STOCK PURCHASE AGREEMENT
AGREEMENT dated April 24, 1998 among WINSTAR COMMUNICATIONS, INC., a
Delaware corporation ("WinStar"), WINSTAR LHC1 LLC, a New York limited liability
company of which WinStar is the sole member ("WinLLC1"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇,
residing at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller").
WHEREAS, Seller is the owner of 560,231 of the outstanding shares (the
"Shares") of common stock, par value $.001 per share, of Advanced Radio Telecom
Corp. ("ARTT"); and
WHEREAS, Seller desires to sell certain of such shares to WinLLC1 and
WinLLC1 desires to purchase such shares from Seller on the terms and conditions
set forth herein;
IT IS AGREED:
1. Sale of Shares; Consideration.
(a) Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) Seller shall sell, transfer, assign and convey to
WinLLC1 555,000 shares of the common stock of ARTT (the "Shares"), and WinLLC1
shall purchase the Shares from Seller. As used herein, the term "Shares"
includes the associated preferred stock purchase rights issued pursuant to the
Rights Agreement dated June 20, 1997 between ARTT and Continental Stock Transfer
& Trust Company (the "ARTT Rights Plan").
(b) The consideration payable to Seller for the Shares shall be 252,272
shares of the common stock, par value $.01 per share, of WinStar (the "WinStar
Shares"), plus the "Adjustment Shares" (as defined in Section 1(c)), if any,
which may be issued pursuant to Section 1(c). The WinStar Shares and the
Adjustment Shares shall be issued by WinStar to Seller.
(c) If, within eighteen months after the Closing Date, WinStar, directly or
indirectly, (i) acquires at least 80% of the outstanding shares of common stock
of ARTT, or (ii) acquires all or substantially all of the assets of ARTT or
enters into a merger or other business combination with ARTT the consequence of
which is that WinStar, directly or indirectly, becomes the sole owner of all or
substantially all of the assets of ARTT ( any event under clauses (i) and (ii)
being an "ARTT Business Combination") for an "average price per share" paid for
shares of common stock of ARTT other than the Shares greater than $20.00 per
share (the "Benchmark Price"), then WinStar shall issue to Seller that number of
shares of common stock of WinStar ("Adjustment Shares") equal to the difference
between such "average price per share" and the Benchmark Price multiplied by
555,000 and divided by the "Adjustment Price" (as hereinafter defined), rounded
to the nearest whole share. Such issuance shall be made on the date (the
"Adjustment Closing Date") which is the fifth business day after the date on
which WinStar consummates the ARTT Business Combination. As used herein,
"Adjustment Price" shall mean the average of the last sale prices of the common
stock of WinStar reported on the Nasdaq National Market ("NNM") for the five
consecutive trading days ending on the date on which WinStar consummates the
ARTT Business Combination. For purposes of this Section 1(c), in determining the
"average price per share" of any shares of common stock of ARTT for which
payment is made with shares of common stock of WinStar, such common stock of
WinStar shall be valued at the average of the last sale prices of WinStar common
stock reported on the NNM for the five consecutive trading days ending on the
date of such purchase by WinStar. In the event of an ARTT Business Combination
pursuant to the preceding clause (ii), the "average price per share" shall be
the value of the aggregate consideration paid by WinStar to ARTT or its
stockholders in such ARTT Business Combination divided by the number of
outstanding shares of common stock of ARTT, with any portion of such
consideration which is paid for with shares of common stock of WinStar being
valued at the average of the last sale prices of WinStar common stock reported
on the NNM for the five consecutive trading days ending on the date of the
consummation of such ARTT Business Combination. If any portion of the
consideration paid by WinStar to ARTT or its stockholders is paid other than in
cash or with shares of common stock of WinStar, for purposes hereof such
consideration shall be valued at its fair market value. Notwithstanding the
foregoing or anything else in this Agreement, WinStar shall have no obligation
to acquire any ARTT securities and has made no representation that it has any
present or future intent to acquire any ARTT securities other than the Shares
and the shares to be acquired by WinLLC1 pursuant to the Reorganization
Agreement (as hereinafter defined).
(d) Solely at WinLLC1's election pursuant to Section 5(i), if Seller has
obtained the necessary consents therefor, Seller shall assign to WinLLC1, and
WinLLC1 shall assume, the obligations of Seller pursuant to Second Restated and
Amended Registration Rights Agreement dated July 3, 1996, among ARTT, Advanced
Radio Technologies Corporation ("ARTC"), the stockholders and warrantholders of
ARTT and the stockholders and warrantholders of ARTC (the "Registration Rights
Agreement").
(e) All share and share-related amounts and figures described hereunder
shall be appropriately adjusted from time to time to account for and give effect
to any reclassifications, stock splits, stock dividends, share combinations and
similar changes affecting the common stock of WinStar as a whole or the common
stock of ARTT as a whole and all holders thereof.
