EXHIBIT 10.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 17, 1997
BY AND BETWEEN
US ONE COMMUNICATIONS CORP. ,
US ONE COMMUNICATIONS SERVICES CORP.
AND
US ONE COMMUNICATIONS OF NEW YORK, INC.
AND
WINSTAR COMMUNICATIONS, INC.
AND
WINSTAR SWITCH ACQUISITION CORP.
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of September, 1997, by and between US ONE Communications
Corp. ("US ONE"), a Delaware corporation, US ONE Communications Services Corp.,
a Delaware corporation, and US ONE Communications of New York, Inc., a Delaware
corporation (each individually a "Seller" and collectively, "Sellers"), and
WinStar Communications, Inc., a Delaware corporation ("WinStar"), and WinStar
Switch Acquisition Corp. (the "Purchaser").
.
RECITALS:
A. Sellers have developed a nationwide telecommunications network capable
of providing local and long distance telecommunications services (hereinafter
referred to as the "Business"); and
▇. ▇▇▇▇▇▇▇ desire to sell and Purchaser desires to purchase certain assets
and rights of Seller and, in connection with such purchase and sale, Purchaser
is willing to assume certain obligations and liabilities relating to the
purchased assets, all on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. PURCHASE OF ASSETS
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions hereof and subject to Sections 1.2 and 5.3.2, at the Closing (as
defined in Section 4.1), Seller will sell, transfer, convey, assign and deliver,
and Purchaser (or its "Designees," as defined in Section 5.3.1) will purchase
and accept, all right, title and interest of Sellers in all assets of Sellers as
listed or described on Schedule 1.1 and as listed or described on Schedules
1.1.1, 1.1.2, 1.1.3, 1.1.4 and 1.1.5, wherever located and shall include the
rights in Section 5.3.2 with respect to the "Designated Contracts"
(collectively, the "Purchased Assets"), free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and encumbrances of
any nature whatsoever except Permitted Liens (as defined in Section 5.1.5) and
Assumed Liabilities (as defined in Section 2.1). In the event that there are
Assets on location at the Switch Sites in addition to those listed on Schedule
1.1, they shall be transferred to Purchasers pursuant to the terms of this
Agreement and shall be included within the Purchased Assets; provided, however,
that this provision shall not apply to any such assets which (i) were delivered
to Sellers prior to July 24, 1997 but were not ordered by Sellers, (ii) were
delivered to Sellers prior to July 24, 1997 pursuant to purchase orders which
were cancelled prior to delivery, or (iii) were delivered to Sellers on or after
July 24, 1997. The Purchased Assets include, but are not limited to:
1.1.1 Contract Rights. All rights and incidents of interest as
of the Closing in and to all leases, agreements and other contracts and legally
binding contractual rights and obligations of Sellers, limited to those listed
or described on Schedule 1.1.1 (together with the "Designated Contracts" defined
in Section 5.3.2 "Contracts");
1
1.1.2 Manufacturers' and Vendors' Warranties. All rights under
manufacturers' and vendors' warranties relating to items included in the
Purchased Assets and all similar rights against third parties relating to items
included in the Purchased Assets, described on Schedule 1.1.2 (collectively,
"Warranties");
1.1.3 Intellectual Property. All right, title and interest in
and to all domestic and foreign letters patent, patents, patent applications,
patent licenses, software licenses and know-how licenses, trade names,
trademarks, registered copyrights, service marks, trademark registrations and
applications, service ▇▇▇▇ registrations and applications and copyright
registrations and applications owned or used by Sellers and all trade secrets,
technical knowledge, know-how and other confidential proprietary information and
related ownership, use and other rights of Sellers, limited to those listed or
described on Schedule 1.1.3 (collectively, the "Intellectual Property");
1.1.4 Governmental Licenses, Permits and Approvals. All rights
and incidents of interest of Sellers in and to all licenses, permits,
authorizations and approvals issued to Sellers by any domestic or foreign court,
government, governmental agency, authority, entity or instrumentality
("Governmental Entity"), including, without limitation, IXC, CAP and CLEC
authorizations, limited to those listed or described on Schedule 1.1.4
(collectively, "Permits"); and
1.1.5 Intangible Telecommunications Assets. All rights, title
and interest in and to the intangible telecommunications assets owned or used by
Sellers in connection with the Business, including, telecommunications numbering
codes, locating routing codes, carrier identification codes and other operating
codes, limited to those listed or described on Schedule 1.1.5 (collectively, the
"Intangibles").
1.2 Excluded Assets. Sellers represent and warrant to the Purchaser
that the Purchased Assets include all assets of Sellers, including all of
Sellers' fixed assets, Contracts, Warranties, Intellectual Property, Permits and
Intangibles, except for those assets set forth in Schedule 1.2 hereto
(collectively, the "Excluded Assets"). Purchaser may, at its option exercisable
in writing at any time prior to the Closing Date, elect to designate certain of
the Purchased Assets as Excluded Assets, provided however that Purchaser may not
designate the real estate leases for the locations where the telecommunications
switches are located ("Switch Sites") as Excluded Assets. In addition, as
described in Section 5.11, Purchaser shall have the right to elect to designate
any or all of the Collocation Schedules, as hereinafter defined, as Excluded
Assets.
ARTICLE II. ASSUMPTION OF LIABILITIES
2.1 Assumed Liabilities. As of the Closing, Purchaser or its Designees
shall assume and thereafter in due course pay and fully satisfy those
liabilities and obligations of Sellers to become due after the Closing Date and
associated with the Purchased Assets listed or described on Schedule 2.1, except
the Designated Contracts. As of the Closing, Purchaser or its Designees, other
than Allegiance Telecom, Inc., Allegiance Telecom of New York, Inc. and
Allegiance Telecom of Georgia, Inc.,shall, in due course pay and fully satisfy
those liabilities and obligations of Sellers to become due after the Closing and
associated with the Designated Contracts listed or described in Schedule 5.3.2.
The obligations set forth in the preceding two sentences collectively are
referred to as the "Assumed Liabilities". Except as provided herein, Purchaser
or its Designees, shall pay no other liabilities of Sellers. WinStar shall
indemnify Sellers from any and all claims or demands in respect of the Assumed
Liabilities from and after the Closing; provided, however that such
indemnification obligations with respect to any Designated Contract shall cease
upon the assignment of such Designated Contract to a third party under Section
5.3.2.
