AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("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"), WINSTAR LHC2 LLC, a New York limited liability company of
which WinStar is the sole member ("WinLLC2" and, together with WinLLC1, the
"LLCs"), LANDOVER HOLDINGS CORPORATION, a Delaware corporation ("LHC"), and
XXXXXXXX X. XXXXXXXXX, residing at 000 Xx Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000
("Xxxxxxxxx" and, together with LHC, the "LHC Parties").
WHEREAS, Xxxxxxxxx is the owner of all of the outstanding shares of capital
stock of LHC;
and
WHEREAS, LHC is principally engaged in the business of investing in stocks
and other securities and managing its investments and has been so principally
engaged since its organization in 1993 (the "Historic Business"); and
WHEREAS, the LHC Parties wish to continue to invest in broad-band
wireless telephone assets through WinStar; and
WHEREAS, the LHC Parties, WinStar and the LLCs wish for LHC to transfer
substantially all of its assets to the LLCs solely in exchange for shares of
voting common stock of WinStar in a transaction intended to qualify as a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended ("IRC"), it being contemplated by the parties
that LHC will thereafter, as an integral part of the transaction, distribute
such shares of WinStar common stock to Xxxxxxxxx in complete liquidation of LHC
and dissolve; and
WHEREAS, WinStar has formed the LLCs to acquire substantially all of the
assets of LHC on the terms and conditions set forth herein for valid business
purposes;
IT IS AGREED:
1. Transfer of Assets; Consideration.
(a) Subject to the terms and conditions of this Agreement, LHC shall
transfer, assign and convey to the LLCs, as directed by WinStar, and the LLCs
shall acquire from LHC, on the Closing Date (as hereinafter defined), the
following assets of LHC:
(i) 2,758,864 shares of the common stock, par value $.001 per share, of
Advanced Radio Telecom Corp. ("ARTT"), a Delaware corporation (the
"Shares"), including 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"), which shall be transferred, conveyed and assigned to WinLLC1;
and
(ii) subject to the provisions of Section 5(l), the other assets listed on
Schedule A annexed hereto (the "Other Assets" and, collectively with
the Shares, the "Historic Business Assets" of LHC), as the same exist
on the Closing Date, which shall be transferred, conveyed and assigned
to WinLLC2.
(b) The consideration payable to LHC for the Historic Business Assets shall
be 1,273,029 shares of the voting 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 LHC.
(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 greater than $20.00 per share (the "Benchmark
Price"), then WinStar shall issue to LHC (or to Xxxxxxxxx, as distributee of LHC
in liquidation) 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 2,758,864 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 Additional ARTT Shares (as hereinafter defined).
(d) The LLCs shall acquire solely the Historic Business Assets and shall
assume solely the following liabilities and obligations of the LHC Parties: (i)
the obligations of LHC pursuant to the agreement with JPW Consulting, Inc.
described in Schedule A (the "JPW Agreement"), (ii) margin debt in certain of
the accounts listed in Schedule A as specified therein, not to exceed $1,000,000
in the aggregate on the Closing Date, and (iii) solely at WinLLC1's election
pursuant to Section 5(o), the obligations of LHC pursuant to the 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") (collectively, the "Assumed Liabilities"). All
of the Assumed Liabilities shall be assumed only by WinLLC2 other than the
Registration Rights Agreement, which shall, at WinLLC1's election pursuant to
Section 5(o), be assumed by WinLLC1 .
(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 expiration or earlier termination of the waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the satisfaction or waiver of the other conditions
to Closing set forth in Section 6 hereof.
(b) At the Closing, LHC shall deliver to (i) WinLLC1, certificates
representing 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 the LLCs ("WinStar
Encumbrances") and those imposed by Federal and state securities laws and, if
assigned to and assumed by WinLLC1, the Registration Rights Agreement (as
hereafter defined), (ii) WinLLC2, bills of sale, assignments and other
appropriate transfer documents in form reasonably satisfactory to WinLLC2
sufficient to convey to WinLLC2 good and marketable title to the Other Assets,
free and clear of all Encumbrances other than WinStar Encumbrances and margin
debt as specified in Schedule A, not to exceed $1,000,000 in the aggregate on
the Closing Date, and (iii) the LLCs and WinStar, the certificates and other
documents required to be delivered by the LHC Parties pursuant hereto.
(c) At the Closing, WinStar and the LLCs (collectively, the "WinStar
Parties") shall deliver to LHC (i) a certificate for 1,134,029 of the WinStar
Shares, (ii) an assumption agreement or other appropriate assumption documents
with respect to the Assumed Liabilities, in form reasonably satisfactory to LHC,
executed by WinLLC2, and (iii) 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 the Escrow Agreement (as hereinafter defined) 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 B annexed hereto.