2. Closing.
(a) Subject to the terms and conditions of this Agreement, the consummation
of the transactions contemplated by this Agreement shall take place at a closing
(the "Closing") to be held at 10:00 a.m., New York City time, at a mutually
agreeable location in New York City, on a date ("Closing Date") as soon as
practicable following the satisfaction or waiver of the conditions to Closing
set forth in Section 6 hereof.
(b) At the Closing, Seller shall deliver to (i) WinLLC1, certificates rep
resenting the Shares, duly executed in form for transfer by the record holders
thereof or with duly executed stock powers therefor, not bearing restrictive
legends of any nature other than legends referring to restrictions imposed by
Federal and state securities laws and free and clear of any liens, claims,
charges, restrictions, security interests or other encumbrances of any kind,
including, without limitation, encumbrances created by option, voting rights,
buy-sell, stockholder or other agreements of any kind whatsoever affecting the
Shares (collectively, "Encumbrances") other than Encumbrances resulting from the
actions or omissions of WinStar or WinLLC1 ("WinStar Encumbrances") and those
imposed by Federal and state securities laws, and (ii) WinStar and WinLLC1, the
certificates and other documents required to be delivered by Seller pursuant
hereto.
(c) At the Closing, WinStar and WinLLC1 (collectively, the "WinStar
Parties") shall deliver to Seller (i) a certificate for 228,132 of the WinStar
Shares, and (ii) the certificates and other documents required to be delivered
by the WinStar Parties pursuant hereto and shall deliver to the escrow agent
referred to in Section 7(c) a certificate for the balance of the WinStar Shares.
The certificates for the WinStar Shares and any Adjustment Shares issued
hereunder shall bear the legends (the "Legends") set forth in Schedule A annexed
hereto.
3. Representations and Warranties of Seller. Seller represents and warrants to
the WinStar Parties as follows and acknowledges that the WinStar Parties are
relying upon such representa tions and warranties:
(a) This Agreement constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by any applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law and except that
enforceability of any indemnification provision may be limited under Federal and
state securities laws.
(b) The execution, delivery and performance of this Agreement by Seller
does not and will not (i) violate or result in any default under or give rise to
any right of termination, revocation or modification of any indenture, license
or other agreement to which Seller is a party or to which the Shares are subject
or (ii) violate or result in any default under any law, regulation, order, writ,
judgment or decree applicable to Seller or the Shares or by which the ability of
Seller to consummate the transactions to be consummated by them hereunder would
be adversely affected as a consequence of such violation or default.
(c) (i) Subject to the Registration Rights Agreement, Seller has the sole,
entire and unfettered right to transfer the Shares to WinLLC1, free
and clear of any Encumbrance whatsoever and subject to no restrictions
with respect to the transferability thereof. Upon acquisition of the
Shares by WinLLC1, WinLLC1 will be able to vote, transfer and
otherwise dispose of the Shares without restriction other than those
imposed by Federal and state securities laws and those under the
Registration Rights Agreement, if assumed by WinLLC1.
(ii) Seller is the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act")) of the Shares, free and clear of all Encumbrances
except as set forth in Schedule B annexed hereto, all of which
Encumbrances shall terminate and be null, void and of no effect on and
after the Closing other than those imposed by the Registration Rights
Agreement (if assigned to and assumed by WinLLC1) and Federal and
state securities laws. No person or entity has any option or other
right to purchase the Shares or otherwise obtain any interest in the
Shares from Seller.
The sale and transfer of the Shares to WinLLC1 pursuant to this
Agreement will not give any person or entity a legal right or cause of
action against the Shares or any of the WinStar Parties except as may
result from a breach by a WinStar Party of an obligation to which it
is subject. Upon consummation of the transactions contemplated hereby,
WinLLC1 will hold the Shares free and clear of any Encumbrance,
including any rights of any other person or entity whatsoever, other
than WinStar Encumbrances, those imposed by Federal and state
securities laws and, if assigned to and assumed by WinLLC1, the
Registration Rights Agreement.
(iii)The Shares are validly issued, fully paid and non-assessable and were
issued in compliance with all Federal and state securities laws. The
Shares constitute the only shares of capital stock of ARTT of which
Seller is the beneficial owner other than 5,231 shares of common stock
of ARTT. For purposes of Rule 144 ("Rule 144") promulgated under the
Securities Act of 1933, as amended (the "1933 Act"), Seller is not an
"affiliate" (as defined in Rule 144) of ARTT and has not been such an
affiliate within three months prior to the date hereof and Seller
acquired the Shares no later than the dates set forth in Schedule C
except for those thereof listed in Schedule C as being free from
restriction under Rule 144.