2
ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. In addition to assuming the Assumed Liabilities,
Purchaser or its Designees will pay for the Purchased Assets and the covenants
of Sellers included herein an aggregate purchase price of U.S. $100 million (the
"Purchase Price"), payable as follows:
(a) $80 million on the Closing Date (as defined in Section 4.1 hereof), by
wire transfer or certified or official bank check to the order of US ONE ("Cash
Portion") provided, however, that if the Sellers have not completed
construction, installation of generators and obtained a certificate of occupancy
for each Switch Site as set forth in Sections 5.1.12 and 5.7 hereof, an amount
equal to the cost allocable to each incomplete Switch Site, as set forth in
Schedule 5.1.12(c), shall be paid into escrow ("Construction Escrow Portion"),
to be held by the Escrow Agent in accordance with the Construction Escrow
Agreement (as defined in Section 3.4.2 hereof);
(b) $16 million on the effective date ("Plan Effective Date") of a
confirmed Chapter 11 Plan of Reorganization of Sellers ("Plan"), by the issuance
by WinStar of shares of its Common Stock ("WCI Shares"), valued for this purpose
at the average of the last sale prices of the WCI Shares on the twenty trading
days ending two business days preceding the Plan Effective Date ("Plan Date
Market Value"), to be issued pursuant to and in accordance with the Plan
("Initial Share Portion"); and
(c) $4 million on the Plan Effective Date by issuance of WCI Shares valued
at the Plan Date Market Value and delivered into escrow pursuant to Section
3.4.1 hereof ("Escrow Share Portion" and, together with the Initial Share
Portion, the "Share Portion"), also to be issued pursuant to and in accordance
with the Plan and to be held and distributed in accordance with the "Escrow
Agreement" (as defined in Section 3.4.1).
Notwithstanding the foregoing, in Purchaser's sole and absolute discretion,
it shall have the right to pay any or all of the $20 million represented by the
Share Portion in cash. To the extent that cash is used in lieu of all or any
portion of the Escrow Share Portion, then such cash shall be paid into escrow
and held in accordance with the terms of the Escrow Agreement.
3.2 Allocation of Purchase Price. Promptly following the Closing Date,
the Purchase Price shall be allocated among the Purchased Assets in such amounts
as shall be specified in a schedule to be prepared by the Purchaser, which
allocation, absent manifest error, shall be binding upon the Purchaser and the
Sellers, each of which agrees to report the effect of the transactions
contemplated hereby on all applicable tax returns or filings in a manner
consistent with such schedule. Each Seller hereby assumes liability for and
shall pay all sales, transfer and similar taxes incurred as a result of the sale
of the Purchased Assets to Purchaser.
3.3 Application of Purchase Price. Upon receipt of the Purchase Price,
Sellers shall be obligated to (i) cure the defaults under the Assumed Contracts
arising or existing prior to the Closing Date as set forth on Schedule 3.3
hereto and (ii) at such time as Sellers are obligated to do so under applicable
bankruptcy law, pay all post-petition expenses of the Sellers, including fees of
the Escrow Agent under the Escrow Agreement and Construction Escrow Agreement
and any taxes or other expenses relating to this Agreement.
3
3.4 Escrow.
3.4.1 On the Plan Effective Date, Purchaser shall deliver the
Escrow Share Portion to Continental Stock Transfer & Trust Company, as escrow
agent ("Escrow Agent"), pursuant to the terms of the escrow agreement, in the
form attached hereto as Exhibit A ("Escrow Agreement"), to be executed by the
parties thereto on the Closing Date. The Escrow Share Portion shall be held in,
and released from, escrow pursuant to the terms of the Escrow Agreement to
secure Sellers' indemnity obligations pursuant to Section 5.2 hereof.
3.4.2 On the Closing Date, if Sellers have not completed the
work set forth in Section 5.7 hereof, Purchaser shall deliver the Construction
Escrow Portion to the Construction Escrow Agent (as defined in the Construction
Escrow Agreement) to be held pursuant to the terms of the escrow agreement, in
the form attached hereto as Exhibit B ("Construction Escrow Agreement"), to be
executed by the parties thereto on the Closing Date. The Construction Escrow
Portion shall be held in, and released from, escrow pursuant to the terms of the
Construction Escrow Agreement to secure Sellers' obligations pursuant to Section
5.7 hereof.
ARTICLE IV. THE CLOSING
4.1 Date of Closing. The consummation of the purchase and sale of the
Purchased Assets contemplated hereby (the "Closing") shall take place at the
offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (or
at such other place as the parties may designate) on the first business day
after the date on which the last of the conditions specified in Article VI has
been fulfilled (or waived by the party entitled to waive that condition), or at
such other time, date or place as the parties may designate. The date on which
the Closing is effected is referred to in this Agreement as the "Closing Date."
At the Closing, the parties shall execute and deliver the documents referred to
in Article VII.
ARTICLE V. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Sellers. Each Seller makes the
following representations and warranties to Purchaser and WinStar, each of which
representation and warranty is true and correct as of the date hereof and shall
be true and correct as of the Closing Date and shall be unaffected by any
investigation heretofore or hereafter made by Purchaser or WinStar:
5.1.1 Organization and Good Standing. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each Seller has the requisite corporate power and
authority to own, lease or otherwise hold the Purchased Assets owned, leased or
otherwise held by it.
5.1.2 Authorization of Agreement; Binding Obligation. Each
Seller has the requisite corporate power to execute and deliver this Agreement
and the Escrow Agreement and perform the transactions contemplated hereby and
thereby to be performed by it. The execution and delivery by each Seller of this
Agreement and the Escrow Agreement and the performance by each Seller of the
transactions contemplated hereby and thereby to be performed by it have been
duly authorized by all necessary corporate and stockholder action on the part of
each Seller. This Agreement has been, and the Escrow Agreement will be, duly
executed and delivered by a duly authorized officer of each Seller and, assuming
the due execution and delivery of this Agreement and the Escrow Agreement
4
by Purchaser, this Agreement constitutes and the Escrow Agreement will
constitute valid and binding obligations of each Seller enforceable against each
Seller in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.1.3 No Restrictions Against Sale of the Assets; Required
Consents. The execution and delivery of this Agreement and the Escrow Agreement
by Sellers does not, and upon approval of the Agreement by the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), the
performance by Sellers of the transactions contemplated hereby and thereby to be
performed by Sellers will not (a) conflict with the certificate of incorporation
or by-laws of any of Sellers, (b) conflict with, or result in any violation of,
or constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a benefit under, any contract, permit, order,
judgment or decree which is included in the Purchased Assets and to which any of
Sellers are parties or by which any of Sellers are bound, (c) constitute a
violation of any law or regulation applicable to any of Sellers, or (d) result
in the creation of any lien, charge or encumbrance upon any of the Purchased
Assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Sellers in connection with the execution and
delivery of this Agreement or the Escrow Agreement by Sellers or the performance
by Sellers of the transactions contemplated hereby or thereby to be performed by
Sellers, except for approval of the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), such of the foregoing as are
listed or described on Schedule 5.1.3 and any filings, if required, with the
Federal Trade Commission ("FTC") and Department of Justice ("Justice") pursuant
to the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and approvals of the appropriate regulatory authorities with respect
to the transfer of any IXC, CAP or CLEC authorizations as referred to in
Schedule 1.1.4.