3. Representations and Warranties of the LHC Parties. The LHC Parties,
jointly and severally, represent and warrant to the WinStar Parties as follows
and acknowledge that the WinStar Parties are relying upon such representations
and warranties:
(a) LHC (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) has all requisite power
to own, lease and operate its properties and to carry on its business as now
being conducted and (iii) has all necessary power and authority to enter into
this Agreement and to perform its obligations as contemplated hereby. All action
necessary to be taken by LHC to authorize the execution, delivery and
performance of this Agreement and all other agreements and instruments delivered
and to be delivered by LHC in connection herewith has been duly and validly
taken. This Agreement constitutes the valid and binding obligation of each of
the LHC 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 LHC
Parties do not and will not (i) violate or result in any default under any
provision of the Certificate of Incorporation or By-Laws of LHC, (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 LHC
Party is a party or to which the Shares or Other Assets are subject or (iii)
violate or result in any default under any law, regulation, order, writ,
judgment or decree applicable to such LHC Party or the Shares or the Other
Assets or by which the ability of the LHC Parties 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, the Voting Trust
Agreement dated November 5, 1996 among LHC, Xxxxxxxx Xxxxxxxxx and
Xxxxxxx Xxxxx Xxxxxxxxx Trust and Xxxxxx X. Xxxxxxxxxxxx, Xxxxxx X.
Xxxxxx and Xxxx X. Xxxxxxxx, Trustees (the "Voting Trust Agreement"),
the Cooperation Agreement dated November 5, 1996 by and between LHC,
Xxxxxxxxx and ARTT (the "Cooperation Agreement"), the instruction
letters and customer agreements listed on Schedule C (collectively
with the Registration Rights Agreement, the Voting Trust Agreement and
the Cooperation Agreement, the "Operative Agreements"), LHC 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 under
the Operative Agreements, except subject to the Registration Rights
Agreement, if assumed by WinLLC1.
(ii) The LHC Parties are the sole "beneficial owners" (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 C 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 any of the LHC Parties. 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.
(iv) The Shares constitute the only shares of capital stock of ARTT of
which LHC or Xxxxxxxxx or any of their respective Affiliates (as
defined in the ARTT Rights Plan) is the Beneficial Owner (as defined
in the ARTT Rights Plan) other than an aggregate of 74,728 shares of
common stock of ARTT (the "Excluded Shares"). For purposes of Rule 144
("Rule 144") promulgated under the Securities Act of 1933, as amended
(the "1933 Act"), none of the Shares was acquired by LHC later than
October 28, 1996, and none of the LHC Parties is an "affiliate" (as
defined in Rule 144) of ARTT or has been such an "affiliate" for at
least three months prior to the date hereof.
(d) LHC is not in violation of any term of its Certificate of Incorporation
or By-Laws or 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 execution and delivery of this Agreement by the LHC Parties do not,
and the performance of this Agreement and the consummation of the transactions
contemplated hereby by the LHC 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 than (i) notice
required to be given to the Trustees pursuant to the Voting Trust Agreement,
(ii) 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, and (iii) notice to and actions by brokerage firms
to transfer the Historic Business Assets and effectuate the assumption of the
Assumed Liabilities.
(f) None of the LHC Parties knows of any 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. Xxxxxxxxx is not in possession of any "confidential
information" which would subject him to the Xxxxxxx Xxxxxxx Policy and Procedure
of ARTT adopted on May 31, 1996 and prohibit the transfer of the Shares to the
LLCs by virtue of such policy.
(g) No representation or warranty by the LHC Parties 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) Except as otherwise set forth in this Agreement, the WinStar Shares and
Adjustment Shares will be acquired for LHC's account and not with a view towards
distribution thereof. The LHC Parties understand that they must bear the
economic risk of an investment in the WinStar Shares and the Adjustment Shares,
which cannot be sold by a LHC Party unless they are registered under the 1933
Act or an exemption therefrom is available. Each of the LHC Parties is an
"Accredited Investor" as defined in Regulation D promulgated under the 0000 Xxx.
The LHC Parties have 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. The LHC Parties acknowledge receiving from WinStar and reviewing
Star's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
("10-K"), Star's Proxy Statement for its Annual Meeting of Stockholders held on
June 26, 1997 ("Proxy Statement"), Star'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 Star's Confidential
Offering Circulars dated March 13, 1998 and March 17, 1998.
