any Repayment of the Bridge Loan, (ii) any Event of
Default under Article VII (m) of the PM Credit Agreement related to the Oak
Transaction; provided that the Investors do not purchase
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<PAGE>
securities representing more than 45% of the voting power of ART's outstanding
capital stock and (iii) the provisions of Sections 6.21 through and including
6.23 of the PM Credit Agreement, which waiver shall extend for a period
beginning on the date hereof and terminating on October 31, 1999.
2.2 WC Credit Agreement. The Lender hereby waives (i) any Event of
-------------------
Default under Article VII(l) of the WC Credit Agreement related to the Oak
Transaction and (ii) the provisions of Sections 6.15 through and including 6.16
of the WC Credit Agreement, which waiver shall extend for a period beginning on
the date hereof and terminating on October 31, 1999.
3. Ratification. Except as provided herein, the Credit Agreements and
------------
the Loan Documents are each in all respects ratified and confirmed and the terms
and conditions thereof in all respects remain in full force and effect.
4. Governing Law. This Agreement shall in all respects be governed by,
-------------
and construed and enforced in accordance with the laws of the State of New York.
5. Miscellaneous. This Agreement shall be binding upon and inure to the
-------------
benefit of and be enforceable by the respective successors and assigns of the
parties hereto. This Agreement embodies the entire agreement and understanding
between ART and the Lender and supersedes all prior agreements and
understandings relating to the subject matter hereof, except as otherwise
provided in Section 3 hereof. If any provision hereof or any application
thereof shall be invalid or unenforceable, the remainder hereof and any other
application of such provision shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives thereunto duly authorized as of the date
first above written.
ADVANCED RADIO TELECOM CORP.
By: /s/ R. S. McCambridge
---------------------------------------------
Name: R. S. McCambridge
Title: Executive Vice President & CFO
LUCENT TECHNOLOGIES INC.
individually and as Administrative Agent
By: /s/ Paul A. Hayes
---------------------------------------------
Name: Paul A. Hayes
Title: Director, NA Customer Finance
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<PAGE>
EXHIBIT 99.1
CONTACTS FOR ART: CONTACTS FOR QWEST:
MEDIA: MEDIA
Jeanne Snell Tyler Gronbach
(303) 771-1666 (303) 992-2155
[email protected] [email protected]
INVESTORS: INVESTORS:
Bob McCambridge Lee Wolfe
(425) 688-8700 (800) 567-7296
[email protected] [email protected]
QWEST COMMUNICATIONS AND INVESTOR GROUP COMMIT
$251 MILLION TO ADVANCED RADIO TELECOM TO EXPAND ITS
HIGH-SPEED LOCAL WIRELESS NETWORK
QWEST TO ACQUIRE 19 PERCENT INTEREST IN ART AND TAKE NEXT STEP IN LOCAL
BROADBAND ACCESS PLANS; INVESTMENT ACCELERATES ART'S BROADBAND IP
NETWORK DEPLOYMENT
JUNE 1, 1999---Qwest Communications International Inc. (Nasdaq: QWST), the
Internet communications company, Advanced Radio Telecom (ART) Corp. (Nasdaq:
ARTT) and a group of high-tech investment funds today announced that they have
signed a definitive agreement for a $251 million equity investment that will
expedite the deployment of ART's high-speed wireless network. For Qwest, the
announcement illustrates the company's aggressive, evolving plans to grow its
local broadband connectivity options and deliver end-to-end, next-generation
communications services to customers.
Qwest will invest $90 million for a 19 percent stake in ART to help support the
construction of ART's fixed wireless networks. The other investors include
syndicate leader Oak Investment Partners, $40 million; MeriTech Capital
Partners, $25 million; Advent International, $20 million; Columbia Capital, $20
million; Accel Partners, $15 million; Brentwood Venture Capital, $15 million;
Worldview Technology Partners, $15 million; Bessemer Venture Partners, $8
million; and Adams Capital Management, $3 million.
Qwest and ART have agreed to integrate ART's local broadband wireless networks
with Qwest's Internet Protocol(IP)-based fiber-optic network. ART will provide
Qwest broadband local wireless capacity, and Qwest will be ART's exclusive
provider of network backbone. The two companies will also co-locate equipment
and coordinate joint marketing initiatives to businesses. ART currently offers
commercial wireless Internet services to businesses in the Seattle, Portland,
Ore., and Phoenix metropolitan areas.