5.1.4 Contracts and Commitments.
(a) Except as described on Schedule 1.1.1, 1.2 and 5.3.2, Sellers are not
arties to any written or oral leases, agreements, other contracts or obligations
relating to the Business.
(b) Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed or required to be listed on
Schedule 1.1.1 and 5.3.2, under which Purchaser is to acquire rights or
obligations hereunder, is valid and enforceable in accordance with its terms; to
Sellers' knowledge, other than (i) payment defaults listed in the Consolidated
Schedule of Liabilities filed by Sellers with the Bankruptcy Court, (ii)
defaults triggered by the financial condition or insolvency of the Sellers or
the existence of the Sellers' chapter 11 cases, or (iii) as set forth on
Schedule 5.1.4(b), Sellers and all other parties thereto are in compliance with
the provisions thereof; to Sellers' knowledge, other than as set forth in
Schedule 3.3, neither Sellers nor any of the other parties thereto is in default
in the performance, observance or fulfillment or any obligation, covenant or
condition contained therein; and, other than as set forth on Schedule 5.1.4(b),
Sellers have not received notice that any event has occurred which with or
without the giving of notice or lapse of time, or both, would constitute a
default thereunder.
5.1.5 Title to Assets; Liens. Except for Liens (as hereinafter defined)
listed or described on Schedule 5.1.5, Sellers have, and as of the Closing Date,
Purchaser will have, good, valid and marketable title to the Purchased Assets
5
free and clear of all title defects or objections, mortgages, liens,
claims, charges, pledges, or other encumbrances of any nature whatsoever,
including without limitation, licenses, leases, chattel or other mortgages,
collateral security arrangements, pledges, title imperfections, defect or
objection liens, security interests, conditional and installment sales
agreements, charges, easements, encroachments or restrictions, of any kind and
other title or interest retention arrangements, reservations or limitations of
any nature (collectively, "Liens"), other than Assumed Liabilities. The liens
listed or described on Schedule 5.1.5 and the Assumed Liabilities are
collectively referred to herein as the "Permitted Liens."
5.1.6 Intellectual Property and Intangibles. Except as set
forth on Schedule 5.1.6, Sellers own the entire right, title and interest in and
to the Intellectual Property and Intangibles included in the Purchased Assets
(including, without limitation, the right to use and license the same). Except
as set forth in Schedule 5.1.6, to the knowledge of the Sellers there are no
pending or threatened actions of any nature affecting the Intellectual Property.
Schedule 5.1.6 lists all notices or claims concurrently pending or received by
Sellers which claim infringement of any domestic or foreign letters patent,
patent applications, patent licenses, software licenses and know-how licenses,
trade names, trademark registrations and applications, service marks,
copyrights, copyright registrations or applications, trade secrets, technical
knowledge, know-how or other confidential proprietary information relating to
the Purchased Assets. All letters patent, registrations and certificates issued
by any Governmental Entity relating to any of the Intellectual Property or
Intangibles and all licenses and other agreements pursuant to which Sellers use
any of the Intellectual Property or Intangibles are valid and subsisting, have
been properly maintained and, to the knowledge of Sellers, neither Sellers nor
any other persons are in default or violation thereunder.
5.1.7 Condition of Certain Assets. The physical assets
comprising part of the Purchased Assets are, and on the Closing Date will be, in
good operating condition and repair, ordinary wear and tear excepted, suitable
for the purposes used for the Business.
5.1.8 Permits, Licenses and Tariffs. The Permits listed on
Schedule 1.1.4 represent all permits, tariffs, authorizations, variances,
exemptions, orders and approvals from federal, state, local and foreign
governmental and regulatory bodies required to be held by Sellers in order to
conduct the Business substantially in the manner heretofore conducted.
5.1.9 Employee Plans.
(a) The Sellers do not maintain any "employee benefit plans" and "employee
welfare plans", as defined in this Sections 3(1) and 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") respectively and, except as set
forth on Schedule 5.1.9, have not maintained, contributed to, been required to
contribute to, or been a party to or a participating employer in, any "employee
pension benefit plan," as defined in Section 3(2) of ERISA, including any
multiemployer employee pension benefit plan (the "Employee Benefit Plans"). The
Sellers are not parties to any collective bargaining or other labor agreements.
(b) The Employee Benefit Plans (i) are qualified to the extent required by
law under Section 401 of the Internal Revenue Code of 1986, as amended and to
the best knowledge of Sellers there exists no fact which would adversely affect
the qualified status of any such Employee Benefit Plan; (ii) have been operated
and administered in all material respects in accordance with ERISA, the Internal
Revenue Code and all other applicable law; (iii) have not engaged in any
transactions (as such term is defined for purposes of ERISA and the Internal
Revenue Code); (iv) have not, since the last annual report filed, been amended
so as to materially
6
increase benefits thereunder or experienced a material increase (more than 20%)
in the number of participants covered thereunder; and (v) v if terminated on the
date hereof, would not give rise to liability under Title IV of ERISA.
(c) Each Seller, at all times, has complied with all applicable provisions
of the Employee Benefit Plans and is not in default thereunder. Full payment has
been made of all amounts which any Seller is required to pay under the terms of
each of the Employee Benefit Plans as a contribution or premium to or in respect
of such plans as of the last day of the most recent fiscal year of each of the
Employee Benefit Plans ended prior to the date of this Agreement, any such
contribution has been accrued as a liability on the books of the Sellers and
none of the Employee Benefit Plans nor any trust established thereunder has
incurred and "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Internal Revenue Code), whether or not waived with
respect to the most recent fiscal year of each of the Employee Benefit Plans
ended prior to the date of this Agreement.
(d) There are no pending, anticipated or, to Sellers' knowledge, threatened
claims against or otherwise involving any of the Employee Benefit Plans, or any
fiduciary thereof, by or on behalf of such plans, any employee or beneficiary
covered under the plans or otherwise involving the plans (other than routine
claims for benefits). There is no judgment, decree, injunction, rule or order of
any court, governmental body, commission, agency or arbitrator outstanding
against or in favor of any plan or any fiduciary thereof.
5.1.10 Environmental Matters; Health and Safety and Other
Laws. The Sellers are, and on the Closing Date will be, in material compliance
with all federal, state and local laws, regulations, permits, orders and
decrees, including those relating to protection of the environment and employee
health and safety ("Applicable Requirements"). The Sellers have not received any
written notice to the effect that their operations are not in compliance with
any of the Applicable Requirements or the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or other substance (including petroleum
products) into the environment and no Seller knows of any facts which could
constitute the basis for any thereof.