(i) No LHC Party is 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 other than as set forth in a statement on Schedule 13-G dated
May 22, 1997 filed by LHC and certain other persons.
(j) LHC is the owner of, and has good and marketable title to, all of the
Other Assets, free and clear of all Encumbrances except as set forth in Schedule
A annexed hereto, all of which Encumbrances, other than liens to secure the
payment of not more than $1,000,000 of margin debt, shall terminate and be null,
void and of no effect on and after the Closing.
(k) None of the WinStar Parties is an "LHC Affiliate" (as defined in the
Voting Trust Agreement) or is "affiliated" (as defined in Section 2(b) of the
Voting Trust Agreement) with an LHC Affiliate.
(l) The LHC Parties have delivered to the WinStar Parties true and complete
copies of each of the Operative Agreements and the JPW Agreement, which are the
only agreements relating to the Historic Business Assets or the ownership
thereof.
(m) The representations and warranties of the LHC Parties set forth in this
Agreement shall survive until one year from the Closing Date except that the
representations and warranties set forth in Sections 3(c) and 3(j) 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 the LHC
Parties and acknowledge that the LHC Parties are 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) Each of the LLCs (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, (C) has all necessary power and authority to
enter into this Agreement and to perform its obligations as
contemplated hereby and (D) shall be treated for Federal tax
purposes as a "disregarded entity" within the meaning of Treasury
Regulation ss.301.7701-3(b)(1)(i) as in effect on the date
hereof.
(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
Agreements, Certificates 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 than the filing of a pre-merger notification ("Notification") pursuant to
the HSR Act.
(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 LHC 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 the LHC Parties 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) (i) None of the WinStar Parties has any plan or intention to
reacquire, directly or indirectly, any WinStar Shares or Adjustment
Shares.
(ii) None of the WinStar Parties has any plan or intention to sell or
otherwise dispose of any significant portion of the Historic Business
Assets except for dispositions made in the ordinary course of business
or transfers described in IRC ss.368(a)(2)(C).
(iii)Following the consummation of the transactions contemplated by this
Agreement, the WinStar Parties plan and intend to use a significant
portion of the Historic Business Assets in a business.
(iv) None of the WinStar Parties is an investment company as defined in IRC
ss.368(a)(2)(F)(iii) and (iv).
(v) None of the WinStar Parties owns, nor have they owned in the five
years preceding the date of this Agreement, directly or indirectly,
any capital stock of LHC.
(vi) WinStar has no plan or intention to sell or otherwise dispose of its
membership interest in either of the LLCs (or any portions thereof).
(i) None of the WinStar Parties is an "LHC Affiliate" (as defined in the
Voting Trust Agreement) or is "affiliated" (as defined in Section 2(b)
of the Voting Trust Agreement) with an LHC Affiliate.
(j) 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) and 4(h) shall
survive without limitation as to time.
5. Additional Agreements.
(a) As soon as practicable after execution of this Agreement, WinStar shall
file a Notification with the Federal Trade Commission ("FTC") and the U.S.
Department of Justice ("DOJ") pursuant to and as required by the HSR Act and
shall notify ARTT of such filing. WinStar shall use its reasonable best efforts
to have the waiting period under the HSR Act terminated as early as practicable.
Promptly upon receipt by any LHC Party or WinStar of any correspondence from the
FTC or DOJ in connection therewith, such recipient shall give copies thereof to
the other party.
(b) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement in accordance with the provisions hereof, no LHC
Party shall sell, assign, or otherwise dispose of or place or allow to be placed
any Encumbrance upon any of the Shares or, except as provided in Section 5(l),
the Other Assets or any interest therein, except to the LLCs pursuant to this
Agreement.
(c) The LHC Parties shall pay all documentary transfer, sales and other
taxes arising out of the sale and transfer of the Shares and the Other Assets to
the LLCs.
(d) From the date hereof through the Closing Date or the earlier
termination of this Agreement, the LHC Parties, 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.
(e) Each party will use all reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Federal, state and other
regulatory bodies and officials that may be or become necessary for the
performance of its obligations pursuant to this Agreement and will cooperate
fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals, including expiration or early
termination of the waiting period under the HSR Act.
(f) 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.
(g) 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 LHC
and Xxxxxxxxx, as distributee of LHC in liquidation, to make a public sale of
the WinStar Shares (including without limitation those WinStar Shares deposited
in escrow pursuant to the Escrow Agreement). 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 LHC and Xxxxxxxxx, as distributee of LHC in
liquidation, 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 the LHC Parties provide to
WinStar all information and documents with respect to their 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 the LHC Parties 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 the LHC Parties and brokerage
discounts and commissions.