(d) Seller is not in violation of any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule or regulation or
writ or decree of any court, governmental agency or instrumentality to which he
is subject, a violation of which would have a material adverse effect on his
ability to perform his obligations under this Agreement.
(e) The execution and delivery of this Agreement by Seller do not, and the
performance of this Agreement and the consummation of the transactions
contemplated hereby by Seller will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority or other third party other than notice to
ARTT pursuant to the Registration Rights Agreement and, if the Registration
Rights Agreement is assigned to and assumed by WinLLC1, a counterpart of such
agreement signed by WinLLC1 required to be given to ARTT pursuant to such
agreement.
(f) Seller knows of no facts or circumstances which could reasonably be
expected to have a material adverse effect upon the business, condition
(financial or otherwise) or prospects of ARTT which have not been publicly
disclosed.
(g) No representation or warranty by Seller contained in this Agreement or
other instrument furnished or to be furnished to the WinStar Parties pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
(h) The WinStar Shares and Adjustment Shares will be acquired for Seller's
account and not with a view towards distribution thereof. Seller understands
that he must bear the economic risk of an investment in the WinStar Shares and
the Adjustment Shares, which cannot be sold by Seller unless they are registered
under the 1933 Act or an exemption therefrom is available. Seller is an
"Accredited Investor" as defined in Regulation D promulgated under the 1933 Act.
Seller has had both the opportunity to ask questions and receive answers from
the officers and directors of the WinStar Parties and all persons acting on
their behalf concerning the business and operations of the WinStar Parties and
to obtain any additional information, to the extent the WinStar Parties possess
or may possess such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of such information. Seller
acknowledges receiving from WinStar and reviewing WinStar's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 ("10-K"), WinStar's Proxy
Statement for its Annual Meeting of Stockholders held on June 26, 1997 ("Proxy
Statement"), WinStar's Current Reports on Form 8-K filed with the Securities and
Exchange Commission ("Commission") since January 1, 1998, which are listed on
Schedule D annexed hereto (the "8-Ks" and, together with the l0-K and the Proxy
Statement, the "WinStar SEC Filings") and WinStar's Confidential Offering
Circulars dated March 13, 1998 and March 17, 1998.
(i) Seller is not a member of a "group" (within the meaning of Rule 13d-5
under the Exchange Act) with respect to the securities of ARTT with any other
person or entity.
(j) The representations and warranties of Seller set forth in this
Agreement shall survive until one year from the Closing Date except that the
representations and warranties set forth in Section 3(c) shall survive without
limitation as to time.
4. Representations and Warranties of the WinStar Parties. The WinStar Parties
jointly and severally represent and warrant as follows to Seller and acknowledge
that Seller is relying upon such representations and warranties:
(a) (i) WinStar (A) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, (B) has all
the requisite power to own, lease and operate its properties and to
carry on its business as now being conducted and (C) has all necessary
power and authority to enter into this Agreement and to perform its
obligations as contemplated hereby.
(ii) WinLLC1 (A) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York,
(B) has all the requisite power to own, lease and operate its
properties and to carry on its business as now being conducted and (C)
has all necessary power and authority to enter into this Agreement and
to perform its obligations as contemplated hereby.
(iii)All action necessary to be taken by the WinStar Parties to authorize
the execution, delivery and performance of this Agreement and all
other agreements and instruments delivered and to be delivered by the
WinStar Parties in connection herewith has been duly and validly
taken. This Agreement constitutes the valid and binding obligation of
each of the WinStar Parties, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether
such enforceability is considered in equity or at law, and except that
enforceability of any indemnification provision may be limited under
Federal and state securities laws.
(b) The execution, delivery and performance of this Agreement by the
WinStar Parties do not and will not (i) violate or result in any default under
any provision of their respective Articles of Organization, Operating Agreement,
Certificate of Incorporation or By-Laws, (ii) violate or result in any default
under or give rise to any right of termination, revocation or modification of
any indenture, license or other agreement to which any of the WinStar Parties is
a party or (iii) violate or result in any default under any law, regulation,
order, writ, judgment or decree applicable to any of the WinStar Parties or by
which the ability of any of the WinStar Parties to consummate the transactions
to be consummated by them hereunder would be adversely affected as a consequence
of such violation or default.
(c) The execution and delivery of this Agreement by the WinStar Parties do
not, and the performance of this Agreement and the consummation of the
transactions contemplated hereby by the WinStar Parties will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority or other third party
other.
(d) None of the WinStar Parties is in violation of any term of its
respective Articles of Organization, Operating Agreement, Certificate of
Incorporation or By-Laws or the provisions of any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule or regulation or
writ or decree of any court, governmental agency or instrumentality to which it
is subject, a violation of which would have a material adverse effect on its
ability to perform its obligations under this Agreement.