5.1.11 Investor Representations.
(a) The WCI Shares which may be issued pursuant to Section 3.1 of this
Agreement will not be registered under the Securities Act of 1933, as amended
("Securities Act"). Accordingly, unless and until Sellers deliver to WinStar a
"No Action Letter" from the Securities and Exchange Commission or a final order
of the Bankruptcy Court providing that the WCI Shares which may be issued
herewith will be exempt from registration under the Securities Act and any state
law pursuant to Section 1145 of the Bankruptcy Code and such WCI Shares may be
issued without any restrictive legend, the WCI Shares will bear a legend
indicating that they are "restricted" and will not be able to be sold in the
open market or otherwise transferred, pledged or hypothecated until such time
that the resale and transfer of same is registered under the Securities Act or
until such time as the WCI Shares are saleable in accordance with Rule 144
promulgated under the Securities Act or some other exemption from registration
provided under the Securities Act or the Bankruptcy Code. WinStar is not
obligated to file any registration statement with respect to the WCI Shares.
(b) Sellers recognize that an investment in WCI Shares involves a high
degree of risk including, but not limited to, the risk of economic losses from
WinStar's operations and the total loss of its investment.
7
(c) Sellers have been given access to full and complete information
regarding WinStar and have utilized such access to the extent deemed necessary
for the purpose of obtaining information, and its officers and directors have
either met with or been given reasonable opportunity to meet with officers of
WinStar for the purpose of asking questions of, and receiving answers to such
questions, from such officers concerning the business and operations of WinStar
and to obtain any additional information, to the extent reasonably available.
Sellers have received copies of all reports filed by WinStar under the
Securities Exchange Act of 1934 during the past two years.
5.1.12 The Sellers have not completed construction, installed
generators or obtained certificates of occupancy for all of the Switch Sites.
Schedule 5.1.12(a) lists the current status of the construction and generators
at each of the Switch Sites. Schedule 5.1.12(b) lists the current status of
certificates of occupancy for each of the Switch Sites and the date Sellers
anticipate receiving each such certificate of occupancy. Schedule 5.1.12(c)
lists the construction, inspections, and other work which has not been completed
and which is necessary to install an operational generator, obtain a certificate
of occupancy and complete construction at each of the Switch Sites and the
maximum cost of completing such work and obtaining such certificate of occupancy
and the timing thereof. The contractors identified on Schedule 5.1.12(c) (the
"Identified Contractors") have agreed to complete construction and obtain
certificates of occupancy for each of the Switch Sites in accordance with the
costs and timing set forth in Schedule 5.1.12(c).
5.1.13 There is no liability for pre-Closing actions taken by
Sellers under the "22 Cage Rental Agreements between US ONE Communications
Services of New York, Inc. and New York Telephone Company" listed on Schedule
5.3.2 ("Collocation Schedules").
5.2 Indemnification. The Sellers shall, jointly and severally,
indemnify and hold harmless Purchaser from and against, and shall reimburse
Purchaser or WinStar, solely through the return to Purchaser of all or a portion
of the Escrow Share Portion of the Purchase Price (or the cash which may be
deposited in escrow in lieu thereof) pursuant to the terms of the Escrow
Agreement, for any Damages (as hereinafter defined) which may be sustained,
suffered or incurred by Purchaser or WinStar, whether as a result of any third
party claims or otherwise, and which arise or result from or in connection with
or are attributable to the breach of any of a Sellers' covenants,
representations, warranties, agreements, obligations or undertakings contained
in this Agreement. "Damages" as used in this Agreement means the dollar amount
of any loss, damage, expense or liability, (including, without limitation,
reasonable attorneys' fees) sustained, suffered or incurred by the Purchaser or
WinStar, reduced by any amounts actually received by Purchaser or WinStar (net
of any deductibles, fees and expenses, but excluding any premiums) from: (i) any
insurance proceeds received by Purchaser or WinStar in respect of such damages;
and (ii) any recovery made by Purchaser or WinStar from a third party (other
than Sellers) in respect thereof. Notwithstanding the foregoing, Sellers shall
not be required to indemnify Purchaser or WinStar under this Section 5.2 unless
the aggregate of all amounts for which indemnity would otherwise be due against
Sellers exceeds $100,000, but in such event, the Sellers shall pay the party to
be indemnified all amounts for which indemnity is due including the first
$100,000 thereof. To the extent Sellers are required to indemnify Purchaser or
WinStar, the Purchase Price shall be deemed to be reduced by such amount.
5.3 Designees and Designated Contracts.
5.3.1 Designees. Subject to the approval of the Bankruptcy
Court, at any time prior to the Closing Date, Purchaser shall have the right to
assign to third parties ("Designees") the right to purchase such of the
Purchased Assets as Purchaser shall determine. If any such assignment
8
is made, the Designees shall assume the Assumed Liabilities with respect to the
Purchased Assets to be purchased by them. Sellers shall cooperate with Purchaser
in all reasonable respects with respect to any such assignment.
5.3.2 Designated Contracts. Schedule 5.3.2 lists all contracts
and agreements ("Designated Contracts") which on or after the Closing Date and
through and including March 20, 1998, upon written notice by the Purchaser to
Sellers and to each party to any such Designated Contract, will be assigned by
the Sellers to either the Purchaser or, subject to approval of the Bankruptcy
Court pursuant to ss.365 of the United States Bankruptcy Code ("Bankruptcy
Code"), a designee of the Purchaser. Prior to March 20, 1998, without the prior
written consent of the Purchaser, Sellers will not seek authority to reject,
will not consent to the rejection of, and will use best efforts, including but
not limited to filing any appropriate pleadings to prevent the deemed rejection
of the contracts and agreements listed on Schedule 5.3.2. Promptly upon written
notice by the Purchaser to Sellers that the Purchaser desires Sellers to assume
and assign one or more of the Designated Contracts to the Purchaser or a
designee of the Purchaser, Sellers will file a motion with the Bankruptcy Court
seeking authorization pursuant to section 365 of the Bankruptcy Code of such
assumption and assignment. Until assumption and assignment or rejection of the
Designated Contracts, Sellers will comply with the provisions of section
365(d)(3) or 365(d)(10) of the Bankruptcy Code , as applicable, with respect to
each Designated Contract. As soon as practicable after Closing, Sellers will
provide to the Purchaser a schedule of regular, ongoing obligations to become
due under the Designated Contracts with respect to obligations arising or
incurred after the Closing and Sellers will provide as promptly as practicable
to the Purchaser any other invoices, bills and other requests for payment under
the Designated Contracts received with respect to obligations arising or
incurred after the Closing . Purchaser's obligations with respect to the
Designated Contracts, until specifically assumed will be solely to make payment
on behalf of Sellers (except as provided in section 5.11) for the payment
obligations arising and incurred after Closing (excluding pre-Closing cure
payments) and before such Designated Contracts are assigned to Purchaser or a
third party designee. Purchaser will pay any such liabilities and obligations
incurred and arising from and after Closing on behalf of Sellers directly to the
other party to the Designated Contract pursuant to section 2.1 of this
Agreement.