(h) From the date hereof until two years from either the Closing Date or
earlier termination of this Agreement pursuant to the provisions of Section 7
hereof, except pursuant to this Agreement, no LHC Party or any of their
respective 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 any LHC Party 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 its own account, by purchase or otherwise, any
voting securities, options, warrants or securities convertible into or
exercisable or exchangeable for voting securities of ARTT.
(i) 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
7 hereof, no LHC Party shall, in any manner, directly or indirectly,
individually or 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.
(j) 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.
(k) Promptly after the Closing, LHC will dissolve and liquidate and,
subject to the provisions of the Escrow Agreement, distribute the WinStar Shares
and any Adjustment Shares that may be issued after the Closing Date to Xxxxxxxxx
as its sole stockholder.
(l) During the period from the date hereof to the Closing Date, LHC may
continue to invest in and trade securities through the accounts (the
"Transferred Accounts") listed in paragraph I.B on Schedule A annexed hereto,
subject to the following conditions that must be satisfied on the Closing Date:
(i) The securities held in the Transferred Accounts must (A) have a
readily ascertainable market value, (B) be issued by companies with a
market capitalization of at least $3 billion, (C) be traded on the New
York Stock Exchange or the American Stock Exchange or listed for
quotation on the NNM and (D) be eligible as collateral for margin
loans within the policies of the brokerage firms in which the
Transferred Accounts are established. No more than 20% of the value of
the securities in the Transferred Accounts on the Closing Date shall
be in the securities of any single issuer. No securities in the
Transferred Accounts on the Closing Date shall be securities of
issuers engaged principally in telecommunications businesses
(including the manufacture or distribution of equipment used for
telecommunications services).
(ii) The aggregate market value of the securities in the Transferred
Accounts, measured as of the close of business on the business day
prior to the Closing Date and based on the last sale price or closing
price, as applicable, net of the aggregate margin debt secured by the
securities in the Transferred Accounts, shall be not less than
$1,000,000 and such aggregate margin debt shall be not greater than
$1,000,000.
(iii)No securities of WinStar or any derivative securities based on
WinStar securities may be held in a Transferred Account on the Closing
Date.
(m) WinStar shall report the acquisition of the Historic Business and the
Historic Business Assets on its Federal corporation income tax return as a
reorganization under IRC ss.368(a)(1)(C) and, if a similar report of the LHC
Parties is timely furnished to WinStar, in a manner consistent therewith, in
accordance with Treasury Regulation ss.l.368-3(a) as in effect on the date
hereof and shall provide Xxxxxxxxx, within thirty (30) days of the filing of
WinStar's Federal corporation income tax return on which such information is
disclosed to the Internal Revenue Service, a copy of the statement attached to
such return.
(n) WinLLC2 shall take no action which would impair the existence of the
Transferred Accounts. For purposes hereof, any action not taken by or at the
direction of a WinStar Party shall not be deemed taken by a WinStar Party.
(o) At WinLLC1's election, given to LHC at least two business days prior to
the Closing Date, LHC shall assign its rights and obligations under the
Registration Rights Agreement to WinLLC1 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 LHC.
(p) Concurrently with the execution of this Agreement, counsel to LHC 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. LHC 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.
(q) During the period between the date of this Agreement and the Closing
Date, neither WinStar nor any of its Affiliates (as defined in the ARTT Rights
Plan) shall acquire or agree to acquire securities of ARTT in an amount such
that any such acquisition would constitute a "Common Stock Event" under the ARTT
Rights Plan. For purposes of this covenant, (i) no action contemplated by this
Agreement shall be deemed to constitute a "Common Stock Event" and (ii) WinStar
and such Affiliates may rely upon the assumptions that, as of the date of this
Agreement, there are outstanding not less than 22,877,503 shares of common stock
of ARTT, including warrants which, for purposes of the ARTT Rights Plan, are
considered to be outstanding shares of common stock of ARTT.
(r) 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 the LHC Parties and the WinStar Parties
to consummate the transfer and acquisition of the Shares and the Other Assets
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 and the Other Assets, or any of
them, to the LLCs.
(ii) All governmental approvals required for the consummation of the
transfer and acquisition of the Shares and the Other Assets, including
but not limited to termination or expiration of the waiting period
under the HSR Act, shall have been granted.
(b) The obligation of the WinStar Parties to consummate the acquisition of
the Shares and the 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 LHC 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
LHC Parties on or before the Closing Date shall have been complied
with.