(e) The Shares will be acquired by WinLLC1 for its own account and not with
a view towards distribution thereof.
(f) The WinStar Shares and the Adjustment Shares are duly authorized and,
upon issuance to Seller in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and, based solely upon the
representations and warranties of Seller contained herein, issued in compliance
with all Federal and state securities laws and free and clear of all
Encumbrances other than those imposed as set forth in the Legends.
(g) Each of the WinStar SEC Filings, including the financial statements
contained therein, as of their filing dates, complied in all material respects
with the requirements of the rules and regulations promulgated by the Commission
with respect thereto and 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. Since the date of filing of the most recently
filed of the WinStar SEC Filings, there has been no material adverse change in
the business or financial condition of WinStar which has not been
publicly disclosed.
(h) The representations and warranties of the WinStar Parties set forth in
this Agreement shall survive until one year from the Closing Date except that
the representations and warran ties set forth in Sections 4(f) shall survive
without limitation as to time.
5. Additional Agreements.
(a) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement in accordance with the provisions hereof, Seller
shall not sell, assign, or otherwise dispose of or place or allow to be placed
any Encumbrance upon any of the Shares, except to the LLCs pursuant to this
Agreement.
(b) Seller shall pay all documentary transfer, sales and other taxes
arising out of the sale and transfer of the Shares to WinLLC1.
(c) From the date hereof through the Closing Date or the earlier
termination of this Agreement, Seller, on the one hand, and the WinStar Parties,
on the other hand (each a "Representing Party"), shall give the other prompt
written notice of any event or development that occurs that (i) had it existed
or been known on the date hereof would have been required to be disclosed by the
Representing Party under this Agreement, (ii) would cause any of the
representations and warranties of the Representing Party contained herein to be
inaccurate, incomplete or otherwise misleading in any material respect, (iii)
would cause the Representing Party to conclude that any of the conditions to
Closing set forth in Section 6 hereof cannot be satisfied, or (iv) is of a
nature that would or could reasonably be considered to adversely affect the
ability of the Representing Party to consummate the transactions contemplated by
this Agreement.
(d) Subject to the terms and conditions of this Agreement, each party shall
cooperate with the other and shall use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate the transactions contemplated hereby,
including the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated hereby. Each of the parties shall
execute such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof. Each of the
parties shall use its best efforts to cause the conditions to Closing specified
in Section 6 which are within its control to be fulfilled.
(e) Within 60 days after the Closing Date, WinStar will file a registration
statement to register all of the WinStar Shares under the 1933 Act to enable
Seller to make a public sale of the WinStar Shares (including those WinStar
Shares deposited in escrow pursuant to Section 7(c)). If Adjustment Shares are
issued, within 60 days after the date of such issuance, WinStar shall use its
best efforts to file a registration statement to register all of the Adjustment
Shares under the 1933 Act to enable Seller to make a public sale of the
Adjustment Shares. WinStar will use its reasonable best efforts to cause such
registration statement(s) to become effective as promptly as reasonably
practicable after filing and to remain effective until such time as the WinStar
Shares and the Adjustment Shares, as the case may be, may be sold publicly
without registration under the 1933 Act. It shall be a condition to any such
registration that Seller provide to WinStar all information and documents with
respect to his ownership of the WinStar Shares and Adjustment Shares, compliance
with law, manner of proposed disposition and such other matters as WinStar shall
reasonably request for disclosure in the registration statement. WinStar and
Seller shall indemnify one another in the manner and to the extent that is
customary in connection with such registrations. WinStar shall pay all expenses
attendant to the preparation and filing of such registration statement other
than the fees and expenses of counsel and accountants of Seller and brokerage
discounts and commissions.
(f) From the date hereof until two years from either the Closing Date or
earlier termination of this Agreement pursuant to the provisions of Section 8
hereof, except pursuant to this Agreement, neither Seller nor any of his
Affiliates (other than the Trustees under the Voting Trust Agreement acting in
capacities other than as such Trustees) or any group (within the meanings of
Rule 13d-5 under the Exchange Act and the Voting Trust Agreement) of which
Seller is or becomes a member will, directly or indirectly, either alone or in
concert with others in any manner acquire, agree to acquire or make any proposal
to acquire, for his own account, by purchase or otherwise, any voting
securities, options, warrants or securities convertible into or exercisable or
exchangeable for voting securities of ARTT.
(g) From the date hereof until two years from either the Closing Date or
the earlier termination of this Agreement pursuant to the provisions of Section
8 hereof, Seller shall not participate in any manner, directly or indirectly,
individually in concert with others, (i) make or in any way participate in any
"solicitation" of "proxies" to vote (as such terms are used in the proxy rules
of the Commission promulgated under the Exchange Act) or seek to advise or
influence any person or entity with respect to the voting of any voting
securities of WinStar, (ii) otherwise seek representation on the Board of
Directors ("Board") or to control or influence the management, Board or policies
of WinStar, (iii) disclose to any third party any intention, plan or arrangement
inconsistent with the foregoing or (iv) advise, assist or encourage any other
person in connection with the foregoing.