5.4 Representations and Warranties of WinStar and Purchaser. Each of
WinStar and Purchaser makes the following representations and warranties to the
Sellers, each of which is true and correct as of the date hereof and shall be
true and correct as of the Closing Date and shall be unaffected by any
investigation heretofore or hereafter made by the Sellers:
5.4.1 Corporate Organization. Each of WinStar and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease or otherwise hold its properties and assets and to carry
on its business as presently conducted. WinStar owns all issued and outstanding
shares of Purchaser, either directly or indirectly through a wholly owned
subsidiary of WinStar.
5.4.2 Authorization and Effect of Agreement. Each of WinStar
and Purchaser has the requisite corporate power to execute and deliver this
Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The execution and
delivery by it of this Agreement and the Escrow Agreement and the consummation
by it of the transactions contemplated hereby and thereby to be consummated by
it, including without limitation the issuance of the WCI Shares, have been duly
authorized by all necessary corporate action. This Agreement has been and the
Escrow Agreement will be duly executed and delivered by a duly authorized
officer of it and, assuming the due execution and delivery of this Agreement by
9
the Sellers, this Agreement constitutes and the Escrow Agreement will constitute
a valid and binding obligation of it, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law).
5.4.3 Restrictions Against Purchase of the Assets. The
execution and delivery of this Agreement and the Escrow Agreement by each of
WinStar and Purchaser does not, and the performance by each of the transactions
contemplated hereby and thereby to be performed by each will not (a) conflict
with its certificate of incorporation or by-laws of it, (b) conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under,
any material contract or permit, order, judgment or decree to which it is a
party or by which it is bound, or (c) constitute a violation of any law or
regulation applicable to it. Except for approval of the Bankruptcy Court and any
applicable requirements of the HSR Act, no consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required to be obtained or made by or with respect to each of WinStar
and Purchaser in connection with the execution and delivery of this Agreement or
the Escrow Agreement by each or the consummation by each of the transactions
contemplated hereby to be consummated by it, except as listed or described on
Schedule 5.4.3.
5.4.4 No Implied Representations or Warranties. WinStar and
Purchaser each hereby acknowledges and agrees that the Sellers are not making
any representation or warranty whatsoever, express or implied, except those
representations and warranties of Sellers explicitly set forth in this
Agreement. SUBJECT TO THE FOREGOING, THE PURCHASED ASSETS BEING ACQUIRED BY THE
PURCHASER AS A RESULT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY
SHALL BE ACQUIRED BY PURCHASER ON AN "AS IS, WHERE IS" BASIS AND IN THEIR THEN
PRESENT CONDITION, AND PURCHASER SHALL RELY SOLELY UPON ITS OWN EXAMINATION
THEREOF. In any event, except as explicitly set forth in this Agreement, none of
Sellers or any of their officers, directors, partners, employees, affiliates or
representatives has made or is making any representation, express or implied, as
to the value of any Purchased Asset being acquired, or any warranty of
merchantability, suitability or fitness for a particular purpose or quality,
with respect to any of the Purchased Assets being acquired, or as to the
condition or workmanship thereof, or as to the absence of any defects therein,
whether latent or patent.
5.4.5 WCI Shares. The WCI Shares have been duly authorized
and, if and when issued in accordance with the terms hereof, will be fully paid
and non-assessable and will not have been issued in violation of any preemptive
rights.
5.4.6 Good Faith Purchaser. WinStar and Purchaser have acted
in good faith as defined in ss.363(m) of the Bankruptcy Code, in accordance with
the terms and provisions of the Bankruptcy Court's Procedures Order, dated
August 4, 1997, the Bankruptcy Code and other applicable law.
5.5 HSR Filing. Within two business days after the execution and
delivery of this Agreement, Sellers and Purchaser each shall make any necessary
filings with the FTC and Justice pursuant to the HSR Act. Sellers and Purchaser
shall cooperate in connection with such filing and shall request early
termination under the HSR Act. Purchaser shall pay the filing fees related to
the filings under the HSR Act. In the event this Agreement is terminated in
accordance with Section
10
8(b), 8(c), 8(d) or 8(e) of this Agreement, Sellers shall pay to Purchaser the
full amount of any filing fees paid by Purchaser relating to the HSR Act filing
("HSR Refund").
5.6 Bankruptcy Court Filings.
5.6.1 Motion to Approve Procedures. Sellers shall file motions
with the Bankruptcy Court by 5:00 p.m. (New York City time) on Wednesday,
October 1,, 1997, to approve the provisions of this Agreement relating to the
Break-up Fee (as defined in Section 9.2 hereof), the Upset Price and Right of
First Refusal (as defined in Section 9.3 hereof) and the HSR Refund (as defined
in Section 5.5 hereof) and shall have given notice as required by the Bankruptcy
Court.
5.6.2 Motion to Approve Sale. Sellers shall file motions with
the Bankruptcy Court by 5:00 p.m. (New York City time) on Wednesday, October 1,
1997, to approve the sale of the Purchased Assets pursuant to ▇▇.▇▇. 363(b) and
363(f) of the Bankruptcy Code and to authorize Sellers to assume and assign to
Purchaser or its Designees the executory contracts identified in Schedule 1.1.1
pursuant to ss. 365 of the Bankruptcy Code, and have given notice to all of
Sellers' creditors, all parties having or claiming an interest in the Business,
to the U.S. Trustee and all other parties in interest in accordance with Rules
6004 and 6006 of the Bankruptcy Rules in connection with such motions. As part
of the motion to approve the sale, Sellers shall request that the Bankruptcy
Court's order provide that (i) it retains jurisdiction through and including
March 20, 1998, to entertain motions to authorize Sellers to assign the
Designated Contracts to Purchaser's designees pursuant to ss. 365 of the
Bankruptcy Code, (ii) Purchaser and WinStar shall not be deemed to be successors
to Sellers for any purpose, including claims arising out of the Employee Benefit
Plans, other than ss.1145 of the Bankruptcy Code, (iii) in the event the WCI
Shares which may be issued pursuant to a Section 3.1 of this Agreement
subsequently are distributed to the creditors or equity security holders of any
of the Sellers in exchange for a claim against or interest in any of the
Sellers, Purchaser and WinStar shall be deemed to be persons that participate in
good faith in the offer, issuance or sale of a security offered or sold under
the plan or plans of the Sellers as provided in ss.1125(e) of the Bankruptcy
Code and (iv) the transfer of the Purchased Assets to Purchaser is not subject
to taxation under any state or local law imposing a stamp or similar tax in
accordance with ss.ss.1146(c) and 105 of the Bankruptcy Code.
5.6.3 Motions to Approve Assignment of Designated Contracts.
Within five business days after Purchaser designates in writing, whether all or
any one of the Designated Contracts are to be assigned to Purchaser or its
designees, Sellers shall assign such Designated Contracts to Purchaser, or file
motions with the Bankruptcy Court to approve the assignment of such Designated
Contracts to such designees and give notice of such motions as may be required.
