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EXHIBIT C
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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
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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 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
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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
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 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.
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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
& Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 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 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
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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.
(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,
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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. (a)
(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
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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
Xxxxxx, 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, 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.
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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 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
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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
Xxxx-Xxxxx-Xxxxxx 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 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
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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 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.
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(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 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:
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(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 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.
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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, 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.
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(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 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
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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 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
xxxx 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.
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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 proprietary
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").
(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.
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(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 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 Xxxxxx Xxxxxxx & Co. Incorporated ("XXXXXX XXXXXXX"), 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
Xxxxxx Xxxxxxx 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
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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.
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
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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 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
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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.
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.
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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);
(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)
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
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,
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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 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
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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 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
Page 167 of 229
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.
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
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Closing Date (or Common Stock into which such Preferred Stock
was convertible), Telesource will have the right to nominate
the Telesource Nominee 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
Xxxxx 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
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until the next meeting of the stockholders for the election of
directors of the Company.
(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
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number of shares of Common Stock issuable pursuant to the Company's Restated
Equity Incentive Plan. Section 1.1
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 any rights, warrants or options to
Page 171 of 229
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.
Section 4.16 PREEMPTIVE RIGHTS.
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(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
Page 173 of 229
(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.
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.
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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 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
Page 175 of 229
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 & Xxxx, 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;
(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;
Page 176 of 229
(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 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;
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(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 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
Page 178 of 229
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 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
Page 179 of 229
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
Company shall pay all fees incurred in connection with all required filings
under the HSR Act (not to exceed $180,000).
Page 180 of 229
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.
Each certificate representing Shares or Conversion Shares shall also
bear any other legends required by any applicable law.
Page 181 of 229
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:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and to:
O'Melveny & Xxxxx LLP
1999 Avenue of the Stars
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) If to the Company:
Advanced Radio Telecom Corp.
000 000xx Xxxxxx XX, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq., General Counsel
Telecopier No.: (000) 000-0000 or (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Page 182 of 229
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 officials, who were directors,
or similar officials, on that date or whose
nomination or election was previously so approved.
Page 183 of 229
(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-???% of the Shares
and, on and after the Closing, Purchasers holding more than 66-???% of
the Shares then owned by the Purchasers.
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
Page 184 of 229
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 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
Page 185 of 229
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.
[This space intentionally left blank.]
Page 186 of 229
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/ XXXXX X. XXXXXX
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and CEO
The Purchasers: U.S. TELESOURCE, INC.
By: /s/ XXXX X. XXXXXXXX
-----------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title:
OAK INVESTMENT PARTNERS VIII, LIMITED PARTNERSHIP
By: Oak Associates VIII, LLC, General Partner
/s/ XXXXXX X. XXXXXX
---------------------------------------------------
By: Xxxxxx X. Xxxxxx, Managing Member
OAK VIII AFFILIATE FUND, LIMITED PARTNERSHIP
By: Oak VIII Affiliates, LLC, General Partner
---------------------------------------------------
/s/ XXXXXX X. XXXXXX
By: Xxxxxx X. Xxxxxx, Managing Member
Page 187 of 229
MERITECH CAPITAL AFFILIATES L.P.
By: MeriTech Capital Associates, L.L.C.
its General Partner
By: MeriTech Management L.L.C.
a managing member
By: /s/ XXXX XXXXXX
--------------------------------------
Xxxx Xxxxxx, a managing member
MERITECH CAPITAL PARTNERS L.P.
By: MeriTech Capital Associates L.L.C.
its General Partner
By: MeriTech Management L.L.C.
a managing member
By: /s/ XXXX XXXXXX
--------------------------------------
Xxxx Xxxxxx, a managing member
Page 188 of 229
ACCEL VI L.P.
BY: ACCEL VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ X. XXXXXX SEDNAOUI
------------------------------
Managing Member
ACCEL INTERNET FUND II L.P.
BY: ACCEL INTERNET FUND II ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By: /s/ X. XXXXXX SEDNAOUI
------------------------------
Managing Member
ACCEL KEIRETSU VI L.P.
By: ACCEL KEIRETSU VI ASSOCIATES L.L.C.
ITS GENERAL PARTNER
By:/s/ X. XXXXXX SEDNAOUI
------------------------------
Managing Member
ACCEL INVESTORS '98 L.P.
By:/s/ X. XXXXXX SEDNAOUI
------------------------------
General Partner
Page 189 of 229
BRENTWOOD ASSOCIATES IX, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partners
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Member
BRENTWOOD AFFILIATES FUND III, L.P.
By Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ XXXX X. XXXXXXX
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Member
COLUMBIA CAPITAL ARTT INVESTORS,
LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ XXXXX X. XXXXXXX, XX.
----------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Managing Director
COLUMBIA CAPITAL ARTT PARTNERS, LLC
By: Columbia Capital, L.L.C.
Its: Managing Member
By: /s/ XXXXX X. XXXXXXX, XX.
----------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Managing Director
Page 190 of 229
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/ XXXXX XXX
----------------------------------------------
Name: Xxxxx Xxx
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/ XXXXX XXX
----------------------------------------------
Name: Xxxxx Xxx
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/ XXXXX XXX
----------------------------------------------
Name: Xxxxx Xxx
Title: Member
Page 191 of 229
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: Xxxxxx Xxxxxx, 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: Xxxxxx Xxxxxx, Senior Vice President*
ADVENT PARTNERS LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: Xxxxxx Xxxxxx, Senior Vice President*
*For all of the above:
/s/ XXXXXX XXXXXX
-------------------------------------------------
Xxxxxx Xxxxxx, Senior Vice President
Page 192 of 229
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
Page 193 of 229
COVE VENTURES, LLC
By: Cove Road Associates, LLC, Managing Member
By: /s/ XXXXXX XXXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Member
Page 194 of 229
XXXXX CAPITAL MANAGEMENT, L.P.
By: ACM Capital Partners II, L.P., General Partner
By: Xxxx X. Xxxxx, General Partner
By: /s/ XXXX X. XXXXX
------------------------------------------------
Name: Xxxx X. Xxxxx
Title: General Partner