(h) Each party shall be solely responsible for the payment of the fees of
all brokers, finders, investment bankers and similar parties engaged by it in
connection with the transactions contemplated by this Agreement.
(i) Promptly after the execution of this Agreement, Seller shall use
reasonable efforts to obtain the consents necessary to permit him to assign to
WinLLC1, and if such consents are obtained, at WinLLC1's election, given to
Seller at least two business days prior to the Closing Date, shall assign to
WinLLC1, his rights and obligations under the Registration Rights Agreement and
WinLLC1, pursuant to Section 15 of the Registration Rights Agreement, shall
exercise a counterpart to the Registration Rights Agreement agreeing to be
treated thereunder in the same manner as Seller.
(j) Concurrently with the execution of this Agreement, counsel to Seller
shall deliver to ARTT an opinion of counsel, addressed to ARTT, stating that in
the opinion of such counsel the transfer of the Shares pursuant to this
Agreement does not involve a transaction requiring registration or qualification
of the Shares under the 1933 Act or the securities or "blue sky" laws of any
state of the United States. Seller hereby represents that the requirement set
forth in the first two sentences of Section 12(c) of the Registration Rights
Agreement that ARTT be given prior written notice of a holder's intention to
make a "Transfer" of "Restricted Shares" (as those terms are defined in the
Registration Rights Agreement) shall be satisfied by the delivery of an opinion
of counsel concurrently with the Transfer.
(k) WinLLC1 will not sell or otherwise transfer or dispose of the Shares
except pursuant to an effective registration statement pursuant to the 1933 Act
or an exemption from the registration requirements thereof.
6. Conditions to Closing.
(a) The respective obligations of Seller and the WinStar Parties to
consummate the transfer and acquisition of the Shares shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(i) There shall not be in effect any order, decree or injunction (whether
preliminary, final or appealable) of a United States Federal or state
court of competent jurisdiction, no rule or regulation shall have been
enacted or adopted by any governmental authority or agency, and no
action or proceeding shall be pending or threatened by any person or
entity other than a party hereto that prohibits consummation of the
transfer and acquisition of the Shares, or any of them, to WinLLC1.
(ii) All governmental approvals required for the consummation of the
transfer and acquisition of the Shares shall have been granted.
(b) The obligation of the WinStar Parties to consummate the acquisition of
the Shares shall be subject to the satisfaction or waiver, on or before the
Closing Date, of each of the following conditions:
(i) The representations and warranties of Seller contained in this
Agreement shall be true and correct on and as of the Closing Date,
with the same force and effect as if made as of the Closing Date.
(ii) All the covenants contained in this Agreement to be complied with by
Seller on or before the Closing Date shall have been complied with.
(iii)The WinStar Parties shall have received a certificate executed by
Seller to the effect set forth in Sections 6(b)(i) and (ii).
(iv) Seller shall have made the deliveries required by Section 2(b) hereof
and shall have executed and delivered to the WinStar Parties the
Escrow Agreement referred to in Section 7(c).
(v) The transactions contemplated by the Agreement and Plan of
Reorganization dated April 24, 1998, among WinStar, WinLLC1, WinStar
LHC2 LLC, Landover Holdings Corporation and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("Reorganization Agreement") shall have been consummated prior to or
concurrently with the Closing or the WinStar Parties shall be
satisfied, in their sole judgment, that such transactions will be
consummated.
(vi) Neither Seller nor ARTT shall have commenced any case, proceeding or
other action (A) relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its property, or shall have made a general assignment for the benefit
of its creditors, and there shall not have been commenced against
Seller or ARTT any case, proceeding or other action of a nature
referred to in clause (A) above or seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its property, which case, proceeding or other
action (x) results in the entry of an order for relief or (y) remains
undismissed, undischarged or unbonded.
(vii)The WinStar Parties shall be satisfied, in their sole discretion,
that the consummation of the transactions contemplated hereby,
together with the acquisition of the shares to be purchased by WinLLC1
pursuant to the Reorganization Agreement, will not constitute a
"Common Stock Event" pursuant to the Rights Plan of ARTT.
(c) The obligation of Seller to consummate the transfer of the Shares and
Other Assets shall be subject to the satisfaction or waiver, on or before the
Closing Date, of each of the following conditions:
(i) The representations and warranties of the WinStar Parties contained in
this Agreement shall be true and correct on and as of the Closing
Date, with the same force and effect as if made as of the Closing
Date.
(ii) All the covenants contained in this Agreement to be complied with by
the WinStar Parties on or before the Closing Date shall have been
complied with.