5.6.4 Retention of Jurisdiction in the Plan. Except as set
forth herein, any plan of reorganization proposed by Sellers shall provide for
the Bankruptcy Court to retain jurisdiction through and including March 20,
1998, to entertain motions to authorize Sellers to assign the Designated
Contracts to Purchaser's designees pursuant to ss. 365 of the Bankruptcy Code.
In the event that the Bankruptcy Court refuses to confirm a plan based in whole
or in part on the foregoing retention of jurisdiction provision, Sellers shall
be entitled to propose a plan of reorganization which omits such retention of
jurisdiction provision, provided, however that Sellers shall not seek or obtain
confirmation of such plan of reorganization on or before March 20, 1998.
5.7 Completion of Construction. On or prior to the Closing Date Sellers
will complete construction of the Switch Sites in accordance with the
construction plans submitted to Purchaser, install generators for the Switch
Sites and obtain certificates of occupancy for the Switch Sites as set forth
11
on Schedules 5.1.12(a), 5.1.12(b) and 5.1.12(c) at no cost to Purchaser or
WinStar. If Sellers have not completed such construction in accordance with the
plans and specifications set forth in the motions and the Bankruptcy Court
orders authorizing such completion and obtained the certificates of occupancy by
the Closing Date, Sellers shall cause the Identified Contractors to use their
best efforts to complete construction, install generators and obtain
certificates of occupancy as soon as possible; provided, however, that Sellers
shall be entitled to draw the cost of such work, to be paid directly to the
Identified Contractors, from the Construction Escrow Account as provided
therein. The Sellers will use their best efforts to complete the construction
and obtain a certificate of occupancy for the Switch Site located in Boston,
Massachusetts on or before the Closing Date or by the Closing Date will contract
with a contractor (which will be deemed an Identified Contractor) to complete
such work and obtain a certificate of occupancy as soon thereafter as possible.
Sellers shall cause all certificates of occupancy issued with respect to Switch
Sites after the Closing Date to be issued to the Lessee under the related switch
lease at the time of issuance. If a certificate of occupancy issued after the
Closing Date is issued to Sellers and Purchaser subsequently requests a transfer
of the certificate of occupancy to Purchaser or its designee, the costs of such
transfer charged by the issuing authority shall be paid by Purchaser.
5.8 Copies of Agreements. Sellers will use its best efforts to provide
Purchaser with a true and complete copy of each of the Agreements listed on
Schedule 1.1.1 hereof on or before October 3, 1997, and shall provide such
copies no later than October 13, 1997.
5.9 Applications for Sellers Permits. Prior to Closing, Purchaser will
file applications for "Sellers Permits" with the State Department of Revenue or
a similar State taxing authority for each State in which a Switch Site is
located and will provide Sellers with a copy of each application.
5.10 Delivery of Employee Benefit Plan Documentation. Sellers will
furnish to Purchaser, not less than three days before the Closing Date, true and
complete copies of the following items, to the extent they exist, with respect
to each Employee Benefit Plan: (i) each plan document; (ii) each trust document;
(iii) all determination letters and other correspondence relating to
qualification of the respective plans under the Internal Revenue Code ; (iv) all
tax returns and annual reports; (v) all financial statements; and (vi) all
actuarial valuations.
5.11 Collocation Schedules. Notwithstanding the provisions of Sections
2.1 and 5.3.2, with respect to each of the Collocation Schedules listed on
Schedule 5.3.2, Purchaser shall have the option until March 20, 1998, to remove
such Collocation Schedules from Schedule 5.3.2 and to add any such Collocation
Schedule to Schedule 1.2 as an Excluded Asset. If Purchaser does not elect to
exclude any such Collocation Schedule, then such Collocation Schedule shall be
treated as a Designated Contract under Section 5.3.2. If Purchaser notifies
Sellers that it wishes Sellers to assume and assign any such Collocation
Schedule to Purchaser or its Designee, then Sellers shall use their best efforts
to obtain such assumption and assignment, or alternatively transfer such
Collocation Schedules to Purchaser or its Designee as Intangible Assets under
Schedule 1.1, including filing and prosecuting appropriate pleadings to
accomplish such result. If the Bankruptcy Court finds that Sellers' rights under
the Collocation Schedules are not assignable or transferable to Purchaser or a
Designee, then the Collocation Schedules will be deemed to be moved to Schedule
1.2 as Excluded Assets. Under no circumstances shall Sellers have any liability
for any additional costs, including, without limitation, the nonrecurring
charges listed in the respective Collocation Schedules, under the documents
relating to the Collocation Schedules, nor will Sellers
12
have any liability to Purchaser or its Designee if the Bankruptcy Court denies
transfer or assumption and assignment of Sellers' rights under the Collocation
Schedules.
5.12 Sellers shall take no affirmative action which shall have the
effect of creating any post-Closing obligation or liability under the
Collocation Schedules.
ARTICLE VI. CONDITIONS TO CLOSING
6.1 Conditions Precedent to Obligations of WinStar and Purchaser. The
obligations of WinStar and Purchaser under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to closing, of all of the following conditions, any one or more of which
may be waived at the option of Purchaser:
6.1.1 Representations, Warranties and Covenants.
(a) All representations and warranties of the Sellers made in this
Agreement or in any Exhibit, Schedule or document delivered pursuant hereto,
shall be true and complete in all material respects as of the date hereof and on
and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Sellers on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(c) Purchaser shall have received a certificate, dated as of the Closing
Date, executed on behalf of each of Sellers by an authorized officer thereof,
certifying in such detail as Purchaser may reasonably request that the
conditions specified in Sections 6.1.1(a) and (b) hereof have been fulfilled.
6.1.2 Closing Documents. Sellers shall have delivered to
Purchaser the documents identified in Section 7.1.
6.1.3 Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the order approving the transactions contemplated by this Agreement
("Order") and the Order shall not be subject to stay pending appeal. The Order
shall provide that (i) this Agreement and the transactions contemplated herein
are approved, (ii) the Sellers had good and marketable title to the Purchased
Assets and such title shall be transferred to Purchaser or its designees free of
all Liens and claims, other than Permitted Liens, and any such Liens or claims
which existed prior to the sale of the Purchased Assets or which arise as a
result of the Employee Benefit Plans shall attach to the Purchase Price paid to
the Sellers, (iii) Purchaser is purchasing the Purchased Assets in good faith
within the meaning of ss. 363(m) of the Bankruptcy Code, (iv) the consideration
to be paid by the Purchaser for the Business is fair and reasonable, (v) there
exist exigent business reasons for the sale, (vi) the sale is in the best
interests of the debtors' (Sellers') estates, their creditors and equity
security holders, (vii) there has been proper and adequate notice given to all
parties required by law to receive notice of the sale, (viii) the Business and
Purchased Assets have been adequately marketed and will lose value absent a
sale, and (ix) the requirements of ss. 363 of the Bankruptcy Code have been met.