<PAGE>
With the equity capital infusion, ART will be able to significantly accelerate
the implementation and evolution of its business plan. The company plans to
build broadband wireless high-speed metropolitan area networks in 40 of the top
50 markets in the United States over the next two years. ART's 38GHz spectrum
licenses and high-speed data communications infrastructure combined with Qwest's
reliable, scalable 18,500-mile network in the United States, will be able to
deliver broadband network applications and services to more than 50 percent of
businesses in the U.S.
The investors will advance $50 million through a short-term senior note, which
will be retired at closing in exchange for equity. The companies anticipate
closing the transaction in the third quarter of 1999 subject to ART shareholder
approval, Hart-Scott-Rodino approval, consents to certain material amendments
and other customary conditions. Each investor will acquire preferred stock
convertible into ART common stock. The preferred shares will be purchased at $80
per share and will be convertible on a 10-to-one basis. The investors' combined
voting interest, with respect to the new investment, is limited to 45 percent of
ART's outstanding voting securities.
"Our investment in ART will provide Qwest with another high-end, last-mile
broadband access solution to support the use of Internet applications and
services by our customers," said Joseph P. Nacchio, Qwest chairman and CEO. "The
ART wireless technology is an outstanding addition to the fiber-optic cable we
are placing in 19 cities to directly connect business customers to our Internet-
protocol network."
Qwest also has made investments and plans to offer digital subscriber lines in a
number of key U.S. markets later this year.
"This is a `grand slam' for all the companies involved, as well as the ART
shareholders," said Henry "Harry" C. Hirsch, ART chairman and CEO. "With a
strong equity capital base, a very sophisticated group of investors in
information technology and communications, and Qwest as our strategic investor
and partner, we can now implement our vision of satisfying the exponentially
growing business demand for end-to-end broadband IP communications services.
Qwest is an outstanding partner for ART because of its leadership in Internet
communications and the compatibility of its state-of-the-art data network with
ours."
Representatives of Qwest Communications and Oak Investment Partners will join
ART's board of directors following the closing.
<PAGE>
ABOUT THE COMPANIES
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable
and secure broadband Internet-based data, voice and image communications for
businesses and consumers. Headquartered in Denver, Qwest has more than 8,500
employees working in North America, Europe and Mexico. The Qwest Macro
Capacity(R) Fiber Network, designed with the newest optical networking, will
span more than 18,500 route miles in the United States when it is completed by
mid-1999, and an additional 315-mile network route that will be completed by the
end of the year. In addition, Qwest and KPN, the Dutch telecommunications
company, have formed a venture to build and operate a high-capacity European
fiber optic, Internet Protocol-based network that has 2,100 miles and will span
9,100 miles when it is completed in 2001. Qwest also has nearly completed a
1,400-mile network in Mexico. For more information, please visit the Qwest web
site at www.qwest.com.
-------------
Advanced Radio Telecom is a facilities-based, broadband ISP providing a direct
connection between the customer premises and the Internet. ART owns and
operates metropolitan area networks in Seattle, Portland and Phoenix using fixed
wireless and fiber optic technologies. ART owns or manages 38GHz spectrum
licenses in more than 210 markets in the United States, including 49 of the top
50 and 90 of the top 100 markets. ART also owns 26GHz and/or 38GHz spectrum
licenses in several European countries. ART offers a full range of Internet
services including dedicated Internet access at speeds up to 10Mbps, e-mail, web
hosting and web design, domain name server (DNS) registration, IP Fax and more.
For more information, please visit ART's web site at www.art-net.net.
Oak Investment Partners is a private partnership that focuses on financing
emerging leaders in the information technology and e-commerce areas. Oak was
founded in 1978 and has since organized eight partnerships with total
commitments of over $1.6 Billion. Examples of past investment successes include
companies such as: Exodus, Inktomi, Parametric, Polycom, Synopsys, and
Wellfleet. Oak's focus in the wireless communications area includes investments
in Metawave Communications, Airspan, Triton and Wireless Facilities Inc. For
more information, please visit Oak's web site at www.oakinv.com.
This release may contain forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest and ART with
the SEC, specifically the most recent reports which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements, including failure to consummate the transaction,
potential fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, Qwest's failure to complete
the network on schedule and on budget, ART's ability to implement its network,
financial risk management and future growth subject to risks, ability to achieve
Year 2000 compliance, competition and customer demand, ART's ability to meet
capital requirements and other financial risks, and adverse changes in the
regulatory or legislative environment. Qwest and ART undertake no obligation to
review or confirm analysts' expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
The Qwest logo is a registered trademark of Qwest Communications International
Inc. in the U.S. and certain other countries.
# # #