(iii)Seller shall have received a certificate of the WinStar Parties to
the effect set forth in Sections 6(c)(i) and (ii) hereof.
(iv) The WinStar Parties shall have made the deliveries required by Section
2(c) hereof and shall have executed and delivered to Seller the Escrow
Agreement referred to in Section 7(c).
(v) None of the WinStar Parties or any of WinStar's significant
subsidiaries (as determined pursuant to Regulation S-X promulgated
under the ▇▇▇▇ ▇▇▇) shall have commenced any case, proceeding or other
action (A) relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its property, or shall have made a general assignment for the benefit
of its creditors, and there shall not have been commenced against any
of the WinStar Parties or any of WinStar's significant subsidiaries
any case, proceeding or other action of a nature referred to in clause
(A) above or seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of
its property, which case, proceeding or other action (x) results in
the entry of an order for relief or (y) remains undismissed,
undischarged or unbonded.
7. Indemnification and Reimbursement.
(a) Seller shall indemnify and hold harmless the WinStar Parties from and
against, and shall reimburse the WinStar Parties for, any Damages (as
hereinafter defined) which may be sustained, suffered or incurred by any of the
WinStar Parties, whether as a result of third-party claims or otherwise, and
which arise from or in connection with or are attributable to (i) the breach of
any of representations, warranties or covenants of Seller contained in this
Agreement and (ii) the ownership of the Shares on or before the Closing Date.
This indemnity shall survive the Closing for a period of one year after the
Closing Date except that with respect to claims arising as a result of a breach
or alleged breach of the representations and warranties in Section 3(c) and the
covenants contained in Sections 5(f) and 5(g), it shall survive without
limitation as to time. Any claim for indemnity asserted within the relevant
period shall survive until resolved.
(b) The WinStar Parties, jointly and severally, shall indemnify and hold
harmless Seller from and against, and shall reimburse Seller for, any Damages
which may be sustained, suffered or incurred by Seller, whether as a result of
third-party claims or otherwise, and which arise from or in connection with or
are attributable to (i) the breach of any of the representations, warranties and
covenants of the WinStar Parties contained in this Agreement, (ii) the ownership
of the Shares after the Closing Date, and (iii) any of the following occurring
within the eighteen month period after the Closing Date: (A) the acquisition by
WinStar (separately or with one or more of its affiliates (as defined under
Regulation D promulgated under the 1933 Act)) of any voting securities of ARTT
or options, warrants or securities convertible into or exercisable or
exchangeable for voting securities of ARTT (other than the Shares and the shares
to be acquired by WinLLC1 pursuant to the Reorganization Agreement), (B) the
making or participation in any manner by WinStar in any "solicitation" or
"proxies" (as such terms are used in the proxy rules of the Commission
promulgated under the Exchange Act) to vote securities or ARTT or the seeking by
WinStar to advise or influence any person or entity with respect to the voting
of any voting securities of ARTT, (C) WinStar otherwise seeking representation
on the Board of Directors ("Board") of ARTT or to control or influence the
management, Board or policies of ARTT, (D) an executive officer or director of
WinStar disclosing to any third party any intention, plan or arrangement to
effectuate any of the foregoing or (E) WinStar advising, assisting or
encouraging any other person in connection with the foregoing, other than
Damages sustained, suffered or incurred by Seller as a result of (x) in the case
of the foregoing clause (A), a claim (other than by a WinStar Party or a
stockholder of WinStar) that the consideration paid by the WinStar Parties for
the Shares is excessive in relation to the consideration paid for such other
shares and (y) in the case of any of the foregoing clauses (A) through (E), a
breach or alleged breach by Seller (or any affiliate thereof) of any obligation
to ARTT arising from activities or agreements of Seller (or any affiliate
thereof) prior to the Closing Date. This indemnity shall survive the Closing for
a period of one year after the Closing Date except that, with respect to claims
arising (A) as a result of a breach or alleged breach of the representations and
warranties in Sections 1(c), 4(f), 4(h) and 5(e), it shall survive without
limitation as to time, and (B) under clause (iii) above, it shall survive for a
period of 20 months after the Closing Date. Any claim for indemnity asserted
within the relevant period shall survive until resolved.
(c) As security for the payment of amounts which may be due to the WinStar
Parties pursuant to the obligations of Seller in Section 7(a), on the Closing
Date Seller shall deliver to ▇▇▇▇ & Hessen LLP, as escrow agent, 24,140 of the
WinStar Shares, to be held and disposed of by such escrow agent pursuant to the
terms of the Escrow Agreement, substantially in the form of Exhibit I annexed
hereto, to be entered into by Seller, the WinStar Parties and such escrow agent
on the Closing Date.