The Order shall not impose any material obligations on WinStar, the Purchaser or
Sellers not contemplated herein.
13
6.1.4 Governmental Consents or Approvals. Each of the
governmental approvals, consents or waivers listed on Schedules 5.1.3 and 5.4.3
shall have been obtained.
6.1.5 HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
6.1.6 No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
6.2 Conditions Precedent to Obligations of Sellers. The obligations of
the Sellers under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to the Closing, of all
the following conditions, any one or more of which may be waived at the option
of the Sellers:
6.2.1 Representations, Warranties and Covenants.
(a) All representations and warranties of WinStar and the Purchaser made in
this Agreement or in any Exhibit, Schedule or document delivered pursuant
hereto, shall be true and complete in all material respects as of the date
hereof and on and as of the Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Purchaser on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(c) Sellers shall have received a certificate, dated as of the Closing
Date, executed on behalf of Purchaser by an authorized officer thereof,
certifying in such detail as Sellers may reasonably request that the conditions
specified in Sections 6.2.1(a) and (b) have been fulfilled.
6.2.2 Closing Documents. Purchaser shall have delivered to
Sellers the documents identified in Section 7.2.
6.2.3 Bankruptcy Court Approval. The Bankruptcy Court shall
have entered the Order and the Order shall not be subject to stay pending
appeal.
6.2.4 Governmental Consents or Approvals. Each of the
governmental approvals, consents or waivers listed on Schedules 5.1.3 and 5.4.3
shall have been obtained.
6.2.5 HSR Act. If applicable, the waiting period under the HSR
Act shall have expired or terminated.
6.2.6 No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
14
6.2.7 Purchase Price. Purchaser shall have delivered to the
Sellers the Cash Portion of the Purchase Price, less any Construction Escrow
Portion delivered to the Escrow Agent pursuant to Section 3 hereof.
ARTICLE VII. DOCUMENTS TO BE DELIVERED AT THE CLOSING
7.1 Documents to be Delivered by Sellers. At the Closing, the Sellers
will deliver to Purchaser the following, at the expense of the Sellers and in
proper form for recording when appropriate:
7.1.1 Transfer Documents. Such bills of sale, assignments,
general warranty deeds and other good and sufficient instruments of transfer as
Purchaser may reasonably request conveying and transferring to Purchaser title
to the Purchased Assets.
7.1.2 Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of the Sellers in the form described in Section
6.1.1(c).
7.1.3 Escrow Agreements. An executed copy of the Escrow
Agreement and, if necessary, the Construction Escrow Agreement.
7.2 Documents to be Delivered by Purchaser. At the Closing, Purchaser
will deliver to the Sellers, at the expense of Purchaser:
7.2.1 Purchase Price. The Cash Portion of the Purchase Price.
7.2.2 Assumption Agreement. Such assumption agreement relating
to Purchaser's or Designees' assumption of the Assumed Liabilities as Sellers
may reasonably request.
7.2.3 Officer's Certificate. A certificate, dated the Closing
Date, executed on behalf of the Sellers in the form described in Section
6.2.1(c).
7.2.4 Escrow Agreements. An executed copy of the Escrow
Agreement and, if necessary, the Construction Escrow Agreement.
ARTICLE VIII. TERMINATION
8.1 Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) Upon the written consent of both Purchaser and the Sellers;
(b) By Purchaser in the event Sellers shall not, by 5:00 p.m. (New York
City time) on Wednesday, October 1, 1997 have filed motions with the Bankruptcy
Court in accordance with Sections 5.6.1 and 5.6.2 hereof;
(c) If Sellers accept a Higher and Better offer in accordance with the
provisions of Section 9.3, in which event this Agreement shall terminate and
Sellers shall transfer the Break-up Fee to Purchaser in accordance with Section
9.2 hereof;
(d) By Purchaser in the event that (i) the Break-up Fee, Upset Price,
Expense Reimbursement, Delay Penalties and Right of First Refusal are not
approved by the Bankruptcy Court on or before October 7, 1997; (ii) the Order
15
is not entered by the Bankruptcy Court on or before October 17, 1997; or
(iii) the Closing has not occurred on or before October 17, 1997; or
(e) By either Purchaser or Sellers if (i) on the Closing Date a condition
precedent to the obligations of such party has not been satisfied by the other
party; or (ii) a material default or breach shall be made by the other party
with respect to the due and timely performance of, or compliance with, any of
its covenants, agreements, representations or warranties herein, and such
default cannot be cured within a reasonable period of time and has not been
waived.
ARTICLE IX. BREAK-UP PROVISIONS
9.1 Specific Performance. The parties recognize that if Purchaser
refuses to perform under the provisions of this Agreement, monetary damages
alone will not be adequate to compensate the Sellers for their injuries. Sellers
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by the Sellers to enforce this Agreement, Purchaser shall
waive the defense that there is an adequate remedy at law. In the event of a
default by Purchaser which results in the filing of a lawsuit for damages,
specific performances, or other remedies, the Sellers shall be entitled to
reimbursement by Purchaser of reasonable legal fees and expenses incurred by the
Sellers.
9.2 Break-up Fee. In the event Sellers shall accept a Higher and Better
offer and this Agreement shall terminate in accordance with Section 8(c) hereof,
within five business days of such event Sellers shall pay or cause to be paid to
the Purchaser a Break-up Fee in the amount of $3,000,000 ("Break-up Fee").
9.3 Expense Reimbursement. In the event this Agreement is terminated by
Purchaser in accordance with Section 8(e) hereof, within five business days of
such event Sellers shall pay or cause to be paid to the Purchaser expense
reimbursement in the amount of $1,000,000 ("Expense Reimbursement").
9.4 Upset Price. This Agreement is subject to the receipt by Sellers of
a "higher and better" offer to purchase the Business in an amount not less than
$7,000,000 more than the Purchase Price ("Upset Price"). Thereafter, all bids
above the Upset Price shall be in increments of $2,500,000. In addition, as a
condition to Sellers' acceptance of such Higher and Better offer, at the time of
making such offer, the offeror of such Higher and Better offer ("Offeror") must
present a certified check or official bank check equivalent in the amount of 10%
of its proposed purchase price to serve as a good faith deposit against the
Offeror's purchase price ("Higher and Better" offer). Notwithstanding the
foregoing, Sellers must offer Purchaser the right, exercisable for a period of
four hours, to acquire the Purchased Assets at the Offeror's price, upon the
terms and conditions set forth herein, except that the Purchaser shall receive a
credit from Sellers toward the Purchase Price in the amount of $3,000,000
("Right of First Refusal"). In the event Purchaser exercises its right to
acquire the Purchased Assets after a Higher and Better offer, the amount of the
Purchase Price in excess of $100,000,000 shall be paid in the same manner and on
the same terms as specified in Section 3.1 (i.e., (i) 80% in cash on the Closing
Date and (ii) 20% in cash or WCI Shares on the Plan Effective Date; with 1/5 of
such 20% being deposited into escrow under the Escrow Agreement).