(iii)The WinStar Parties shall have received a certificate executed by the
President of LHC and Xxxxxxxxx to the effect set forth in Sections
6(b)(i) and (ii).
(iv) The WinStar Parties shall have received the opinion of Xxxx & Hessen
LLP, counsel to the LHC Parties, substantially in the form annexed
hereto as Exhibit I.
(v) The LHC Parties shall have made the deliveries required by Section
2(b) hereof and shall have executed and delivered to the WinStar
Parties an Escrow Agreement substantially in the form of Exhibit II
annexed hereto (the "Escrow Agreement").
(vi) Neither any LHC Party 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 any LHC Party 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 not more than 555,000 other shares of
common stock of ARTT (the "Additional ARTT Shares") will not
constitute a "Common Stock Event" pursuant to the Rights Plan of ARTT.
(viii) The Excluded Shares shall have been sold to a person who is not
"affiliated" (as defined in the Voting Trust Agreement) with LHC.
(c) The obligation of the LHC Parties 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)The LHC Parties 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 the Escrow Agreement
to the LHC Parties.
(v) The LHC Parties shall have received the opinion of Xxxxxxxx Xxxxxx &
Xxxxxx, counsel to the WinStar Parties, to the effect set forth in
Sections 4(a), (b)(i), (b)(ii) (to the best of their knowledge),
(b)(iii) (to the best of their knowledge), (c) (to the best of their
knowledge with respect to third parties), (d) (to the best of their
knowledge except as to Articles of Organization, Operating Agreement,
Certificate of Incorporation and By-Laws) and (f).
(vi) None of the WinStar Parties or any of Star's significant subsidiaries
(as determined pursuant to Regulation S-X promulgated under the 0000
Xxx) 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 Star'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. Termination.
(a) This Agreement may be terminated at any time prior to the Closing as
follows:
(i) by mutual written consent of the LHC Parties and the WinStar Parties;
(ii) by the LHC Parties, (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 LHC has given notice to the WinStar
Parties of its 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 the LHC
Parties to consummate the transactions contemplated by this Agreement
shall not have occurred by June 30, 1998, except that if by June 30,
1998, all of such conditions have occurred other than approval of such
transactions by the FTC and the DOJ, such approval has not been
obtained by August 31, 1998.
(iii)by the WinStar Parties, (A) if the LHC Parties 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 LHC of their intention to
terminate, (B) if the representations and warranties of the LHC
Parties 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
June 30, 1998, except that if by June 30, 1998, all of such conditions
have occurred other than approval of such transactions by the FTC and
the DOJ, such approval has not been obtained by August 31, 1998.
(b) In the event of termination by the LHC Parties 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 7, and each party shall bear its
own costs and expenses. In such event:
(i) If this Agreement is terminated by the LHC Parties pursuant to Section
7(a)(ii)(A) or (B) or by the WinStar Parties pursuant to Section
7(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.
8. 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 the LHC Parties:
Landover Holdings Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
- and -
Xxxxxxxx X. Xxxxxxxxx
000 Xx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to the WinStar Parties:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
(c) Neither the LHC Parties nor the WinStar Parties shall make any public
announcements 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 LHC prior to the public dissemination thereof.
(d) The WinStar Parties may assign its rights and obligations 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. The LHC
Parties shall not assign any of its 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 the LHC Parties 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 and the Indemnity Agreement among the parties executed
concurrently with the execution of this Agreement, together with the Schedules
and Exhibits hereto (including the Escrow Agreement), 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.
THE FOLLOWING PAGE IS THE SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
WINSTAR COMMUNICATIONS, INC.
/s/ X. X. Xxxxxx
By:_________________________________
Name: X. X. Xxxxxx
Title: Executive Vice President
WINSTAR LHC1 LLC
By: WINSTAR COMMUNICATIONS, INC., Member
/s/ X. X. Xxxxxx
By:_________________________________
Name: X. X. Xxxxxx
Title: Executive Vice President
WINSTAR LHC2 LLC
By: WINSTAR COMMUNICATIONS, INC., Member
/s/ X. X. Xxxxxx
By:_________________________________
Name: X. X. Xxxxxx
Title: Executive Vice President
LANDOVER HOLDINGS CORPORATION
/s/ Xxxxxxxx X. Xxxxxxxxx
By:_________________________________
Name: Xxxxxxxx X. Xxxxxxxxx
Title: President
/s/ Xxxxxxxx X. Xxxxxxxxx
___________________________________
XXXXXXXX X. XXXXXXXXX