(d) As used herein, the term "Damages" means the dollar amount of any loss,
damage, expense or liability, including, without limitation, reasonable
attorneys' fees and disbursements incurred by an indemnified party in any action
or proceeding between the indemnified party and the indemnifying party or
between the indemnified party and a third party, which is determined to have
been sustained, suffered or incurred by a party and to have in arisen from or in
connection with an event or state of facts which is subject to indemnification
under this Agreement. The amount of Damages shall be the amount finally
determined by a court of competent jurisdiction (after the exhausting of all
appeals) or the amount agreed to upon settlement in accordance with the terms of
this Agreement, if a third-party claim, or by the parties, if a direct claim of
one party against another. Notwithstanding the foregoing, "Damages" shall
include, with respect to any claim for indemnification arising under Section
7(b)(iii), only such loss, damage, expense and liability as, in the aggregate,
exceeds the amount of any payment made pursuant to Section 1(c).
(e) A party required to make an indemnification payment pursuant to this
Agreement ("Indemnifying Party") shall have no liability to make such payment
unless the party entitled to receive such indemnification payment ("Indemnified
Party") gives notice to the Indemnifying Party specifying (i) the covenant,
representation or warranty contained herein which it asserts has been breached,
(ii) in reasonable detail, the nature and dollar amount of any claim the
Indemnified Party may have against the Indemnifying Party by reason thereof
under this Agreement, and (iii) whether the claim is a third-party claim or a
direct claim of the Indemnified Party against the Indemnifying Party.
(f) If an Indemnified Party becomes aware of a third-party claim for which
an Indemnifying Party would be liable to an Indemnified Party hereunder, the
Indemnified Party shall, with reasonable promptness, notify in writing the
Indemnifying Party of such claim, identifying the basis for such claim and the
amount or the estimated amount thereof to the extent then determinable which
estimate shall not be conclusive of the final amount of such claim (the "Claim
Notice"); provided, however, that any failure to give such Claim Notice will not
be deemed a waiver of any rights of the Indemnified Party except to the extent
the rights of the Indemnifying Party are actually prejudiced by such failure.
The Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel (who shall be reasonably acceptable to the Indemnified Party) to
represent the Indemnified Party and shall pay the reasonable fees and expenses
of such counsel with regard thereto; provided, however, that any Indemnified
Party is hereby authorized, prior to the date on which it receives written
notice from the Indemnifying Party designation such counsel, to retain counsel,
whose reasonable fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other action
which it reasonably shall deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnified Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties of any such proceeding (including any impleaded parties) included
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party defends.
A claim or demand may not be settled by any party without the prior written
consent of the other party (which consent will not be unreasonably withheld)
unless, as part of such settlement, the Indemnified Party shall receive a full
and unconditional release reasonably satisfactory to it. Notwithstanding the
foregoing, the Indemnifying Party may settle any third-party claim without the
prior written consent of the Indemnified Party if such claim is exclusively for
monetary damages.
(g) If any Indemnified Party shall have a direct claim against any
Indemnifying Party hereunder, the Indemnified Party shall send a Claim Notice
with respect to such claim to the Indemnifying Party.
(h) No Indemnifying Party shall be required to indemnify an Indemnified
Party pursuant to this Section 7 unless the aggregate of all amounts for which
indemnity would otherwise be due against it exceeds $50,000 and then only to the
extent such amounts exceed $50,000 and do not exceed $1,700,000. The provisions
of this Section 7(h) shall not apply with respect to a claim for indemnification
based on a breach or alleged breach of the covenants of Seller in Sections 5(f)
and 5(g).
8. Termination.
(a) This Agreement may be terminated at any time prior to the Closing as
follows:
(i) by mutual written consent of Seller and the WinStar Parties;
(ii) by Seller, (A) if the WinStar Parties shall have failed to perform any
of their covenants or agreements contained in this Agreement, which
failure, if subject to cure, has not been cured within 10 business
days after Seller has given notice to the WinStar Parties of his
intention to terminate, (B) if the representations and warranties of
the WinStar Parties contained in this Agreement shall not be true and
correct in all respects at the time made and at the Closing Date or
(C) if the conditions to the obligations of Seller to consummate the
transactions contemplated by this Agreement shall not have occurred by
August 31, 1998.
(iii)by the WinStar Parties, (A) if Seller shall have failed to perform
any of their covenants in this Agreement, which failure, if subject to
cure, has not been cured within 10 business days after the WinStar
Parties have given notice to Seller of their intention to terminate,
(B) if the representations and warranties of Seller contained in this
Agreement shall not be true and correct in all respects at the time
made and on the Closing Date or (C) if the conditions to the
obligations of the WinStar Parties to consummate the transactions
contemplated by this Agreement shall not have occurred by August 31,
1998.