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly
16
given when delivered in person or when dispatched by electronic facsimile
transfer or one business day after having been dispatched by a nationally
recognized overnight courier service to the appropriate party at the address
specified below:
(a) If to Sellers, to:
US ONE Communications Corp.
One Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
(b) If to Purchaser, to:
c/o WinStar Communications, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.:
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
10.2 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns (including the Designees), but will not be assignable or
delegable by any party, except pursuant to Section 5.3, without the prior
written consent of the other party which shall not be unreasonably withheld.
10.3 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of Sellers and Purchaser contained in
this Agreement shall survive the Closing Date.
10.4 Waiver. Purchaser and Sellers by written notice to the other may (a)
extend the time for performance of any of the obligations of the other under
this Agreement, (b) waive any inaccuracies in the representations or warranties
17
of the other contained in this Agreement or in any document delivered in
connection herewith, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
the other party, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its (or any
of its affiliates') representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties, conditions or covenants
contained in this Agreement and will not operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature.
10.5 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by any party or any of their respective
affiliates (or by any director, officer or representative thereof) relating to
the matters contemplated hereby. This Agreement (together with the Exhibits and
Schedules hereto) constitutes the entire agreement by and among the parties
hereto and there are no agreements or commitments by or among such parties or
their Affiliates except as expressly set forth herein.
10.6 Amendments and Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements signed by the parties
hereto.
10.7 Rights of the Parties. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto, their respective Affiliates and the
Designees any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
10.8 Further Assurances. From time to time, as and when requested by
either party, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments as may be reasonably necessary
to consummate the transactions contemplated by this Agreement; provided,
however, with respect to any CAP, CLEC or IXC Authority which is requested to be
transferred to the Purchaser or any third party by Purchaser, Sellers shall have
no obligation to do anything other than to execute transfer and related filings
prepared by the Purchaser or such third party at no cost to the Sellers..
10.9 Transfers. Purchaser and Sellers will cooperate and take such
action as may be reasonably requested by the other in order to effect an orderly
transfer of the Purchased Assets. Each Seller covenants and agrees that it will,
on the Closing Date and from time to time thereafter, do all such further acts
and things as may be requested by Purchaser for the effective transfer and
delivery of the Purchased Assets to Purchaser or the Designees, or for aiding
and assisting Purchaser to put Purchaser or the Designees in possession and
operating control of the Purchased Assets and Business; provided, however, with
respect to any CAP, CLEC or IXC Authority which is requested to be transferred
to the Purchaser or any third party by Purchaser, Sellers shall have no
obligation to do anything other than to execute transfer and related filings
prepared by the Purchaser or such third party at no cost to the Sellers..
10.10 Governing Law; Consent to Jurisdiction. This Agreement, including
without limitation, the interpretation, construction and validity hereof, shall
be governed by the laws of the State of New York. Notwithstanding that the
matters set forth in Section 5.6 hereof will be submitted to the
18
Bankruptcy Court for determination, each party hereby agrees that after
confirmation of a plan, all disputes hereunder shall be submitted for
determination by arbitration by Judicial Arbitration Meditation Services, Inc.
("JAMS") in accordance with the rules and regulations of JAMS, or by any other
body mutually agreed upon by the parties. Purchaser and Sellers shall each
select one independent, qualified arbitrator and the two arbitrators so selected
shall select the third arbitrator. Arbitration shall take place in New York, New
York (or such other location as to which Purchaser and the Sellers may agree).
The arbitrators, who act by majority vote, shall be able to decree any and all
relief of an equitable nature, including but not limited to such relief as a
temporary retraining order, a temporary injunction, or a permanent injunction,
and shall also be able to award damages, with or without an accounting and
costs. The decree or judgment of an award rendered by the arbitrators may be
entered in any court of competent jurisdiction located in the County of New
York, State of New York ("NY Court") and the parties agree to submit to the
jurisdiction of the NY Court. Service of process in any such arbitration, action
or proceeding brought against a party may be made by registered mail addressed
to such party at the address set forth in Section 10.1 or to such other address
as such party shall notify the other party in writing is to be used for such
purpose pursuant to Section 10.1. For purposes hereof, the address designated
for the Sellers shall also be the address designated for each Seller's
shareholders. Each party hereby waives the right to trial by jury.
10.11 Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable domestic or foreign statute,
law, ordinance, rule or regulation, this Agreement shall be construed with the
invalid, illegal or unenforceable provision deleted, and the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected or impaired thereby.
10.12 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
10.13 Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
10.14 Passage of Title and Risk of Loss. Legal title, equitable title
and risk of loss with respect to the Purchased Assets will not pass to Purchaser
until such Purchased Assets are transferred at the Closing, which transfer, once
it has occurred, will be deemed effective for tax, accounting and other
computational purposes as of 11:59 P.M. (New York City time) on the Closing
Date.
10.15 Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all references to Sections,
Articles or Schedules are to Sections, Articles or Schedules of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "or" is disjunctive but not
necessarily exclusive, (v) words in the singular include the plural and vice
versa, and (viii) the terms "Subsidiary" and "Affiliate" have the meanings given
to those terms in Rule 12b-2 of Regulation 12B under the Securities Exchange Act
of 1934, as amended. All references to "$" or dollar amounts will be to lawful
currency of the United States of America.
19
(b) No provision of this Agreement will be interpreted in favor of, or
against, either of the parties hereto by reason of the extent to which either
such party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
20
10.16 No Recourse. Notwithstanding any of the terms or provisions of this
Agreement, each of the Purchaser, on the one hand, and the Sellers, on the other
hand, agree that neither it nor any person acting on its behalf may assert any
21
claims or cause of action against any officer or director of the other
party (or parties) or stockholder of such other party (or parties) in connection
with or arising out of this Agreement or the transactions contemplated hereby.
10.17 Press Releases. The Sellers shall not issue a press release or
engage in any other publicity regarding the subject matter of this Agreement
without the Purchaser's prior written approval.
[Remainder of page intentionally left blank.]
22
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLERS:
US ONE COMMUNICATIONS CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
US ONE COMMUNICATIONS SERVICES CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
US ONE COMMUNICATIONS OF NEW YORK, INC.
By:_______________________________________
Name:___________________________________
Title:____________________________________
PURCHASER:
WINSTAR SWITCH ACQUISITION CORP.
By:_______________________________________
Name:___________________________________
Title:____________________________________
WINSTAR:
WINSTAR COMMUNICATIONS, INC.
By:_______________________________________
Name:___________________________________
Title:____________________________________
23