(b) In the event of termination by Seller or the WinStar Parties, or both,
pursuant hereto, written notice thereof shall forthwith be given to the other
party and all further obligations of the parties under this Agreement shall
terminate, no party shall have any right under this Agreement against any other
party except as set forth in this Section 8, and each party shall bear its own
costs and expenses. In such event:
(i) If this Agreement is terminated by Seller pursuant to Section
8(a)(ii)(A) or (B) or by the WinStar Parties pursuant to Section
8(a)(iii)(A) or (B), the terminating party's right to pursue all legal
and equitable remedies for breach of contract or otherwise, including,
without limitation, Damages relating thereto, shall survive such
termination unimpaired; and
(ii) Nothing herein shall preclude any party, upon a breach hereof by
another party, from pursuing all equitable remedies, including
specific performance, it being acknowledged and agreed by the parties
that the transactions contemplated hereby are of a special, unique and
extraordinary character and that any breach will cause irreparable
injury to the non- breaching party for which money damages will not
provide a wholly adequate remedy.
9. Miscellaneous.
(a) Except as otherwise provided herein, all costs and expenses, including,
without limitation, fees and disbursements of representatives, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) 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 as of
the date delivered if delivered personally or by nationally recognized overnight
courier or by telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
If to Seller:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the WinStar Parties:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Mollen & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Neither Seller nor the WinStar Parties shall make any public announce
ments in respect of this Agreement or the transactions contemplated herein
without the consent of the other, which consent shall not unreasonably withheld
or delayed, except that any of the WinStar Parties may make any public
announcement they deem necessary to comply with their legal obligations
(including disclosure by means of filings with the Commission and other
governmental authorities), and will use reasonable efforts to provide a copy of
such public announcement to Seller prior to the public dissemination thereof.
(d) The WinStar Parties may assign its rights under this Agreement, or any
portion thereof, to any wholly-owned direct subsidiary (including a
non-corporate subsidiary) of WinStar or any successor to WinStar, provided that
such assignee shall assume in writing the rights and obligations so assigned and
such assignment shall not relieve the WinStar Parties of their obligations
hereunder to the extent not fulfilled by such assignee. Seller shall not assign
any of his rights under this Agreement without the prior written consent of the
WinStar Parties.
(e) This Agreement may not be amended or modified except by an instrument
in writing signed by Seller and the WinStar Parties, which instrument shall
thereupon be binding upon all the parties.
(f) Any party may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
(g) If any provision of this Agreement is determined to be invalid, illegal
or incapable of being enforced by a court or regulatory agency of competent
jurisdiction, the other provisions of this Agreement shall not be affected and
shall remain in full force and effect and the parties shall negotiate in good
faith revisions to this Agreement so as to effect the original intent of the
parties pursuant to the provision so affected.
(h) This Agreement, together with the Schedules and Exhibits hereto
(including the Escrow Agreement referred to in Section 7(c)), constitute the
entire agreement, and supersede all prior agreements and undertakings, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof and, except as otherwise expressly provided herein, are not intended
to confer upon any other person any rights or remedies hereunder.
(i) This Agreement shall inure to the benefit of and be binding upon the
successors, distributees and assigns of the parties.
(j) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York, without regard to principles of conflicts of
law. EACH PARTY HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN THE STATE OF NEW
YORK, COUNTY OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY REGISTERED MAIL ADDRESSED TO
SUCH PARTY AT ITS ADDRESS SPECIFIED IN SECTION 8(b). EACH PARTY FURTHER WAIVES
ANY OBJECTION TO VENUE IN NEW YORK AND ANY OBJECTION TO AN ACTION OR PROCEEDING
IN SUCH STATE AND COUNTY ON THE BASIS OF FORUM NON CONVENIENS. EACH PARTY ALSO
WAIVES ANY RIGHT TO TRIAL BY JURY.
(k) This Agreement may be executed in one or more counterparts, and by the
different parties in separate counterparts, each of which when executed shall be
deemed to be an original but all of which when taken together shall constitute
one and the same agreement.
(l) No provision of this Agreement or any other instrument or other
document delivered in connection with the transactions contemplated hereby will
be interpreted in favor of, or against, any of the parties by reason of the
extent to which such party or its counsel participated in the drafting hereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
WINSTAR COMMUNICATIONS, INC.
/s/ ▇. ▇. ▇▇▇▇▇▇
By________________________________________
Name: ▇.▇. ▇▇▇▇▇▇
Title: Executive Vice President
WINSTAR LHC1 LLC
By: WINSTAR COMMUNICATIONS, INC., Member
/s/ ▇. ▇. ▇▇▇▇▇▇
By:_______________________________________
Name: ▇.▇. ▇▇▇▇▇▇
Title: Executive Vice President
/s/ ▇▇▇▇▇ ▇▇▇▇▇
_______________________________________
▇▇▇▇▇ ▇▇▇▇▇
